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ESR steps up warehousing space investment; eyes 18 m sq ft portfolio in 3 years

Warburg Pincus-backed logistics development platform ESR is stepping up its investment in the industrial and warehousing space in the country, with a plan to operationalise 18 million sq ft portfolio in the next three years.

The company is also eyeing markets like Gurgaon, Chennai and Bengaluru to expand its portfolio apart from venturing into tier II cities. “Industrial and warehousing will be a resilient sector. We will see growth both in terms of demand and supply,” said Abhijit Malkani, CEO, ESR India.

The firm is looking to also acquire 8 warehousing projects across major hubs and these transactions are expected to be concluded over the next one year.

In December, it set up a second fund with Singapore’s sovereign fund GIC. The 80:20 strategic partnership of a $750-million joint venture will see both the partners develop and acquire industrial and logistics assets in India. “All future development will be through the GIC-ESR joint fund,” said Malkani. ESR has $30 billion of assets under management globally. Its current portfolio is spread across nine cities, 15 locations, 700 acres of land acquired and 4.5 million sq ft warehousing under development. Apart from Pune, ESR India is currently developing warehousing projects at Hosur and Sriperumbudur in Tamil Nadu, Farrukhnagar and Bilaspur in DelhiNCR, and Kothur in Hyderabad. Despite the economic stress, the logistics and warehousing sector in the country is seeing double-digit growth.

Property consultant Knight Frank estimates that annual warehousing transactions in top eight Indian cities will expand at a compound annual growth rate (CAGR) of 19% to 76.2 million sq ft by FY26 from 31.7 million sq ft in FY21.

“Supply chain disruptions from the pandemic have intensified the need for more institutional players in the warehousing segment which will ensure institutionalisation of the warehouse space, leading to greater participation from the big developers,” said Shishir Baijal, CMD, Knight Frank India.

In FY21, warehousing transactions in the top 8 Indian cities registered a decline of 23% year-on-year to 31.7 million sq ft.

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