US developer Panattoni says India needs to change land acquisition process

Photo: Reuters

MUMBAI (REUTERS) – US industrial property developer Panattoni has called on India to streamline its land acquisition processes, which it says are making it harder for developers to benefit from the booming warehouse market in the country.

Domestic and foreign real estate developers are building more warehouses in India to meet the growing demand from companies for land storage. However, in a country where many farmers or others may own a piece of land, the process of transferring it is often a contentious and time-consuming matter.

While India offers opportunities for expansion, “the biggest challenge is the land itself — the permits (and) the availability of data needed to acquire it,” said Robert Dobrzycki, CEO of Panattoni, a company with large industrial real estate assets in the US, Canada and Europe that entered the Indian market in 2022.

“We would like to do more and more. We would like to maximize our presence. But we are usually limited by external factors,” such as land availability, Dobrzycki said in a July 5 interview.

Panattoni plans to invest $100 million annually in India over the next 2-3 years and hopes to sign 3-4 land deals in 2024. The company had earlier said it took eight months to complete the formalities for acquiring its first complex near New Delhi, the construction of which will begin in the coming weeks.

Infrastructure development in India is driving high demand for land, leaving few plots in good locations and rising prices eroding developers’ profits as rents fall, executives say.

Demand for modern warehouse space for rent surged in the last quarter of 2023, with growth reaching a two-year peak as India’s economy continues to outpace many developed nations, according to real estate firm Colliers.

Panattoni has embarked on an “expansion from west to east,” starting in India, and hopes to also enter Japan and Australia in the next two years, Dobrzycki added.