03 July 2018

1. Warburg-Embassy JV buys 110 acre in Haryana to build industrial park

Private equity major Warburg Pincus and Embassy Group’s joint venture company Embassy Industrial Parks has acquired a 110-acre land parcel in Haryana’s Farrukhnagar town near Gurgaon

(Source: ETRealty, 23 June, 2018)

Research View

With an existing portfolio of 5 million sq ft (0.46 million sq m) of developable lands for industrial parks, Embassy Industrial Park, a joint venture (JV) between private equity firm Warburg Pincus and realty giant Embassy group acquired a 110 acres (0.17 sq miles) land parcel at Farukh Nagar, which is at a distance of 22km (13.6 miles) from Gurugram, Haryana. According to company’s website, the facility holds a development potential of 3 million sq ft (0.27 million sq m), and is the second investment as part of a Memorandum of Understanding (MoU) of INR 1,919 crores (USD 293 million) with the Haryana government. The first investment in Haryana is located in Bilaspur, established with a vision to build quality Grade A industrial unit coupled with light manufacturing and warehousing spaces in close proximity to leading consumer and industrial centres across India. Other facilities are situated in Tier II and Tier III cities such as Chakan (Pimpri Chinchwad, Maharashtra), Sriperumbudur (Kanchipuram, Tamil Nadu) and Uluberia (Howrah, West Bengal). Another noteworthy investment of INR 2,000 crores (USD 307 million) was by Singapore based Ascendas-Singbridge Group and global investment firm, Temasek Holdings, in Q2 2018 itself. This further highlights the achievements of the central government efforts in the transformation of the logistics and the warehousing sector by the introduction of policies such as Make in India, 100% Foreign Direct Investment (FDI) in e-tailing marketplace, Goods and Services Tax (GST), and the most recent infrastructure status grant to this sector. We can further anticipate more investments in this sector, especially in Tier II and Tier III cities owing to the availability of larger and cheaper land parcels suitable for warehousing.

2. 

Phoenix Mills acquires Indore shopping mall for $34.5 mn  


The Phoenix Mills Ltd has acquired an under-construction retail asset in Indore for Rs 234 crore ($34.5 million).

(Source: VCCircle, 22 June, 2018)

Research View

The Phoenix Mills, through its wholly owned subsidiary, Insight Hotels & Leisure Pvt Ltd., has acquired an under-construction retail asset admeasuring 1.1 million sq ft (0.1 million sq m) of gross leasable area in Indore for INR 234 crore ($34.5 million). Phoenix Mills plans to develop the asset as Phoenix MarketCity Indore, which is expected to be operational by 2021. Earlier this month, the Phoenix Mills’ subsidiary, Destiny Hospitality Services entered into an agreement to acquire an under-construction retail development in Lucknow for INR 453 crore ($66.8 million). In another transaction in July 2017, Blackstone Group’s subsidiary, Nexus Malls acquired Elante Mall admeasuring 1.15 million sq ft (0.11 million sq m) located in Chandigarh. In our opinion, these transactions are indicating towards growing trend of investments and acquisitions of retail assets in tier II cities as well. After a few years of reduced focus, the retail real estate has started witnessing interest from investors and developers in the backdrop of rising consumption levels. While Blackstone is focusing on retail assets to diversify its investment portfolio, Phoenix has been buying brownfield retail assets and building new ones in metropolitan and tier II cities in line with its overall strategy of maintaining market leadership in the retail space. Premium retail occupiers are advised to capitalise on these opportunities to provide quality retail and entertainment experiences, with large-scale retail destinations to these under-served tier II cities. Driven by changing consumer preferences and digitally aware shoppers that are increasingly turning to online shopping, we see that retail brands, in malls and on high streets alike, are increasingly realigning their product mix, with more focus on entertainment quotient and delivering experiential shopping to entice customers.


3. 

The commercial hub of Kolkata loses charm as businesses opt for affordable alternative



BBD Bag, Esplanade, Ganesh Chandra Avenue, Park Street, Camac Street and Theatre Road, which once attracted top Indian corporates, have lost much of their sheen with corporates now opting for alternative locations.

(Source: ETRealty, 21 June, 2018)

Research View

Unlike any other city in India, the economic growth in Kolkata is moving towards outskirts of the city. In the past one year, the occupier demand is largely driven by relocations and expansion in the peripheral areas. The city recorded about 0.2 million sq ft (18,000 sqm) of annual gross absorption, in Q1 2018, and the bulk of leasing volume, 60%, was concentrated in Sector V while New Town and Rajarhat accounted for a 36% share. The remaining 4% of the transaction volume was observed in the CBD locations. We expect the SBD area (Topsia, EM bypass and Ruby) to capture commercial occupier’s interest given the planned Grade A space offerings, better connectivity and competitive rentals. The PBD area (Salt Lake, Rajarhat, New Town, Sector V) will continue to attract Information Technology Enabled Services (IT/ITeS) enabled occupiers who are looking for affordable sub-one dollar rentals without compromising with the quality of development and ample availability. Recently, we observed major deals of companies like ZTE, Teja Industries, Byju and Reliance Jio taking place in the PBD locations. As per Colliers International, most of the Grade A supply over the next three to five years is expected to come at the PBD areas, providing adequate spaces for the prospective occupiers in the lookout of new office space. We expect the office market to gain momentum in the next three to five years majorly driven my government policies. The ease of doing business, increased focus on infrastructure development, and renewed private investment is likely to boost the expansion of the commercial office market in the city. In the recently held Bengal Investment Summit 2018, the state of West Bengal received a huge INR2,200 billion (USD33.8 billion) worth of overall investment proposals from various industries. Prominent companies including Reliance Industries and Adani Group promised to invest INR 50 billion (USD764 million) and INR15 billion (USD230 million), respectively. This renewed interest from the corporate houses is attributed to the reformed policies of the state government and improved business-friendly perception of the state as a whole.


Contact for more information


India
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