ANSHUL SINGHAL, CEO, EMBASSY INDUSTRIAL PARKS
In India, we are seeing a strong growth potential for the industrial and warehousing real estate sector with the increasing number of e-commerce and other industries. It has always been the requirement for these industries to seek reliable developers who can work with them nationally to meet their needs for quality warehousing infrastructure. Moreover, the rollout of GST will lead to more consolidation in the warehousing sector that will provide the ideal platform for the emergence of large scale nationwide players. An increase in consumption demand is expected, which will indeed boost economic growth of the fast-growing Indian economy.
Warehousing in India is rapidly evolving from traditional set-ups with inefficient facilities to sophisticated solutions and modern state-of-the-art facilities. So, we at Embassy Group, knew that it was the right time for us to take the entirely new concept of industrial parks forward. The lack of organization in the sector and a spike in demand for modern Grade A warehousing which we expect to see touch 125 million sq. ft. over the next few years are major drivers behind our entry into the segment. We are currently actively pursuing a number of strategic land acquisitions to position ourselves to become a truly integrated nation-wide player.
Embassy Industrial Parks will have an equity commitment of up to USD 250 million over and above 500 million we can draw debt of USD 750 million. The Embassy Industrial Parks is making three kinds of offerings from the new business i.e. build industrial parks on 50-200 acre land parcels near key cities; set up build-to-suit facilities or campus for international firms; and help companies’ expansion plans by building in return for a long-term, lease arrangement.
Embassy Industrial Parks is hoping to build 15 to 20 million sq. ft. of industrial and warehousing space over the next 5 years across India. Embassy Industrial Parks has developed a pan-India strategy and has built a dedicated team to execute its plans, making Embassy Industrial Parks one of the few players to have a focussed all-India presence in this attractive segment of real estate.
The industrial and warehousing spaces are targeted at industrial verticals such as 3PL, e-commerce, FMCG, automobile ancillaries and retail. Companies benefit in terms of long term costs and operational efficiency. We provide steel buildings that are quick to erect so the cycle time for clients to move in after making a decision is less than half of conventional concrete buildings. We also provide build-to-suit factory building and warehousing facilities to industrial and logistics clients on a lease rental basis. The development will further include best in class industrial infrastructure along with amenities. Embassy Industrial Parks are strategically located in the proximity of key commercial, industrial and freight corridors across India.
The value proposition that Embassy Industrial Parks offers to clients include:
As per recent reports, the annual demand for warehousing is 25 million sq. ft. and expected to touch 40 million sq. ft. in two years. The total warehousing space (excluding agro-based warehousing) is approximately 700 million sq. ft. which includes 29 million sq. ft. of modern space and 210 million sq. ft. of Grade B warehousing space.
But, the market for modern industrial and warehousing space is rapidly expanding, and is estimated to reach 125 million sq. ft. over the next five years. GST roll-out and the setting up of Delhi-Mumbai industrial corridor, western and eastern dedicated freight corridors, Chennai-Bangalore industrial corridor and the increasing demand from e-commerce players, distribution companies, courier firms, etc. are all contributing to the increase in demand.
Embassy Industrial Parks has set a target of 15-20 million sq. ft. of industrial and warehousing space in the next five years across Bangalore, Chennai, Mumbai, Delhi NCR, Hyderabad, Pune and Ahmedabad. The land parcel of each of these industrial parks will be 50 to 200 acres.
Yes, we strongly believe that the country is geared up to deal with this change. There are many supporting reasons behind this acceptance. Growing international trade and manufacturing activity in the country led many industries to gain tremendous traction over the last few years. Until a decade ago, warehousing in India lacked the modern facilities and there had been a huge gap between demand and supply. Indian warehousing sector lacked sufficient physical infrastructure and did not match up to the international warehousing standards.
The unorganized players in the industry are also facing challenges and bottlenecks at various stages of their operation lifecycle. Therefore, the transformation from traditional to the modern set-up is being accepted across sectors and industry. In a highly price sensitive market, acceptance of the premium required to operate out of modern Grade A spaces could be seen as a challenge initially. However, companies now realise the lifecycle benefits in terms of long term costs and operational efficiency.
Steel has a vital, if not essential role, in this big transformation. By using steel technology with the combined knowledge of high precision engineering, we can deliver a 500,000 sq. ft. warehouse in under 10 months which can ensure that the business model is viable due to early rental revenue due to faster occupancy. The conventional construction technologies “non-steel” make it hard to unlock returns on your capital investment due to time constraints, unpredictability and cost escalations which impair business models. Due to the presence of organized re-engineering companies in India, we can fix a lump-sum building price and guarantee back-to-back rentals to our customers.
The large scale nature of our parks and its construction means that we have set processes in place. All our parks are made from A grade pre-engineered manufacturers who source their steel from A grade top tier steel companies, who in turn follow a zero effluent discharge policy in their steel plants and are highly environmentally conscious. Furthermore, all our parks are IGBC silver compliant with natural rain water harvesting, smart energy management systems, use of solar panel technology and so on. At Embassy Industrial Parks, we are very environmentally conscious and believe in sustainability.
Embassy Industrial Parks will help international and MNC clients with specific mandates to search for land in pre-defined areas, acquire land on their behalf and develop a complete campus or ‘build-to-suit’ facility for them. For industries wishing to expand their operations while limiting their up-front capital expenditure, we offer a complete build-to-suit space to augment existing operations. This expansion is limited to building and fit-outs in return for a rental, which will be on a long term, flexible lease basis.
The Embassy Industrial Parks across all the 7 key cities will be fully master-planned to specifically cater to industrial and logistical traffic movement. We extend beyond building and delivering best-in-class industrial and warehousing solutions to management and maintenance of these developments.
In October 2015, we announced the formation of Embassy Industrial Parks a US $250 million joint venture between the Embassy Group and Warburg Pincus. Embassy Industrial Parks is hoping to build 15 to 20 million sq. ft. of industrial and warehousing space over the next 5 years across India.
We have already signed lands which are at various stages of acquisition in Chennai, Delhi, Pune and Bangalore, and we are actively working to acquire land in Mumbai, Gujarat, Hyderabad and Kolkata.