PE Investment in India’s industrial and warehousing segment fell to USD 102 million in January-June from USD 1,250 million (about Rs 9,300 crore) in the year-ago period, as per a report by US-based Colliers International.
“Since 2017, the sector has attracted investment inflows of Rs 27,800 crore (USD 3.7 billion). Between 2017 and H1 2020, the sector garnered a considerable 17 per cent share of total private equity real estate investment,” the report said.
The consultant noted that the industrial and warehousing sector has attracted significant investor interest since 2017 owing to the reforms introduced by the government.
These reforms include implementation of the Goods and Services Tax (GST) regime, accordance of infrastructure status to the sector, creation of logistics park policy and development of multimodal infrastructure, among others.
“The warehousing sector that was characterized by fragmented sheds and godowns in the past is now becoming more organized, buoyed by the government policies,” Colliers said.
To capitalize on the growth potential of the reorganized segment, the sector has attracted significant investor interest.
“This segment’s share of total private equity real estate investment in India has been increasing year-on-year since 2017, signifying the increasing attractiveness, ” the report said.
During 2019 through H1 2020, the industrial and warehousing segment garnered the third highest share of PE investments after office and retail.
The investment capital came from foreign investors such as the Abu Dhabi Investment Authority, Canada Pension Plan Investment Board (CPPIB), Ivanhoe Cambridge, Ascendas and Blackstone among others.
“Investment activity may be muted for the next one year due to slower decision-making by investors because of the ongoing pandemic.
“However, we expect the inflow from both foreign and domestic funds to grow over the next 2-3 years as existing participants expand their portfolio and new players enter the market,” the report said.
The consultant expects the warehousing segment to bounce back quicker than other segments of real estate, driven by robust demand from e-commerce and other consumer-led occupiers.