ESR is stepping up its presence in India with the purchase of a development site in the north of the country, as the logistics specialist looks to ride the rising demand for warehousing in the subcontinent.
The Warburg Pincus-backed company is planning to develop a 300,000 square metre (3.2 million square foot) logistics park on the site in Haryana state, which will make the facility one of the largest in northern India.
ESR acquired the land parcel, which is adjacent to the 223,000 square metre Keystone Knowledge Park science and technology hub, from Indian conglomerate Mayar Group through an undisclosed fund.
ESR declined to comment on the name of the fund acquiring the project or the purchase price following an enquiry from Mingtiandi, but the company has over the past two years announced joint ventures in India with developer Lodha Group, Allianz Real Estate and Mumbai-headquartered retail conglomerate Future Group.
Growing a $500M Logistics Platform
The new property, once it reaches completion, will bring ESR’s portfolio in the country to 14 properties, with the hybrid developer-fund manager now having grown its assets under management in India to approximately $500 million since establishing its first major joint venture in the country in November 2018.
“ESR India is committed to building institutional grade logistics infrastructure to facilitate the development and modernisation of the nation’s supply chain,” Abhijit Malkani and Jai Mirpuri, Country Heads of ESR India, said in a joint statement.
Located in the city of Sohna, 55 kilometres south of Indira Gandhi International Airport, the proposed high-spec park will support last-mile delivery for the business hubs of New Delhi, Gurugram and Faridabad, according to the company, which plans to being construction on the project in May.
“ESR Sohna will be well-positioned to cater to the needs of the expanding e-commerce industry with state-of-the-art infrastructure to aid advanced supply chain and logistics processes,” Malkani and Mirpuri stated.
Riding the E-commerce Wave
ESR is riding a wave of e-commerce-fuelled warehouse demand in India, which in 2018 saw JLL value its logistics sector at $160 billion, with the property consulting predicting at the time that the market segment would grow to $215 billion by 2022.
The logistics specialist, which now has global assets under management worth $20.2 billion, is planning to contribute to that industry expansion with a Sohna facility that meets the Indian Green Building Council’s Silver standard for sustainable buildings.
ESR has already established a reputation for its environmentally friendly design after becoming the first logistics developer in Asia Pacific to receive the International WELL Building Standard for its Bucheon Logistics Park in South Korea, according to a company announcement just last week.
Targeting Growth Through Partnerships
The acquisition of the development site continues ESR’s India momentum as the company strives to reach a goal established two years ago of establishing $1 billion in assets in the country.
Just four months ago, the company invested INR 3 billion ($42 million) in the development of a pair of logistics parks in Jhajjar and Nagpur through a joint venture with a subsidiary of Mumbai-headquartered retail conglomerate Future Group, ratcheting up its capacity to serve growing e-commerce demand in India’s northern and central regions.
That tie-up came less than three months after ESR had set up a joint venture with Mumbai-based developer Lodha Group to develop a $100 million industrial park in Thane, a city just northeast of Mumbai.
That 50:50 partnership is developing 17 buildings on 3.9 million square feet of land to deliver a leaseable area of 1.8 million square feet.
In 2018, ESR set up its first major joint venture in India when it joined forces with Allianz Real Estate, the property investment arm of the European insurer to establish a dedicated vehicle for acquiring logistics facilities in the country, with the two companies committing an initial $225 million in capital at the time.