ESR Advisers Opine That Realty Slow Down Assisting Warehousing COS Unlock Land Prices

The slowdown in the residential real estate segment is helping warehousing players to unlock large land parcels through joint venture and development agreements, said Abhijit Malkani, co-CEO at ESR Advisers India.

ESR, one of Asia’s largest developers and operators of logistics and warehousing facilities, follows an asset-light model. It has entered into ventures with the likes of the Future Group, GMR and Lodha to develop logistics parks in Nagpur, Gurgaon, Hyderabad and Thane to expand its logistic footprint here. “One of the biggest challenges for the industry is land acquisition, but that has started to be available now. Execution will be the key to success in future,” said Malkani.

The Hong Kong-headquartered firm that counts Amazon and Flipkart among its clients plans to list its assets through a real estate investment trust (REIT) over the next 3-4 years in India. “The success of the first REIT (in India) has given clear exit to investors. The idea is to have 30 million sq ft of operational assets over the next 3-4 years,” said Malkani.

ESR, formed by the merger of e-Shang Cayman and Redwood Group Asia, owns and manages properties worth about $20 billion globally.

The Indian arm has already deployed $250 million over the last two years.

Property consultant JLL said strong demand was expected to drive market absorption in the warehousing space and keep vacancy below 10%. In 2019, large global funds like Blackstone, ESR and Morgan Stanley invested in a combination of platforms or project-level deals.In 2018, ESR and Allianz Real Estate had decided to jointly invest about $500 million in India’s growing logistics and industrial property market. The JV plans to roll out large-scale logistics and industrial facilities in eight cities — Mumbai, Pune, Chennai, Delhi, Ahmedabad, Kolkata, Bengaluru and Hyderabad.

India’s logistics and warehousing sector is expected to see significant growth, with foreign capital remaining an integral part of the development. According to the JLL India Industrial Services report, 2019 witnessed 15% growth in total net absorption in Grade A & B warehousing space in the country’s top eight cities.