AA Holdings, Avinya Industrial & Logistic Park partner to develop and invest in warehousing
The two entities aim to develop 20 million square feet of land parcels across the country in the next 3 years
AA Holdings, an industrial and warehousing development and funding firm helmed by real estate veteran Abhijit Verma, today announced a strategic partnership with a logistic development company, Avinya Industrial and Logistic Park to empower all small landlords and aggregators across the country to develop quality warehousing infrastructure.
Through this partnership, the two entities aim to develop 20 million square feet of land parcels across the country in the next 3 years to contribute meaningfully towards the creation of a warehousing ecosystem at the grass root level.
The joint venture will play a pivotal role in further expanding the burgeoning warehousing infrastructure development in the country which is currently limited to the top 8-10 cities only. This will enable local landlords and aggregators to acquire the necessary skill sets and knowledge to attract the right clients and make the right use of their real estate assets as India looks forward to becoming a $5 trillion economy.
Commenting on the launch of his new venture, Abhijit Verma, Managing Director, AA Holdings said, "India is the fastest growing warehousing market in the world propelled by the rapid growth of e-commerce, the introduction of the Goods and Services Tax and the improved in road infrastructure. These factors have unlocked immense potential to develop land parcels into prime warehousing properties and bring prosperity to the land owners by imparting the right knowledge in the best use of the asset and inculcating the necessary skill sets. Through this new venture, we aim to be a catalyst and leverage their grassroots knowledge to help them emerge as developers by imparting the right business acumen, helping them connect with clients and guiding them in the best use of their assets. With Avina, we found synergies in our vision of transforming the warehousing market in India by empowering small landowners and making available quality assets to support the growth of businesses in India".
India has the seventh largest landmass in the world which spells immense opportunities for industrial and warehousing development in the country. However, India's per capita warehousing stock stands at just 0.02 square metres as compared to that of the United States of America (USA), China and the United Kingdom which have 4.4 square metres, 0.8 square metres and 1.09 square metres respectively, according to property consultant Knight Frank.
He further added, "As the fastest growing economy in the world, India needs to rapidly build the supporting infrastructure in order to sustain the growth and this growth will be premised on the development of quality warehousing infrastructure across the country. With AA Holdings, we aim to combine our knowledge and expertise to deliver tailor-made solutions to landowners and aggregators to support both ends of the spectrum and help businesses across the country. Land and warehousing are complex matters which require a deep understanding of the geography, local laws and demand-supply scenario to gauge its value and this joint venture will do exactly the same to bring prosperity for all."
Since 2011, the demand for industrial and warehousing properties increased significantly with the entry of multinational corporations and over the years, it also led to the transformation of the sector through the development of Grade A Assets. Even in terms of transaction volumes, USA's industrial and warehousing market saw 20.4 million square metres transacted during 2020, seven times that of India in FY 2021.
This necessitates the need to empower small and micro landlords, and aggregators to bring to the market a wide selection of properties waiting to be leveraged and offers an opportunity for them to utilise this sector to start their entrepreneurial journey and reap rich dividends.
According to a report by property consultant Colliers, the gross absorption of industrial real estate in the top 5 cities of India during the first 6 months of 2022 stood at 10.8 million square feet with Delhi and NCR accounting for the highest activity at 28%. About 55 per cent of the gross absorption was led by third-party logistics players, followed by the engineering and automobile sectors with a share of 12% each.
However, the report also revealed that supply declined 24% over the last 6 months across 5 cities to about 11.8 million square feet in the first half of 2022, opening up a window of opportunity for local players and AA Space aims to be at the forefront of enabling small and micro real estate players in further expanding the organised share of the real estate industry.