Chennai, already a hub for automobile manufacturing, is swiftly becoming a hotspot for large industrial warehouses and logistics parks. The southern city is witnessing over Rs 10,000 crore in warehousing and industrial infrastructure projects, benefiting from a surge in manufacturing activity and the shift in production from China by global firms.
Greenbase Industrial and Logistics Parks, a 50:50 joint venture between the Hiranandani Group and PE major Blackstone, recently announced a Rs 1,500-crore investment towards land acquisition and the development of built-to-suit industrial spaces in the southwest and northern parts of Chennai.
Greenbase is the latest to ramp up its capacity in the city, which is increasingly attracting major players. Singapore-based CapitaLand, domestic warehousing fund and development management firm Welspun One, and Ample Parks—a joint venture between Mahindra Lifespace Developers and private equity firm Actis—are among the companies that have committed thousands of crores to develop industrial warehouses in recent times.
Niranjan Hiranandani, Chairman of Greenbase Industrial and Logistics Parks, attributes the growth in warehousing and logistics space in Chennai to a combination of factors. He highlights favorable government policies and ease-of-doing-business initiatives, including quick approvals, tax benefits, and fiscal incentives, as key drivers.
Chandranath Dey, India Head of Operations & Business Development at JLL, said that India, like many other countries in Southeast Asia, faces ‘Double A Constraints’—Approvals and Acquisition. “Land acquisition hurdles vary across different states since land is a state subject, but Tamil Nadu has mastered the art of easing out hurdles,” he said.
Land acquisition is time consuming and risky for manufacturing and warehousing / logistics companies. Different states have different hurdles like Urban Land Ceiling & Regulation Act (ULCRA) in West Bengal which restricts ownership of large tracts of land. Tamil Nadu’s solution of dry / wet land eases the hurdles of land use change in various other states.
Dey added that except for Gujarat, very few states have achieved what Tamil Nadu has did i.e making state-sponsored land available across the state. The state has in the offerings large land parcels (pooled in from Private and Govt.ownership) for industries and manufacturers to develop or developer / funds to co-develop with the government, he noted.
Recently, Tamil Nadu Chief Minister M.K. Stalin announced that the state aims to create a 45,000-acre land bank, with 41,000 acres already been identified.
According to real estate consulting firm Vestian, Chennai has seen a three-fold increase in demand for warehousing and logistics space during January-June even as larger markets like Delhi-NCR saw a 77% decline in leasing activity. Vestian’s latest Warehousing and Logistics Sector review said, absorption of warehousing and logistics spaces across seven major cities rose by 8% to 16.6 million sq. ft. During the same period, Delhi-NCR’s absorption fell to 1.1 million sq. ft. from 4.7 million sq. ft. last year, whereas Chennai saw a three-fold increase to 1.5 million sq. ft.
Most of the new and existing warehouse expansion projects are concentrated in Oragadam, southwest of Chennai, which hosts several automotive and ancillary manufacturers, including Renault Nissan Automotive India, Daimler India, and Apollo Tyres.
For instance, Greenbase, which holds 180 acres in Oragadam, will acquire an additional 211 acres, expanding its total holdings to 391 acres. CapitaLand is progressing with the next phase of the Ascendas Firstspace industrial park in the same region while ESR India, a joint venture between ESR Group and Allianz Real Estate, recently acquired an additional 27 acres in Oragadam for Rs 276 crore, bringing its total industrial park area to 107 acres.
“Due to its proximity to a marine port and the upcoming Parandur airport, Chennai’s southwest area offers a dual advantage. This makes it an attractive proposition for marquee and organized players,” Hiranandani noted.