Lodha Group, the country’s largest real estate firm by sales, is foraying into the warehousing space with a 150-acre facility in Palava to diversify revenue streams amid a tepid residential property market.

“Land for the industrial housing park has been identified and we are expecting approvals shortly. We are also in talks with three operators for a joint venture around the Grade A warehousing industrial park,” Shaishav Dharia, Regional CEO of the Lodha Group, told BusinessLine .

Palava’s proximity to both the Jawaharlal Nehru Port (JNPT) and the upcoming Navi Mumbai airport makes it an ideal warehousing location for corporates. “The proximity to critical aspects of logistics and the fact that the land is title free makes it attractive for companies. We are talking to MNCs and grade A players,” he added.

Palava is a 4,500-acre greenfield smart city in the Kalyan-Dombivli region being developed and managed by the Lodha Group. Dharia pointed out that the warehousing foray was guided by a two-fold strategy.

“One is to build an economy within Palava and create jobs. Secondly, there is a clear shortage of Grade A warehousing space in MMR (Mumbai Metropolitan Region) and we want to tap into that demand.”

Demand-supply gap

The domestic warehousing industry is dominated by small and unorganised players.

According to a Knight Frank report on warehousing in India, the demand for large warehousing spaces is likely to see a steady increase as occupiers now are moving out of smaller warehouses to consolidate their activities in larger facilities.

This demand-supply gap will allow big players like Lodha to command a premium. For example, in the Bhiwandi warehousing cluster, the rents for unorganised spaces are as low as ₹9 per sq ft whereas organised players are charging in the range of ₹14-17 per sq ft in the same region.

The company will focus on creating the warehousing infrastructure given its expertise in construction and development.

“The clients can focus on the leasing and operations,” said Dharia.

What has also given a boost to the company’s warehousing plans is the grant of infrastructure status to the logistics industry, including warehousing, last November.

This decision will enable companies in the sector to access funds at lower cost with longer tenure and enhanced limits.