Bangalore-based realty firm Vaishnavi group ventures into warehousing space

Bangalore-based realty firm Vaishnavi group has ventured into warehousing space and plans to double its commercial portfolio over the next 5 years as it looks to diversify its portfolio.

The first warehousing project will come up in the outskirts of Bangalore spread around 700,000 sft. “The legal due diligence is completed and we expect to complete the acquisition by the end of March. There is huge potential for warehousing in the country as the ecommerce is just a fraction as compared to developed countries and has huge potential,”said CN Govindaraju, managing director, Vaishnavi Group.

Vaishnavi Group willbuild tap warehousing space spread over 700,000 sft to one million sft in the outskirt of Bangalore by2022 with plans to scale further. “We plan to owe the land and all the projects will be built to suit. We will own 50% stake while the remaining will be sold at 8.5% cap rate,” he said.

The company is looking to set up warehouses across peripheral directions of Bangalore since there is sizeable demand here. “Land cost shouldn’t be too high either, should be capped at a maximum
1.6-1.8cr per acre for it to be viable with today’s rental scenario, ” said Govindaraju.

The demand for Grade A and Grade B warehousing is expected to grow at a CAGR of 25 percent from 107M sqft to 325M sqft between FY20 to FY25 and 20 percent from 167M sqft to 419M sqft between FY20 to FY25 respectively, Praxis Global Alliance, a leading management consulting and advisory firm. The spurt in demand has seen firms and funds like Puravankara, Embassy, Blackstone, Ascendas and Morgan Stanley to increase focus on this segment.

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Savio Monteiro, SVP, Transportation and Logistics, Praxis Global Alliance said, “Grade A warehouses are expected to grow at a CAGR of 25 percent over the next five years on the back of robust demand from Ecommerce, retail, FMCG and other sectors. Private Equity has evinced significant interest in this sector with huge investments during the pre-COVID period. We expect this trend to continue post COVID too, as the economy comes back to full steam.”

Separately, Vaishnavi is looking to double its commercial portfolio either through land acquisition or development management agreement. Vaishnavi, which currently has 10m sq ft of commercial and residential projects under various stages of development, plans to deploy about Rs 3500 crore over the next 5 years.“We will go for 50% to 60% strata sales of the commercial project to self generate liquidity apart from raising money from financial institutions,” said Govindaraju.

Vaishnavi Group currently has 8 mn sft of commercial and residential projects under construction and planning stage and has completed 10 mn sft of project so far.



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