ESR, Future to build 2 logistics parks 

Hong Kong-based logistics real estate firm ESR has announced that it is tying up with India’s Future Group to develop two logistics parks with an investment of US$42.3 million

September 4, 2019

The logistics parks will be located at Nagpur and Gurugram and span 75 acres, with a potential development of around 1.3 million sq. feet

The logistics parks will be jointly developed by Future Group’s Future Market Networks Ltd and ESR, with the latter as the majority partner

ESR has entered into partnerships to invest over US$1 billion in 8 Indian cities, in the growing logistics and industrial property market

International interest has especially been driven by enhanced market transparency, new infrastructure and potential growth opportunities

In the burgeoning space of commercial real estate, Warburg Pincus-backed logistics real estate firm ESR has announced that it is tying up with Future Group to develop two logistics parks with an investment of US$42.3 million. To be located at Nagpur and Gurugram, the logistics parks will span 75 acres with a potential development of around 1.3 million sq. ft. The logistics parks will be jointly developed by Future Group’s Future Market Networks and ESR, with the latter as the majority partner.

ESR, headquartered in Hong Kong and Singapore, has been on an expansion spree in India for the past year. The company – which has presence across major markets in APAC – has entered into strategic partnerships or been in talks with Allianz Real Estate, the Lodha Group, and GMR Infrastructure to invest over US$1 billion in India’s growing logistics and industrial property market. The joint venture intends to focus on eight key cities—Mumbai, Pune, Chennai, Delhi, Ahmedabad, Kolkata, Bengaluru, Hyderabad. 

There has been growing interest from both global investors and property developers to enter India’s growing logistics market. Post the implementation of Goods and Services Tax (GST), the demand for warehousing and logistic spaces has increased sharply. India had also come up in top-five preferred markets in APAC with the launch of the first Real Estate Investment Trust (REIT) earlier this year. 

According to an August report by CBRE, logistics leasing in India recorded a growth of 31 per cent in the first half of this year, with Mumbai, Chennai and Bengaluru accounting more than 60 per cent of the leasing activity.

India has stood out as one of just two countries in Asia to draw investor interest in the real estate sector. As compared with 2018, when only 2 per cent of respondents chose India as their preferred location for investments, the interest more than tripled to 7 per cent in 2019. International interest has especially been driven by enhanced market transparency, new infrastructure and potential growth opportunities.

Unlike other countries, India offers scale, a factor that makes it especially popular for funds deploying large amounts of capital. The demand for innovative workspaces is expected to continue amid the steady flow of foreign investment into industries spanning software to logistics. Investment expansion into tier-2 and tier-3 cities have opened up room for further growth.