With the opportunity in warehousing real estate expanding manifold because of the Covid-19 pandemic followed by an ecommerce surge, Bengaluru-based real estate company Puravankara is planning to enter the segment.

It would be investing Rs 1,500 crore in the business in the next five years through various joint ventures and strategic partnerships, said a top company official. It has currently tied up with Morgan Stanley as a JV partner for the warehousing business and will be concentrating on Bengaluru followed by cities such as Mumbai, Hyderabad, Chennai and Pune.

“The warehousing opportunity has gone beyond lifestyle products and even food and groceries. Because e-commerce is making such big promises, quick availability of products has become critical. So every company, whether it is ecommerce or non-ecommerce, will have to have a hybrid model for survival and we want to be a part of this opportunity,” said Vishal Mirchandani, CEO, Commercial & Retail, Puravankara.

According to a Knight Frank report on India warehousing, the pan India footprint of ecommerce warehousing is 50 msft, with over half of it occupied by a single player, Amazon. Flipkart comes next with around 15 per cent share and both of them have a total occupancy of 70-75 per cent. The sector’s appetite for warehouses has grown 55 per cent CAGR in FY 2017-2020 period. As the market grows, more and more players are likely to enter or expand in the segment.

With Bengaluru being a hub for ecommerce, Embassy Group is developing a warehousing facility at Hosur. Located in Tamil Nadu alongside the industrial corridor between Bengaluru and Chennai barely 60 km from the city centre of Bengaluru, it is spread across 1.3 million square feet of land at a cost of Rs 280 crore.

“We believe that e commerce will drive the need for warehousing and we see an opportunity in this space,” said Aditya Virwani, COO, Embassy Group.

According to reports, the company is exploring various options to monetise its warehousing and industrial parks business at an enterprise value of Rs 1,700-2,000 crore.

In July, Amazon said it plans to set up 10 new fulfilment centres, increasing its warehousing capacity by 20 per cent. After this expansion, Amazon will have about 60 fulfilment centres spread across 15 states.

While ecommerce companies are mostly driving the demand for large warehouses, industry experts say developers are now receiving considerable enquiries from e-commerce companies for 12 month space in Bengaluru and Pune, says Colliers India.

Further, with rising consumerism and smartphone penetration, e-commerce will continue to run in the long-run and warehousing will continue to benefit from this.

“Warehousing will not disappear and it’s an important driver of the consumption economy. So we want to be part of that opportunity,” said Mirchandani of Puravankara.