Investing in India’s booming e-commerce infrastructure : A game-changing opportunity

NEW DELHI : India’s e-commerce market is on a rapid growth trajectory, with online sales forecasted to skyrocket from $60 billion to $300 billion by 2030. This exponential growth has spurred robust demand for Grade A warehouses across the country. India is in a structural sweet spot with respect to warehousing, with industrial and consumption led demand outstripping the supply addition in most key markets across the country. Multinational tenants (across industrial categories, E-commerce players and 3PL Logistics companies) are increasingly gravitating towards larger, higher-quality warehouses. While 7 in 10 online shoppers reside in Tier 2+ cities, only ~28% of the warehousing stock is in Tier II cities, which is driving demand for Grade A warehousing assets in cities like Jaipur, Lucknow, Kolkata, Nagpur and Ludhiana. Between 2017-2022, institutional players have invested close to ~$10 bn towards building Grade A warehousing assets.

Property Share – India’s first and largest commercial real estate investment platform, recently unveiled its latest real estate investment opportunity — a prime distribution centre leased to a leading e-commerce company, a subsidiary of the largest retailer in the world. This rare investment opportunity offers retail investors a chance to invest in a brand-new built-to-suit Grade A+ warehousing facility. This opportunity marks Property Share’s first foray into the Indian warehousing space, having already invested ~£20 mn across 3 warehousing assets in the UK.

Key Highlights of the investment opportunity are:

Impressive Rental Yield: 9.1% per annum

Reputable Tenant: Leased to  an Indian e-commerce giant

Long Lease Tenure: A secure 9-year lease with a 4.3-year tenant lock-in period

Location Advantage: Situated in Jaipur’s largest industrial market, conveniently located off NH48

Superior Build Quality: A meticulously crafted, A+ built-to-suit facility tailored to the tenant’s needs

Favourable Returns: Offering an attractive target IRR of 16.1% and a 1.70x multiple

Comprising three boxes totalling more than half a million sq. ft of warehousing area, this distribution centre serves as the largest distribution and fulfilment centre in the West for the e-commerce giant. Processing a staggering 2 lakh orders per day (5 lakhs during peak periods), the tenant has spared no expense in outfitting the facility with state-of-the-art infrastructure, including advanced racking systems, turnstiles, offices, training centres, cafeteria, and employee recreation zones.

Furthermore, the location of the asset, Ajmer Road stands out as Jaipur’s premier warehousing location with a roster of esteemed tenants like Amazon, Coca Cola, Hindustan Unilever, Delhivery, Havells, and ECom Express operating out of the area. Strategically positioned just 45 minutes from the Jaipur airport and in proximity to Mahindra World City, the warehouse enjoys seamless connectivity to key highways, enhancing its appeal to tenants and investors alike.

The investment opportunity is a direct play on the logistics and warehousing market which is one of the fastest growing segments within real estate on the back of rising e-commerce and online shopping post the pandemic.