Singapore-based Ascendas-Singbridge Group on Thursday said it has formed a joint venture with real estate firm Firstspace Realty to enter India’s industrial logistics and warehousing market. The two partners will jointly invest up to $600 million over the next 5-6 years.
During this period, the company aims to develop close to 15 million sq. ft of space.
The Ascendas-Firstspace platform will invest in projects aimed at the development of logistics and factory spaces in Mumbai, the National Capital Region (NCR), Pune, Chennai, Bengaluru and Ahmedabad.
FirstSpace founder Aloke Bhuniya will lead the new vertical. Started in 2015, the Mumbai-based realty firm— which builds and manages industrial logistics and warehousing assets—has so far developed a total of around 50,000 sq. ft of logistics and warehousing space in Bengaluru and Chennai.
“We have a created industrial real estate platform between Ascendas Singbridge and Firstspace Realty for developing and managing industrial warehousing and logistics parks across the country,” Bhuniya, who is chief executive officer (CEO) of Ascendas-Firstspace, said in an interview. He said that through the platform, the company is looking at building greenfield projects, as well as acquiring existing logistics and warehousing assets across the country. Around $500-600 million has been allocated to invest in the new business.
“Some part of the fund will be raised through external debt, and some will come from the Ascendas Group,” he said.
In April, the Ascendas-Singbridge Group bought six warehouses with a total space of around 832,000 sq. ft from Mumbai-based logistics company Arshiya, for Rs534 crore.
The acquisition was funded by Ascendas Property Fund Trustee, which manages the Ascendas India Trust. The new platform created will also manage these assets, he said.
Ascendas-Singbridge currently owns and manages over 30 million sq. ft of industrial space across Asia-Pacific. In India, the company manages around 10 million sq. ft of assets across Bengaluru, Chennai, Hyderabad, Pune and Gurugram, across seven IT parks. Some of its properties include India International Tech Park in Bengaluru, CyberVale in Chennai; CyberPearl in Hyderabad; and International Tech Park in Pune.
“We have been in India for over two decades, developing iconic business and IT Parks… Entering the industrial and logistics sector is a natural progression, and we expect to meet the growing demand for quality manufacturing and logistics space,” Miguel Ko, group CEO Ascendas-Singbridge said in a statement released on Thursday.
Ascendas-Singbridge currently owns and manages over 30 million sq. ft of industrial space across Asia Pacific.
A report by property advisory firm Colliers International said the warehousing and logistics sector is getting a boost due to government’s Make in India campaign, with the National Manufacturing Policy allowing 100% foreign direct investment in e-tailing marketplace, along with the impending rollout of the Goods and Services Tax.
Recently, Canada Pension Plan Investment Board’s acquired a majority stake in IndoSpace, for $500 million, the largest industrial and logistics deal in India so far.
“The organized warehousing sector is poised for an interesting time ahead in the short-to-medium term, as the envisaged spurt in demand for organized top quality warehousing is expected to exceed available quality supply in major cities across India,” said Shyam Arumugam, associate director (office services) Colliers International India in the report.