Canada Pension Plan Investment Board manages around $456.7 billion in pension assets. These assets managed are on behalf of 20 million contributors and beneficiaries of the plan, media reports said. 

The consortium along with SKR will develop, own and operate a rental multifamily project in Brazil. Hilary Spann, Managing Director, Head of Real Estate Americas, CPP Investments, told the media, “CPP Investments continues to see increasing demand in the rental multifamily sector in Brazil, which will particularly benefit developers of modern, high-quality residential space. We are pleased to venture with SKR on this project and we look forward to expanding our purpose-built multifamily portfolio in Brazil.”

It is reported that the project will be unique to the Brazilian skyline. The project is expected to be delivered in 2023.  The pandemic stalled Brazil’s real estate market growth in the last few months. As of November, the market remained fragile with home prices in Sao Paulo rising by measly 0.21 percent in the third quarter of 2020. 

However, demand is slowly improving due to historic low interest rates following the pandemic’s slump. Sao Paulo State Housing Union recorded 4,341 new residential units that were sold in the city. This was up by 32.3 percent from the previous year, media reports said.

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Under the terms of the agreement,  the renewable energy fund InvIT will have an initial corpus of $600 million with an option to increase the funds further, Chairman Ajay Piramal said in a statement. CPPIB will contribute $360 million while Piramal will finance $90 million to the renewable energy investment trust corpus.

Both companies being the co-sponsors of renewable energy investment trust will cumulatively hold 75 percent of the units. Of the units, CPPIB and Piramal will hold 60 percent and 15 percent respectively. However, Piramal will be the sole investment manager and project manager for renewable energy investment trust, according to a local media report.

The proposed InvIT might be a great opportunity for both companies in the future. “The renewable energy sector is at an inflection point and is witnessing significant consolidation, the pace of which is likely to increase in the near future. We believe that the timing is therefore opportune for aggregating assets in this sector given that the existing players are willing sellers in light of a constrained capital market environment – both debt and equity,” Piramal said.

Headquartered in Toronto, CPPIB is Canada’s largest pension fund with $368.5 billion in assets under management.

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Interestingly, logistics in the Asia Pacific region is performing well in comparison to other global counterparts. According to the 2016 World Bank survey on trade logistics, top regional markets such as Singapore, Hong Kong and Japan feature near the top of a global league of 160 countries in terms of logistics performance, alongside markets in Europe and the United States.

Based on JLL estimates, the total amount of stock in seven largest logistics markets in the region currently totals more than 1.5 billion sqm (gross floor area), double the size of the 795 million sqm in the United States and significantly more than the 260 million sqm in Europe. It is more appropriate, however, to look at logistics stock at a local level, as regional economies are at vastly different stages of development.

As a share of population, each person in Australia and Singapore has 1-2 sqm of stock on average, as compared to average stock level per person in South Korea, Hong Kong, China and Europe (which is in the range of 0.4-0.7 sqm). It is important to note that while the Indian logistics stock per person is miniscule, it is set to grow as the ‘Make in India’ programme and the proposed 35 multi-modal logistics parks (MMLPs) are going to play a vital role in the times ahead.

The warehousing sector in India has already seen CAGR of 20% from 2014 to 2017, fuelled by economic revival, growth of its e-commerce and the third party logistics industries as well as implementation of GST. The existing stock has a potential to grow at an even faster rate going forward, at least until 2022. Investment in infrastructure is also expected to play a significant role, as large planned investments such as MMLPs, dedicated freight corridors (DFC), etc., in road, rails, ports and airways across emerging India will bolster trade – and, consequently, warehousing demand.

Subsequently, investors are now attracted by strong occupier demand for logistics properties, and the value proposition of interesting yields compared to other forms of traditional real estate. Direct real estate transaction volumes in Asia-Pacific’s industrial sector totalled USD 13.8 billion in 2016, based on data from Real Capital Analytics (RCA). The sector accounted for about 12% of the region’s total volumes between 2011 and 2016.

Although India and emerging South-East Asia accounted for less than 3% of volumes in these transactions, the potential for growth is phenomenal. This is already evident in some of the recent investment trends in H12017, which has accounted for nearly USD 2 billion in a phased manner in the coming years.

While on one hand, the three-step deal between Canada Pension Plan Investment Board (CPPIB) and IndoSpace accounts for an investment of USD 1.3 billion, on the other, Ascendas- Singbridge is also involved in a two-stage acquisition of six warehouses (totalling 0.83 millon sft) from Arshiya, a Mumbai based logistics and supply chain company for INR 534 crore.

Additionally, Ascendas-Singbridge has also set up a joint venture (JV) with industrial properties developer  FirstSpaceRealty christened as ‘Ascendas FirstSpace’ with an objective of invest and build around 15 million sq ft. of industrial and logistic space over the next five years. With so much happening in the sector, logistics real estate presents an attractive alternative for investors and enables them to enter or exit the Indian market in a much faster and efficient way.

Srinivas N is Managing Director – Industrial Services at JLL India

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