The transformation of the Warehousing Industry has not only been rapid in the past year, but it has been truly tremendous in India. The enforcement of GST, reported annual investments up to Rs 50,000 crore, and ever-increasing warehousing space all point towards the organization of the industry. The volume and degree of opportunities for the labour force and industry leaders alike. This rejuvenation of what was once a godown storage system has altered to that of complete logistics-friendly infrastructure.
The time is therefore as ripe as it can be for industry players to capitalize on the situation, especially considering the recent milestone for Indian real estate investment – the launch of Blackstone-Embassy Group’s REIT (India’s first Real Estate Investment Trust). It will significantly enhance the transparency and governance in commercial real estate while also attracting more institutional fund flows into the sector. It must also be understood that since REIT is led by Blackstone.
In addition, the listing and subsequent performance are reported to be closely monitored by Bank of America Corp., Morgan Stanley, Kotak Mahindra Bank, and JPMorgan Chase & Co. Hence, such successful listings are expected to incur sponsors from warehousing along with office, retail, and hospitality as well.
The onus therefore lies on warehouse industry players to likewise invest in REITs and create more offerings. This is because of the longevity of industrial assets because of the long-term leases. In addition, the tenants who will seek grade-A facilities will benefit as rentals are bound to climb in the coming years due to better utilization of space volume.
Industrial REIT investments additionally poses a good route for new players to enter the Warehouse market considering logistics is increasingly being considered an asset class post-GST. It has indeed acquired immense interest from domestic and foreign institutions alike. The new segment in itself promises a lot to market expansion and consolidation making it vital for the industry to indulge in REITs. The mutual-fund like model of REITs will only present the opportunity for investors to access dividend-based income and total returns along with feeding Warehouse market expansion in India.
It was earlier predicted that the year 2019 was going to incur further impetus in addition to its positive start in the Warehouse industry. The predictions have indeed come true considering the Blackstone-Embassy led REIT has not only brought India’s real estate market into the big leagues but is also boosting investor sentiment in real estate. Warehouse industry players must therefore take it upon themselves to invest in REITs as an added push to the rolling wheel that is market expansion.