Temasek Holdings and JTC Corporation jointly-owned Ascendas-Singbridge Group and Firstspace Realty have agreed to form a joint venture platform to develop logistics and industrial facilities across major warehousing and manufacturing hubs in India. The JV will be investing $500-$600 million for developing these facilities over the next five years through a mixture of debt and equity, a senior official told FE. The warehouses will meet the infrastructure needs of businesses such as third party logistics, e-commerce, automobiles, fast-moving consumer goods, modern retail and manufacturing in India. According to the plan the platform will be developing 14-15 million square feet over the period of next five years. Aloke Bhuniya, chief executive officer, Ascendas-Firstspace said the JV is hoping to close its first land deal for developing a warehouse in the next 30-45 days. It is targeting to set up warehouse facilities in Pune, Ahmedabad, Mumbai, Chennai, Bengaluru and NCR with built up space ranging from 5 lakh sq ft to 3 million sq ft.
Commenting on the tie-up, Miguel Ko, group chief executive officer, Ascendas-Singbridge said: “We have been in India for over two decades, developing iconic business and IT Parks. Entering the industrial and logistics sector is a natural progression, and we expect to meet the growing demand for quality manufacturing and logistics space. We have assembled an entrepreneurial team to lead the way, who will be supported by our experienced India and global operations.”
This is the second large deal sealed in the warehousing space in India in the last one month. In May, Canadian pension fund, Canada Pension Plan Investment Board (CPPIB) had announced forming a joint venture with one of India’s prominent warehousing companies owned by private equity fund Everstone Group, with an initial investment of $500 million. Ascendas-Singbridge and Firstspace JV is only for future development of warehouses under the platform.
Industry experts say that with the implementation of Goods and Services Tax (GST) round the corner and Real Estate Investment Trusts (REITs) likely to be a reality soon, the warehousing sector is looking at bright days ahead, with a lot of consolidation on the anvil.
In fact, the total warehousing space requirement in the country’s top seven markets — Mumbai, NCR, Bengaluru, Chennai, Pune, Hyderabad and Ahmedabad — is expected to grow from 621 million sq ft in 2016 to 839 million sq ft by 2020, according to a Knight Frank India report.
At present, 17 m sq ft of space is transacted in these seven warehousing markets, with the auto & auto ancillary and chemical & pharmaceutical sectors being the largest demand drivers.
“The sector, which is still evolving, will see consolidation and improvements in quality, transparency and corporate governance due to flows of institutional capital into the sector,” Bhuniya said.
Headquartered in Singapore, Ascendas-Singbridge is among the leading urban development and business space solutions provider with assets under management exceeding 20 billion Singapore Dollars. It currently owns and manages over 30 million sq ft of industrial space across Asia Pacific. Firstspace Realty specialises in the development and management of local industrial real estate.