Embassy Group eyes warehouse project deal with Cornerstone
BENGALURU: Southern developer Embassy Group is close to signing a deal with Cornerstone, one of the largest land owners, to lease 150 acres for building a 3.5 million sqft warehouse project at Hoskote.
Billionaire Jitu Virwani led Embassy, which moved into the warehousing sector by forming a JV with private equity Warburg Pincus last year, will have 70% economic interest in the project with Cornerstone owning the rest, according to sources familiar with the matter. The transaction is done “in principal,” they said adding the deal will be signed in a month once the commercial aspects of it are fine-tuned.
Cornerstone declined to comment. An Embassy spokesperson said the company was in talks for land in various parts of the country for warehousing but nothing specific has been closed.
The warehousing project is expected to attract major e-commerce players as they rapidly expand in the country and a spurt in manufacturing on account of the Make in India campaign. A source said Flipkart already held talks with the Embassy to occupy about 1-2 million square feet space in the warehouse over the next four years. Flipkart did not respond to requests for comment.
E-commerce today accounts for about 25% of all warehousing absorption in India. The industry may invest an additional $2 billion to $3 billion in warehousing over next 2-3 years. Flipkart has 17 warehouses across India covering 1.5 million sqft, while Amazon has 21 with almost 2 million sqft space.
Warehousing has always been an unorganized and fragmented sector in India but now demand for high quality – Grade A and Grade B in industry parlance – warehouses has risen.
Property consultancy CBRE says the market for modern industrial and warehousing spaces is rapidly expanding and is estimated to touch about 125 million sqft in the next five years.