Welspun One Logistics Parks (WOLP) which last year raised India’s first alternative investment fund (AIF) that focuses on warehousing development and within a short period of time, has successfully committed 100% of the funds corpus across six investments spanning five cities- MMR, NCR, Bangalore, Chennai and Lucknow, aggregating to a portfolio of ~6.6 MM square feet of gross leasable area.
Of this, 1MM square feet of area has already been delivered and an additional 2MM square feet is expected to be delivered in Q2-CY 2023; this implies 50% of funds portfolio will be delivered, operational and rent generating all within a little over 2 years from its first close. Notably, ~60% of the portfolio is already pre-leased to a blue-chip roster of tenants which includes Delhivery, Flipkart, FM Logistics, Tata Croma, Ecom Express amongst others with significant visibility on leasing of the balance portfolio.
While the sector had attracted close to USD 6 billion in FDI over the past 3-4 years, there was no avenue for domestic investors to participate in this opportunity in a hassle free, transparent and institutional manner. Welspun One provided this opportunity through financialization of real estate by launching India’s first AIF focussed on warehousing development. WOLP Fund 1 received a very favourable response and was able to raise INR 500 crore of capital commitments, from a set of high net worth investors including marquee individuals and family offices.
“The advent of REITs in India opened the doors for financialization of real estate, whereby investors can avoid the hassles of owning physical real estate viz. illiquidity, high ticket size, maintenance etc. and instead own units in their demat account which provides them with a stable rental income plus potential for capital appreciation. WOLP Fund 1 took this concept a step further, wherein investors can participate right from the land stage through the leasing and development journey to earn attractive returns with the same level of convenience offered by a REIT, via ownership of units in our AIFs.”Anshul Singhal, Managing Director, Welspun One Logistics Parks
Since its first investment in April 2021, in its flagship 110 acre, 2.5 million square feet park in Bhiwandi (Mumbai Metropolitan Region), WOLP has added an additional ~171 acres across five more investments in a combination of established Tier 1 warehousing markets like Delhi/NCR, Bangalore and Chennai and growth/Tier 2 markets such as Lucknow-Kanpur. The Company has witnessed strong leasing traction across all its projects, which is a testament to its ability to identify and acquire sites in high-demand locations and its collaborative approach with customers, by partnering with them to design and develop unique real estate solutions which seamlessly meet their operational requirements.
In addition to its current projects, the Company has an active pipeline of ~600 acres of land, aggregating to ~13 MM sq. ft. of development potential. WOLP has also signed MoUs with multiple state Governments, including Haryana, Karnataka and Tamil Nadu, to develop Grade A warehousing facilities in those states thereby giving WOLP a single window access to the government assistance to facilitate timely approvals as per the prevailing policies of the respective states. Over the next 5 years, the Company expects to develop a portfolio of 20-25MM sq. ft. across “first mile” and “last mile/city centre” facilities in leading Tier 1 and Tier 2/3 cities pan-India.
India’s warehousing industry continues to show strong growth with an expected CAGR of ~18% over the next 3-4 years. While demand from the E-commerce and 3PL sectors along with regulatory tailwinds due to the implementation of the Goods and Services Tax (GST) had led the first wave of growth, a continued regulatory push via the National Logistics Policy along with a growth in demand from manufacturing sector with the success of programs such as Make in India, Atma Nirbhar Bharat, PLI, etc. further enhanced by a China+1 strategy being adopted by large multinational corporations, is fueling the next wave of growth. Alongside this, the next wave of E-commerce growth also appears to be well underway with a meaningful growth starting to come from Tier II and Tier III cities, in addition to a growing Tier I market.