Mirae Fund Buys Warehouse From Prakhhyat Group to Enter India Logistics Market

The Indian arm of Mirae Asset Global Investments has acquired a Mumbai area warehouse from local builder Prakhhyat Group for INR 1.3 billion ($16 million), as the Korean asset manager looks for returns in the subcontinent’s real estate sector, according to a press release on Thursday.

Mirae Asset Investment Group’s purchase in Bhiwandi, in western Maharashtra state, gives it 300,000 square feet (27,870 square metres) of leasable space within Prakhhyat Group’s K Square Integrated Industrial Park, which hosts a growing industrial cluster northeast of Mumbai.

The deal marks the first ever acquisition on behalf of the Mirae Asset Credit Opportunities Fund – an alternative investment fund dedicated to the Indian property market – with the Korean firm saying that it is on the lookout for future purchases of “top-grade commercial leased” assets.

“We continue to be bullish on the Indian economy and the real estate sector in India,” said Jun Young Hong, a director at Mirae Asset Investment Managers (India). He added that, “We are also exploring opportunities at office acquisition deals including IT parks, corporate offices besides logistics and industrial space.”

Rental Income Secured For 10 Years

Mirae’s new prize occupies a 9-acre (3.6-hectare) site with German shipping services provider Rhenus Logistics having agreed to lease the entirety of the premises on a ten-year deal.

The facility became operational in September last year and yields INR 26 per square foot per month in rent, or about INR 7.8 million monthly for the entire building, Anarock Capital Advisors chief executive officer Shobhit Agarwal, who advised on the deal, told Mingtiandi on Friday.

The asset is one of 25 prefabricated warehouses and more than 40 other industrial buildings that Prakhhyat Group has developed in its 160-acre, K Square industrial park, with the developer foreseeing more such investments by international players.

“This warehousing space will deliver a massive competitive advantage,” said Prakhhyat Group director Sandeep Bagla. “Global investment groups will increasingly identify and secure such superior assets to ramp up their presence in India.”

While Mirae has been offering financial services in the country since 2006, it only in 2018 obtained approval from the Securities and Exchange Board of India to launch Mirae Asset Credit Opportunities Fund as its first local real estate vehicle in the country.

The details of the fund, including its capitalisation, have not yet been made public, however, local news reports in 2018 showed the Korean investor initially planned to invest around $500 million to acquire residential and commercial properties across the country via the strategy.

High Growth Sector

India has been enjoying a post-pandemic warehouse demand thanks to demand from third-party logistics providers, e-commerce firms and the electronics sector, as well as from its burgeoning manufacturing and retail industries, according to Anarock’s Agarwal, making the logistics sector an attractive target for foreign companies.

Agarwal said rising demand is likely to drive 15 to 20 percent growth in India’s logistics real estate market each year over the next three to four years, with Bhiwandi’s proximity to Mumbai making it a top hub.

“Bhiwandi commands an approximately 16 percent share among the top 10 micro-markets, now dominating the Grade A warehousing space,” he said. “India’s warehousing and logistics sector is a compelling buy for global institutional investors as there has been a massive growth in the sector,” he added.

Late last year, Singapore sovereign wealth fund GIC teamed with Asia Pacific logistics giant ESR to establish a $600 million joint venture focused on acquiring income-producing core industrial and logistics assets across first and second tier cities in India.

That announcement came six months after North American investors Bain Capital and Ivanhoe Cambridge, alongside local development giant Lodha, committed to invest $1 billion to form a digital infrastructure platform starting with an industrial park in Mumbai.