Commercial leasing expected to reach pre-Covid level in next two-three quarters: DLF

New Delhi: DLF Ltd, the country’s biggest real estate developer, said commercial leasing is expected to reach pre-Covid level in the next two-three quarters after the slowdown caused a delay in decision-making by corporates. The company is also in the process of adding more assets to its rental portfolio as it prepares for a real estate investment trust (REIT). “India has global comparative advantage in terms of a very large English speaking, tech educated population below the age of 30. India also has a global cost advantage of the above talent pool in terms of low wage costs. The real estate costs add to this advantage,” said Sriram Khattar, managing director-rental business, DLF. The company, which operates nearly 35 million square feet of grade A assets in the country, under its rental arm, DLF Cyber City Developers Limited (DCCDL), is expected to take it to 40 million sq ft by December 2021. While two properties that are already part of DCCDL will become operational soon, the company will bring in three-four more assets that are currently under DLF. By 2021, the country’s office space market is also expected to recover. “The new age technology and e-commerce companies will also find India a compelling destination for conduct of their business and their research and development,” said Khattar. The recently acquired One Horizon Centre (OHC) and two upcoming properties at Chennai and Gurgaon will add value to REIT.DCCDL has acquired One Horizon Centre at Rs 780 crore. The leasable area of the property is about 8,13,000 sq ft.“At OHC , the vacancy is about 7-8% against the usual average vacancy of 3%. The teams are in talks to lease out the vacant space and once leased the total rental income would be in the range of Rs 155-160 crore per annum,” said Khattar. The first phase of downtown Gurgaon, with leasable area of 1.5 million sq ft, is expected to become operational by December 2021. The deadline was pushed back from July due to Covid-19.The company is also evaluating small assets in Okhla, Gurgaon and Kolkata with a leasable area of 300,000-400,000 sq ft each to shift it to DCCDL. Khattar said there have been a lot of enquiries from large corporates but due to the delay in taking decisions, full recovery is expected in two-three quarters.DLF has developed 153 real estate projects with a total rea of about 330 million sq ft. Nearly 40 million sq ft rental yielding commercial assets will be put under REIT by DCCDL, a joint venture between DLF and Singapore’s sovereign wealth fund.The company will appoint an advisor soon and will be REIT ready in the next 12-15 months. The company reported a 49% decline in net profit to Rs 228 crore for the quarter ended September, impacted by high fixed cost at a time when its operations had slowed down due to Covid-19.
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