Adani Ports will purchase 10 million square feet of warehousing assets annually until 2026 | Whuff News

Adani Ports and Special Economic Zone Ltd (APSEZ) is looking to buy as much as 10 million square feet (sq ft) of warehousing assets annually as India’s largest private port operator bets on the e-commerce boom to increase capacity 150 times to 60 million sq ft by 2026 from the current 8 lakh sq.ft.

Adani Logistics Ltd, an APSEZ unit, will use a combination of organic and inorganic opportunities to command a dominant position in the segment.

The Gautam Adani-led conglomerate plans to add 30 million square feet through warehouse greenfield development leveraging its existing land area of ​​1,850 acres across India’s top 20 cities, while about 30 million square feet (16 percent of the market capacity of Grade A) will be added through the acquisition of strategic assets in the top 20 markets, according to a presentation seen by
Business Line .

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About 60 percent of the 30 million square feet of internal development will come from existing land assets and the remainder will be built by acquiring additional land.

Of the 30 million square feet of inorganic growth, 10 million square feet will be added in 15 locations that are in or near tier 1 and 2 cities.

“We are venturing into Grade A suite warehousing, which is our next growth focus area. Our warehousing business is expected to grow 150 times in the next five years with better returns to stakeholders. With this portfolio growth object, we will chart a new course for the future of APSEZ,” said Karan Adani, CEO, APSEZ during an analyst call.

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“We see about 7 to 10 million square feet of acquisition every year,” Karan Adani said. The warehousing will complement APSEZ’s existing transport utility network, he added.

At the nascent stage in India

India’s warehousing stock currently hovers at 30.9 million square meters and the country’s per capita warehousing stock is 0.02 square meters, compared to 4.40 square meters in the US, 1.09 square meters in the UK and 0.80 square meters in China.

In terms of per capita warehousing stock, Indian warehousing is in its infancy. At a projected GDP growth of 7 percent, Grade A warehousing is expected to grow by approximately 17 percent by 2026.

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India’s Grade A warehousing stock has grown at a CAGR of 20 percent over the past five years to reach 164 million square feet, initially driven by manufacturing and now by e-commerce and 3PL companies. Over 90 percent of warehousing needs across the top 8 cities.

Grade A warehousing capacity is expected to reach 370 million square feet by 2026, growing at a CAGR of 17 percent.

Plug-and-play infrastructure

E-commerce penetration in India as a percentage of retail is expected to grow to 10.7 percent in FY24 from 6.5 percent in FY21. The share of e-commerce in the overall Grade A warehousing demand in India will increase to 31 percent in FY21 from 23 percent in FY20.

Institutional interest in the warehousing business is driving orderly market growth. This segment attracted an all-time high investment of $743 million (more than ₹5,500 crore) in the first quarter of FY22.

Adani Logistics will create infrastructure for light manufacturing and others that are built to suit assets for higher realisation. The plug and play infrastructure will allow investors to start their business immediately without much delay and according to their operational standards.

The firm will lease warehouses and build to fit infrastructure on long-term leases of 5-9 years, which is expected to earn a return on capital employed of over 18 percent and an EBITDA of over ₹2,000 crore.

Along with ports, airports and ground transportation terminals, there will be further improvements, the company said.

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