Investors from China, Japan and Korea gung-ho on industrial
development projects
By Mr. Anuj Puri, JLL
India
Apart from the favourite asset classes of office and residential,
private equity (PE) has been taking increased interest in warehousing,
logistics and retail real estate.
PE investors and overseas developers are already looking at
opportunities to enter India’s industrial and warehousing sector by investing
in various development projects.
Investors from other nations, in general, and Asian countries such
as China, Japan and Korea, in particular, have shown a lot of interest
industrial development projects.
A few key announcements that show their increasing interest are:
* ‘Wanda Industrial New
City’; Dalian Wanda Group
* Industrial Parks by
China Fortune Land Development Company Private (CFLD)
* Development of smart
cities by ZTE Corporation
* Neemrana Japanese
investment zone
* Mandal Becharaji,
Japanese investment zone
* SUPA, Japanese
investment zone
* Chinese industrial
zone in Vadodara
* Ascendas-Singbridge exploring
multiple portfolios of industrial and logistics parks across India.
With the implementation of Goods and Service Tax (GST),
warehousing and logistics’ spaces will start to see a consolidation of assets.
Unlike earlier (small assets in various states), developers will focus on the
development of large-scale, technologically advanced warehouses.
Such assets will attract private equity (PE) investors, since they
can deploy a larger amount in fewer assets, making monitoring easier. If they
perform well, such assets can even fetch a better valuation when monetising
through REITs or other ways.
Retail assets gaining attention
In the past few months, key leasehold retail assets across the
country have come on the PE radar.
A few reasons include well-managed Grade-A malls starting to enjoy
better occupancy with rent escalation on the cards, after a lull of six to
seven years.
Such well-managed assets/ entities will attract investor focus.
A few key deals seen in 2016 were
* GIC bought a 50%
stake in Viviana Mall of Sheth Developers in Mumbai
* Blackstone acquired
the retail portfolio of Alpha G Corp through an entity level deal
* Blackstone has
progressed well in acquiring a stake in the retail assets of L&T in Navi
Mumbai
* Blackstone buying 50%
stake in Pune’s Westend Mall
Leasehold retail property usually has a higher probability of
success as the developer is actively involved in the key functions of mall
management, especially tenant management.
Various new regulations like easing foreign investment for
single-brand retailers, longer shopping hours and an updated framework for
establishing Real Estate Investment Trusts (REITs) have attracted the attention
of various private equity funds like Blackstone, Xander, GIC, Morgan
Stanley, towards the Indian retail real estate sector.
Various retail mall developers are also looking to sell
their existing retail assets and raise funds for expansion.
About the author..
Mr. Anuj Puri, Chairman and Country Head at JLL India
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