Bengaluru: Assetz Property Group is diversifying into logistics and warehousing, aiming to raise around $100 million from institutional investors to acquire land as it seeks to tap into the e-commerce boom and meet its own warehousing needs.

Over the next five years, Assetz plans to invest and buy land parcels in Karnataka, Tamil Nadu and Maharashtra for the new business. The company will kick off its first warehousing facility on a 60-acre piece of land in Hoskote, near Bengaluru.

A Singapore-headquartered firm, Assetz develops luxury housing projects and commercial office projects in southern India. Recently, the realty firm also ventured into the 25-50 lakh mid-income housing segment, raising around $116 million from Equis Funds Group Pte Ltd.

“This is the perfect time for us to get into the logistics business because there is not much competition, with not many organized players yet a lot of demand," said Ben Salmon, co-founder and chief executive, Assetz. Salmon said that over the last few years, Assetz has gained enough real estate experience, having acquired nearly 400 acres and is well-equipped to manage the new business vertical now.

Assetz has also tied up with Imergy Power Systems, a company that provides energy storage solutions, as its partner for its off-grid warehouse renewable energy system initiative, that will be used at its industrial warehouses. The initiative will help minimise energy outages at its warehouses, lower its energy procurement costs and reduce its carbon footprint, the company said.

On the new mid-income housing front, Assetz’s other new business, it plans to launch its first project, a 19-acre site in Bengaluru, by the year end. Four other land parcels near the city have been earmarked for projects.

“These will be larger projects, in a township format. The capital we raised will be used for infrastructure development in these projects," he said.

The boom in e-commerce has highlighted the need for new warehouses and expansion of storage capacity. E-commerce firms such as Flipkart and Amazon are scrambling to add warehouses in new cities as they seek to meet demand from the next wave of online shoppers, particularly in smaller cities and towns. For instance, in just two years, Amazon has opened 11 warehouses in the country.

Before the Lehman crisis and the economic slowdown that followed, a number of real estate developers had planned to enter non-real estate businesses such as warehousing and education. However, many of them shelved those plans because of a liquidity crunch, and focused on their core business.

“Logistics is a highly unorganized sector, and so if a company is able to do a professional, organized manner, it is likely to find traction amongst occupiers and investors. A company planning to venture into the business now, would have an early mover advantage as well, and should be willing to take the risk if he aspires for good returns from the business," said Ashutosh Limaye, national director, research, JLL India.

Limaye says that unlike the last round of participants from real estate, developers this time around should not try to go beyond their known geographies and instead of managing the operations themselves, should outsource them to professional operators.

Mihir Dalal contributed to the story.

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