Amazon and Flipkart have leased warehousing space of 500,000-600,000 square feet each in Mumbai’s Bhiwandi micro market, one of the largest warehousing hubs in Asia.
Mumbai: Top e-commerce players Amazon India and Walmart Inc.-owned Flipkart have leased around 1.1 million square feet of warehousing space in Mumbai Metropolitan Region from Xander Group’s industrial real estate platform for a long-term tenure of 20 years, said three persons with direct knowledge of the development.
The Singapore-based alternate investment firm Xander Investment Management (XIM) had contracted these warehousing facilities in December 2019 for more than Rs 300 crore in Bhiwandi micro market, one of the largest warehousing hubs in Asia.
“Flipkart and Amazon have separately entered into a long-term lease with Xander. The tenure of this is for a period beyond 20 years. They have individually leased an area of around 5-6 lakh sq ft each,” said one of the persons mentioned above.
The latest agreement with Amazon and Flipkart is for space that is part of Xander’s dedicated platform for industrial and logistics assets, for which a pool of $250 million was announced in late 2019. Sponsored by the Xander Group, the platform has raised capital from leading European institutional investors that have previously been limited partners in XIM sponsored opportunity funds.
“Walmart-owned Flipkart has occupied around 80% of its area and the balance is expected to be occupied in the next 4 months. Similarly, Amazon has occupied around 60% of its area and the balance is likely to be operationalised in April this year,” added another person, who did not wish to be identified.
Flipkart is expected to utilise this Mumbai warehousing facility as a hub for non-large stock keeping units (SKUs) with more than 4 lakh daily operational shipments—including around 2 lakh inward and 2 lakh outward moves. The hub will cater to western India states such as Madhya Pradesh, Maharashtra and Gujarat and employ more than 2,500 people.
“At Amazon, we are committed to invest in our fulfilment network to better serve our customers across the country. We have built a strong presence in the state of Maharashtra with 11 fulfilment centres and more than 5 million cubic feet of storage space with thousands of work opportunities for people. We continue to expand our fulfilment network and further invest in the state,” Amazon spokesperson said in response to ET’s emailed queries.
For Amazon, which has invested heavily in operational equipment, the facility has been set up as a fulfilment centre, which will provide the entire suite of services to its vendors including storage, packaging, shipment, marketplace platform, etc.
A separate email sent to Flipkart and Xander Group for comments remained unanswered as of publishing this story.
Xander, an alternate investment firm focused on emerging markets, with an emphasis on India and Southeast Asia currently has an industrial portfolio of 4.3 million sq ft focused in Tier 1 Indian cities.
Real estate consultants familiar with the transaction said that Xander is actively pursuing opportunities to expand its industrial platform further in India.
According to industry estimates, almost one-fourth of the total warehousing space in India was leased to e-commerce firms such as Flipkart and Amazon during 2019-20. This is further expected to accelerate, due to larger behavioural change of towards online retail following the outbreak of Covid-19 pandemic.
The industrial and logistics segment has become a key growth driver in real estate. The expansion of the online retail sector has resulted in greater demand for warehousing, thereby resulting in higher investments in infrastructure and supply chain modernisation.
Recently, Flipkart acquired 140 acres of land in Manesar, Haryana, to set up its largest fulfilment centre in Asia. The transaction was completed after easing of lockdown.
According to a recent report by Knight Frank, committed land for warehouses across the country is estimated at 21,163 acres, with potential of adding 63% more supply to the existing 307 million sq ft of warehousing stock.
The logistics and warehousing sector is currently going through a transformational phase in India as a result of major federal government reforms, proliferation of organised retail and changing consumption patterns. The growth impact on the sector—currently valued at $160 billion or 6% of India’s GDP—is expected to be greater than 10% annually.