Owing to the reforms introduced by the government, the industrial and warehousing sector in India has attracted significant investor interest since 2017. As per foreign property consultant Colliers International, since 2017, the sector has attracted investment inflows of $3.7 billion from multiple, large institutional investors. Between 2017 and H1 2020, the sector garnered a considerable 17 per cent share of the total private equity real estate investment. This segment’s share of total private equity real estate investment in India has been increasing year-on-year since 2017, indicating the increasing attractiveness of the sector. During 2019 through H1 2020, the industrial and warehousing segment garnered the third highest share of private equity investments after office and retail. “We expect India, with its large labour force and domestic consumer market, to be a big benefactor and garner its fair share of the global supply chain market in the next three to five years. Our interaction with key developers and industry leaders suggests that the e-commerce, electronics and automotive sectors are expressing keen interest in setting up facilities in NCR, Mumbai, Pune, Bangalore and Chennai. India is well poised in Asia to absorb demand arising from companies that may shift some manufacturing from China to India as well. Data localisation leading to the creation of data centres and local manufacturing owing to the ‘Atmanirbhar Bharat’ call by the Prime Minister are the two trends to watch out for,” says Shyam Arumugam, head – industrial & logistics (India) at Colliers International India. The report states that investment activity may be muted for the next year due to slower decision-making by investors because of the ongoing pandemic. However, it expects the inflow from both foreign and domestic funds to grow over the next two to three years as existing participants expand their portfolio and new players enter the market. Owing to robust demand from e-commerce and other consumer-led occupiers, it expects the segment to bounce back quicker than other real estate segments. Significant shift Covid-19 has fast-tracked the global supply chain rebalancing which was triggered by the US-China trade war. Globally, manufacturing companies are actively evaluating a China+1 supply chain strategy, wherein they establish an incremental supply base outside China. “We recommend that electronics and pharmaceutical companies focus on Bengaluru and Hyderabad, while the automotive segment should focus on Pune and Chennai. The entry of global manufacturing multinationals into India should provide a boost to the country’s exports, along with generating increased demand for warehousing facilities,” adds Arumugam.
-
The industrial and warehousing segment garnered the third highest share of PE investments
