How is the market for Industrial parks shaping up in India?
Industrial and logistics parks have seen a paradigm shift in the past decade driven by digitisation and automation, entry of institutional developers and an influx of capital from institutional investors. Favourable policies are increasing FDI investments and interest from international companies to set up operations in India. Integration of international standards in design and development in line with ESG practices is becoming the norm, hence a shift in Grade B to Grade A spaces is taking place. Industrial driven markets like Pune and Chennai have over 71% Grade A assets, new assets in tier 1 markets are mostly driven by institutional developers who only develop Grade A projects.
Even though the government is taking various initiatives for the growth of Industrial parks, the pace of development of Industrial parks is slow? What are the challenges facing Industrial parks developers?
The major challenge is land acquisition, clear land titles with multi modal connectivity are rare. Debt is scarce in this market, making it a deterrent for local developers to continue with development, especially during the pandemic, hence tenants are increasingly choosing institutional players to get assured delivery of their boxes within their timeline. There is a pressing need for optimisation in-city distribution with the development of Grade A multi-storied facilities within city horizons, however, there is a mismatch in rental expectations in the market. Industrial and warehousing real estate is the only real estate segment which has shown resilience during the pandemic; however, it is a low margin business, the prices for raw materials and labour has significantly increased with rents increasing marginally, hence the pace of expansion is a bit slow.
What are the tweaks required in government policies and regulations to propel the sector?
Government should enable easier building approvals to accelerate growth, further invest in infrastructure for better multi-modal connectivity, and subsidise utilities like power, water for tenants and developers. A public-private partnership would go a long way in attracting FDI in the country.
We are coming across terminologies such as eco and smart-Industrial Parks? Can you brief us about these and are you in the process of developing eco and smart-Industrial Parks?
ESR parks are smart and sustainable, we are the pioneers in introducing digital park management through the ESR India app. The app enables safer and contactless access to visitors, 24x7 live feed to view common areas and building periphery, digital service requests for repair and maintenance of common amenities and wayfinding within the park for smoother traffic movement.
What are the international Best Practices you would like to see its implementation in India?
All our parks are designed and constructed based on our international guidelines. Integrating sustainable features and safe construction practices are key to our business, and we are already implementing them in India. ESR group has a strong commitment to ESG practices, and this is driving our next stage of growth.
Can you please share with us a few of the unique features of the Industrial Parks that you have commissioned?
Our parks are designed to be smart, sustainable, and human-centric. We invest in designs that are built for the future to ensure our buildings are relevant for tenants as well as generate yield for our investors in the long term. We integrated a range of human-centric features such as ample open areas and green zones, 12 m roads for smoother traffic movement, 4% skylights for a better working environment and reduced energy consumption, smart security through contactless visitor management and AI-enabled cameras for anomaly detection. Our parks are fully compliant in terms of safety and regulations.
With the focus increasingly becoming environment centric with ‘Sustainability’ as the buzzword, how are you assimilating and accommodating Sustainability in your projects?
Most of our parks are IGBC (Indian Green Building Council) pre-certified Gold and above to focus on green design and community development. Our parks are energy, water, waste and material-efficient to benefit indoor environment quality and occupational health. The roof of our buildings is equipped to take solar panel load and we encourage clients to install them. We only use low flow water fixtures and have a zero-discharge policy to reutilise water after treatment.
What are your CAPEX plans for the next three years and the Industrial Parks in the pipeline?
We have plans to invest 1 billion USD in the Indian market. We are keeping a close eye on the potential and future opportunities, and we are open to committing more. We are already present in 9 cities and 15 locations; we are looking at expanding into key tier 2 markets and further strengthening our position in tier 1 markets.
