31 July 2018

1. YEIDA to allot land for industry near Jewar airport

The Yamuna Expressway Industrial Development Authority (YEIDA) has launched a scheme for industrial land allotment around the proposed Jewar international airport.

(Source: ETRealty, 25 July, 2018)

Research View

In the bid to fast-forward the development process in the vicinity of the Jewar Airport (about 75 Km from Delhi), the Yamuna Expressway Industrial Development Authority (YEIDA) had launched two land schemes in its area earlier this year in January. The first scheme entails the establishment of 5-star Hotels in 5 different land parcels of 10 acres (0.04 million sq m) each while in the second scheme, the authority had planned to offer a total of 650 acres (2.63 million sq m) of land for the development of commercial and industrial units in the vicinity of the upcoming airport. As per the second scheme, YEIDA will be opening the plot allotment scheme for the Industrialists. The applicants can purchase a land size above 4000 sq m (43000 sq ft) and those seeking to acquire a smaller land parcel will have to go through the lottery system of land distribution. Many major business-houses are looking to invest in the area ranging from a renowned film city to cellular phone manufacturing companies. The Jewar airport, which got the approval of an International airport construction from the union civil aviation ministry on June 2017, is also coming up with a multi-modal logistics park next to it. The Adani group, which is planning to build this logistics park had signed a memorandum of understanding with the YEIDA. Many other domestic and international investors have also signed MoUs with the authority worth INR100 billion (USD1.5 billion) to develop manufacturing facilities along the 165 km long (102 miles) Yamuna Expressway. Investors seem to be stimulated by the active infrastructure developments. A cumulative investment is expected in the range of INR 130 billion to 150 billion (USD1.6-1.7 billion) to be pumped by various businesses in this region. On the real estate front, we may observe heightened commercial office leasing activity, resulting in an upward trend in the office rentals by 3-4% till 2021.

2.  Awfis Space raises $20 million more

Awfis Space Solutions, India’s largest home-grown co-working space provider, has raised $20 million in series C funding from its existing investors global venture capital firm Sequoia Capital.

(Source: Economic Times, 25 July, 2018)

Research View

Awfis Space Solutions, India’s largest home-grown co-working space provider, raised INR1.4 trillion (USD20 million) in series C funding from its existing investors Sequoia Capital, Radha Kapoor-led The Three Sisters: Institutional Office and Temasek arm InnoVen Capital. In another transaction, smart workspace solutions provider IndiQube raised INR1 billion (USD14.6 million) of equity in a round led by WestBridge Capital in June 2018. These transactions display the growing investor interest in the area of shared offices, which has seen a number of co-working facilities mushroom in metropolitan cities in the past few years. Besides its cost-effectiveness and flexibility, use of co-working space is becoming more popular due to increasing uncertainty among occupiers regarding their future headcount growth. Awfis, which operates 7,500 seats in 21 workplaces across the National Capital Region (NCR), Bengaluru, Mumbai, Hyderabad, Pune and Kolkata, will use the funds to support its expansionary plans to scale up to 35,000 seats in 100 centres across metropolitan and Tier-II cities alike in two years. We expect the co-working concept to continue expanding notably, especially in cities such as Mumbai, Bengaluru and NCR. We expect, the funding transactions to support in their expansionary plans and strengthening execution capabilities for the co-working operators.

3. KKR to invest INR 1,800 crore in Mumbai’s 3 realty projects

Global alternative investment management firm KKR & Co is stepping up its presence in the Indian real estate space with a debt financing of INR 1,800 crore in three mid-market real estate projects in Mumbai.

(Source: Economic Times, 24 July 2018)

Research View

Global alternative investment management firm KKR & Co is expanding its presence in the Indian real estate market with a debt financing of INR1,800 crore (USD0.26 bn) in three mid-market real estate projects in Mumbai. As per media sources, the company is in plans to lend around INR750 crore (USD0.11 bn) each to a newly launched commercial office project of Lodha developers in Central Mumbai, and an upmarket residential project of Shapoorji Pallonji in South Mumbai. Another INR250-300 crore (USD0.04 bn) to a Thane-based residential project. Private-equity majors are steadily increasing their portfolio of commercial assets across Indian cities. According to RCA, increasing investments in Indian real estate markets in H1 2018 recorded INR156 billion (USD2.4 bn) worth transactions, up by 26% compared to H1 2017. While, traditionally, most equities in real estate was in the hands of local developers. In the past two years well capitalised institutional investors have started acquiring premium Grade A assets and making a strategic partnership with developers. In our opinion, H2 2018 is also likely to witness a few remarkable deals in the office sector, driven by increasing fund flow from foreign investors, rising demand for premium office assets, low vacancy rate in key micromarkets and increased transparency in the sector. Moreover, backed by key economic reforms such as Goods and Services Tax (GST), infrastructure status to logistics and 100% Foreign Direct Investment (FDI) in the e-commerce market, we expect industrial and warehousing sector to emerge as a captivating opportunity for investors over the coming years.


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