Interestingly, this investment capital came from foreign investors such as the Abu Dhabi Investment Authority, Canada Pension Plan Investment Board (CPPIB) and Ivanhoe Cambridge, to name a few. We expect the inflow of investors, both foreign and domestic, to continue due to multiple tailwinds, which are discussed later in the report. Colliers International projects the investment inflow is likely to touch INR495 billion (USD6.9 billion) by 2021 as existing participants expand their portfolio and new players enter the market. For reference, Blackstone Group is mulling an INR11 billion (USD150 million) investment to acquire and build logistics assets in India. Once finalized, this would be Blackstone’s maiden investment in the burgeoning industrial and warehousing sector in India.
The attractiveness of the logistics sector has improved further with the government according infrastructurestatus to the sector in November 2017. This has been implemented as part of government efforts to bolster infrastructure development in the country. This policy change has enabled warehousing companies to raise longer tenure debt funding from banks at competitive rates and cheaper foreign currency funding through external commercial borrowing. We foresee that the availability of lower cost debt at a time when there is selective lending in the economy, will improve the return profile from investments in the sector. We believe that besides the strong consumption in the economy over the last five years, investors are buoyed by this reform. Colliers International expects that the available capital pool will further increase as other large foreign and domestic players enter the sector driven by favourable demand drivers.
- Colliers Research