Realtors turn aborted SEZ sites into warehouses

May 14, 2009

A number of developers have started unlocking the value of their aborted or postponed special economic zones (SEZ) sites by developing warehouses, reports Financial Chronicle.

The demand-side impetus for modern warehousing from retail and other sectors has triggered a supply-side response in the initiation of the next wave of integrated logistics and warehouse project, said Jones Lang LaSalle Meghraj (JLLM).

According to JLLM, it makes sense for developers to start off with warehouses, realise the value and wait for an appropriate time (when the liquidity crunch is over and things get better) to move to bigger things.

A some cases in point are: Reliance Logistics Park (Mumbai SEZ), Reliance Logistics Park (Reliance Haryana SEZ), Unitech-Salem-Jurong, KMDA (Kona, Howrah, West Bengal), Global Logistix Navi Mumbai Investment Company (Navi Mumbai SEZ), Reliance Logistics Park (Navi Mumbai SEZ), Adani Logistics Park (Patli, Pataudi Road, Haryana), Reliance Logistics Park (Rewas Port Based SEZ), and MADC Sical Logistics (MIHAN Road Terminal, Nagpur).

“Recent plans by United Credit Belani Group, RPG-owned CESC and Phoneix Group of Forum Mall fame are all cases in point,” quoted Mayank Saksena, associate director, JLLM in the report.

Abdul Wahid, chief executive officer, Apeejay Infralogistics, said, “Even with global meltdown, Indian GDP (gross domestic product) will still have a steady growth over 6 per cent due to its domestic consumption. This is a direct growth-enabler for the logistics industry, which is expected to grow 15 per cent to 20 per cent year-over-year.”

The Indian logistics business is undergoing a sea-change and moving out from the disorganised and fragmented business models to highly integrated, consolidated and organised one, said Wahid.

“As per the declared investment plans, nearly 110 logistics parks spread over 3,500 acres, involving an estimated cost of $1 billion, are expected to be operational and an estimated 45 million sq ft of warehousing space, with an investment of over $500 million, is expected to be developed by various logistics companies by 2012,” Wahid added.

Meanwhile, quoting Jones Lang LaSalle Meghraj’s latest study report, On Point: Retail Distribution Warehousing, Saksena said, “Another development that has helped in the promoting the cause of integrated logistics facilities has been the policy allowing the establishment of free- trade warehousing zones (FTWZs) by the government. As a special category of special economic zones with a focus on trading and warehousing, FTWZs are admissible to all the tax benefits extended to SEZs. They provide duty-free warehousing to exporters.”