Blackstone's giant real estate arm wants to double warehouses in India

Preeti Singh and Baiju Kalesh

Blackstone Inc. plans to more than double its holdings of Indian warehouses and may eventually take the logistics business public as the asset manager increases its bets on the world’s fastest-growing major economy.
 

The New York-based firm may boost the warehouse space to at least 100 million square feet in India in two to three years, according to Kathleen McCarthy, co-head of the global real estate business. Blackstone would eventually look to raise money from the booming business through a large strategic sale or public offering in the next 12 to 24 months, she said in an interview in Mumbai. 
 

 

Blackstone is seeking to expand its $20 billion portfolio of Indian real estate — including office space and hotels — even as investors grow cautious on the sector in many parts of the world amid high borrowing costs and rising vacancies for commercial property.
 

Blackstone’s real estate trust for wealthy individuals just resumed allowing customers to pull money without constraints after limiting withdrawals for about 15 months to avoid forced selling. A major share class of the trust posted a 0.5% loss in 2023, the lowest annual return since its 2017 debut.
 

The $1 trillion asset manager expects activity to pick up after one of the slowest years for deployment, McCarthy said. The firm invested $15 billion in property last year, less than a third of the nearly $48 billion spent the previous year, according to presentations on the firm’s website.

“We see globally there’s a more favorable climate for real estate moving forward,” McCarthy said, declining to say how much of the $65 billion in dry powder for real estate would be deployed in India. McCarthy helps to oversee the $337 billion global real estate business.
 

Warehousing will be a key focus in India, including so-called last-mile assets, typically smaller storage spaces close to end users of goods. “It has a much larger moat around it than traditional first-mile warehousing, and we want to try and integrate it into our platform,” said Asheesh Mohta, senior managing director and head of real estate acquisitions for Blackstone India.

Besides warehousing, Blackstone plans to build a new platform for hospitality in India, with the economy projected to grow about 7.6% this fiscal year, based on government estimates.
 

“There’s so much demand domestically, and there’s going to be so much demand internationally coming into this market,” McCarthy said. “India has a very limited supply of chain brands that really attract so much of both business and leisure travel.”

Blackstone is also on the hunt for data centers, after its $10 billion acquisition of QTS Realty Trust Inc., which already has relationships with companies like Microsoft Corp. and Apple Inc.
 

“Every large user in the world is a tenant with us already,” Mohta said. “That gives us a massive advantage when we are speaking to potential tenants in India.”
 

On the office front, Blackstone is already the largest landlord of commercial real estate in India, as its economic growth, demographics and underlying supply fundamentals make it an attractive investment hub, according to McCarthy.  
 

Blackstone manages large campuses in cities like Pune, Bengaluru and Hyderabad. Manufacturers designing aircraft and car engines, pharmaceutical giants working on drug discovery and technology companies building new products have driven up demand for space, Mohta said. 
 

“The CEO of a very large bank was in one of our facilities and they said they spent the same amount of fit out cost that they spent in their New York opening,” Mohta said, underscoring how global customers are willing to pay more for high-quality offices in India. “The tenants don’t have a five-year vision, but a 20-year vision.”
 

--With assistance from Kevin Dharmawan and Dawn Lim.