Mahindra Lifespaces and Actis have entered into an agreement to establish an integrated business to develop industrial and logistics real estate facilities across India with an initial investment of Rs 2,200 crore.

Actis, a global investor in sustainable infrastructure, will hold a majority stake in the joint venture, while Mahindra Lifespaces a significant minority stake.

The business will acquire and develop greenfield and brownfield sites in key markets across India, aiming to become a leading real estate solutions provider to global and local corporations.

Up to 100 acres of land with ready infrastructure in the Mahindra World Cities, offering a built-up potential of over 2 million square feet, have been earmarked as seed sites to be acquired and developed by the business over time, subject to requisite approvals, the company said in a statement.

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Ashish Singh, partner and head of India and SE Asia Real Estate, Actis, said: “The warehousing sector in India is in early stages of a transformation, rapidly gaining scale while also undergoing modernisation. Actis sees enormous growth potential in the sector as India grows to become the third-largest consumption economy globally by the turn of this decade. The demand for industrial real estate is on the rise as India benefits from a renewal of domestic capital investment cycle, realignment of global supply chains in many sectors and, as the government’s PLI schemes catalyse, more and more investment in manufacturing locally.”

Commenting on the JV, Arvind Subramanian, managing director and CEO, Mahindra Lifespaces, said: “We are witnessing strong and accelerating demand for Grade A warehousing and manufacturing facilities from both multinational and Indian clients. With our experience in building and operating thriving integrated cities and industrial parks and our ready-to-market plug-and-play infrastructure in Mahindra World Cities in Chennai and Jaipur, we are well-positioned to cater to this demand.”

Industrial and warehousing have emerged as a high-growth real estate asset class, buoyed by rising consumer demand and accelerating manufacturing investment. The National Logistics Policy announced recently is expected to give a further fillip to investments in the sector.

The warehousing transaction volumes for the eight primary markets are estimated to grow at a compounded growth rate of 19% in the FY21-26 period, according to ‘India Warehousing Market Report 2022’ of Knight Frank India. The 62% growth in volume seen in financial year 2021-2022 started this off on a strong note, and the resilience built into supply chains with businesses maintaining comparatively higher inventory levels over multiple locations should help support demand and rent, the report stated.