Hiranandani plans ₹2,000 crore investment in warehousing business

Niranjan Hiranandani, co-founder and MD, Hiranandani Group.

BENGALURU : Hiranandani Group plans to invest around 2,000 crore in its warehousing vertical “GreenBase” over the next year to scale up the business, said top company executives.

The Mumbai-based group may eventually list the income generating assets through an investment trust, the executives said.

Hiranandani said on Thursday that it will build a wind turbine park and warehousing facility for wind turbine maker Vestas India at Oragadam, Chennai. The 500,000 square feet (sq. ft) facility will be built on 23 acres and would be the first under the new vertical. This facility would be part of a 115-acre industrial and logistics park, housed in the mixed-use integrated township Hiranandani Parks in Oragadam.

GreenBase’s operating model is to develop built-to-suit industrial facilities and warehouses, and cold storage facilities on a long-term leasehold contract for customers and large third-party logistics, or 3PL, firms.

“The objective is to create a new platform and profit centre, and close the first few transactions with companies, and start building the facilities,” Niranjan Hiranandani, co-founder and managing director, Hiranandani Group, said in an interview. “Apart from these locations where we already own land and are building the infrastructure, we are also looking for other locations like Bhiwandi, Ahmedabad, Hoskote (in Bengaluru) and NCR (national capital region). Availability of land is not an issue but we are looking for strategic parcels which can generate bigger opportunities for the business.”

Besides Oragadam, Hiranandani has around 250 acres in Talegaon, near Pune, and another 77 acres in Nashik.

Industrial real estate is fast emerging as the go-to class for developers and investors in India, driven by the e-commerce and consumption sectors and aided by the government’s “Make in India” initiative and the roll out of the goods and services tax (GST).

Logistics leasing grew 31% on a yearly basis, crossing 13 million sq. ft, according to an August report titled India Industrial and Logistics Market View, H1 2019 by property advisory CBRE South Asia Pvt. Ltd. Mumbai, Chennai and Bengaluru comprised more than 60% of leasing activity. “…As technology permeates the sector, demand for quality space is increasing and corporates across segments are opting for large, modern warehouses. Advances in technology, particularly automation, will continue to enhance the specifications and operations of logistics assets, thereby pushing older, inferior-grade properties down the demand pyramid,” the CBRE report said.

Embassy Office Parks, which launched India’s first real estate investment trust or REIT earlier this year, has performed well while the response to infrastructure investment trusts (InvIT) has been a mixed bag so far.

“…We are targeting close to 12 million sq. ft over the next five to seven years. This portfolio is a good yield asset class, which most probably will be available for retail participation through a REIT/InvIT platform,” said N. Shridhar, group director and chief executive, infrastructure (industrial and logistics), at Hiranandani Group.

Over the years, the group has diversified from being just a real estate developer, into newer businesses. The company said in July that it will invest 1,000 crore to develop its first data centre building as part of an integrated township that the company is currently developing at Panvel in the outskirts of Mumbai.