The Hindu Business Line : Warming up to warehouses

Realterm Logistics, Future Capital group company, is willing to partner with developers to set up warehouse projects, according to Ms Vineeta Wadhwani, Vice-President, Realterm Logistics.

Addressing a seminar on private equity investments in the real-estate sector, she said the company hopes to expand warehouse infrastructure across major manufacturing centres and consumption centres — Delhi, Mumbai, Pune, Chennai, Bangalore, Hyd erabad, Kolkata and Ahmedabad. The company plans to set up more than 1 million sq.ft of warehouse and logistics space in these centres. In Chennai, the company is looking at opportunities in Sriperumbudur, the emerging manufacturing hub, and the traditional warehousing centres in Red Hills and Madhavaram, which are well linked to the ports.

Aggregating land — ideally over 100 acres is needed for a project — is not Realterm Logistics’ expertise. So it is willing to partner with developers with land for the project. With retail, manufacturing and consumption growing, the demand for quality warehousing is being strongly felt.

Investment in a warehouse would fetch returns in the vicinity of about 20 per cent, she said, assuming land costing Rs 200 per sq.ft, about Rs 50 lakh an acre, cost of construction at Rs 500 per sq.ft with a ground coverage (FSI) of about 0.5-06 and rental income of about Rs 12-15 per sq.ft — rent would increase with higher quality specifications, Ms Vineeta said.

The company plans to go for a REIT listing on the Singapore stock exchange, which would make it the first industrial REIT out of India.

Landmark deals

The Tamil Nadu Industrial Development Corporation (Tidco) is set to sign agreements for two landmark IT SEZ projects next week with DLF and Tata Realty.

Popularly dubbed the Tidel Park II and III, both these projects, to come up in the IT corridor, were bid out through international competitive bidding last year. Both were landmark deals in value and size of the projects.

One of the largest deals of its kind in Chennai, the Rs 3,500 crore IT, ITES SEZ and convention centre bagged by Tata Realty will soon get off the ground following the deal being formally signed next week.

Last December, Tata Realty was identified as the joint venture partner in the bids called by Tidco to set up a 2.1-million sq.ft IT SEZ, and a convention centre and commercial space adjacent to the Tidel Software Park promoted by Tidco.

The convention centre would have capacity to seat 1,500 delegates. Linked to this facility is also a provision to construct over 100 serviced apartments and other support infrastructure, including multilevel parking. Tidco is to take a 26 per cent stake in the equity or bring in Rs 50 crore, whichever is less. This deal set a landmark price by doubling the value of space in Taramani compared to the bid called three months earlier for an IT SEZ, just down the IT corridor next to the American International School — the IT SEZ by the Delhi-based developer DLF, bid out last September by Tidco. At Rs 26.07 crore an acre, it is a Rs 660-crore deal, which envisages setting up 2.6 million sq.ft of IT space.

More action in Chennai

A botanical garden has been planned on the grounds.

The Tamil Nadu Government formally announced in the Assembly a clutch of projects involving significant real-estate development within the heart of Chennai.

One in particular, the Government taking back the 17 acres allotted to Agri Horticulture Society, in which the iconic Drive-in Woodlands was operating, evoked the interest of most Chennai citizens. The Chief Minister, Mr M. Karunanidhi, announced in the Assembly that the Government has acquired the land valued at over Rs 1,000 crore after nearly three decades of court battle. The State Government would develop a world-class botanical garden along the lines of the Lalbagh in Bangalore.

Another was the plan to develop the 13-acre land where the Central Prison — which has now been shifted to the city’s outskirts — once stood. Over one acre would be allotted to the Chennai Metro Rail facility and 1.5 acres for an electrical substation for the Metro Rail, he said. The balance 10.73 acres would allotted to expand the facilities of the General Hospital adjacent to this area. The 165-year-old hospital has over 2,722 beds, handles 12,000 outpatients daily, apart from training over 2,000 medical students. The facility is overstretched to capacity and will be expanded. Similarly, the facilities at the Stanley Medical College and Hospital would be expanded in North Chennai. Ten acres belonging to the Public Works Department would be handed over to the hospital, he said.

R. BALAJI