Real estate developer DLF will soon start construction work on 2 million sq ft of office space in Gurgaon as it sees rising demand for Grade A office buildings in the coming year, a top executive said.
Sriram Khattar, managing director at DLF Rental Business, said the company’s under-construction buildings have already been fully leased.
He said the company will invest Rs 1,500 crore on the construction of office space in downtown Gurgaon and Chennai.
“We are quite enthused with the leasing that has happened in DLF Downtown, Gurgaon. We have now planned another block of about 2 million sq ft on which, once the approvals come in, the construction should commence in the next 2-3 months, ” Khattar said in a Q2 analyst call.
According to DLF Cyber City Developers (DCCDL), the rental arm of the company, leasing momentum has picked up in the last 6-8 weeks.
“Two towers in Downtown Gurgaon, each with 1.25 million sq ft are nearing completion. We anticipate receiving OC (occupation certificate) within this fiscal year. One tower is nearly fully leased and on the other one, we have signed a non-binding agreement for about 95% of the tower,” Khattar said.
“This would leave very little stock in towers one and two. This has encouraged us to look at a new tower in DLF Downtown of a much larger size, of about 2 million sq ft. And the design work on that is in an advanced stage, approvals are commencing, and we should start the construction on that in the first quarter of the next calendar year,” he said.
DCCDL’s consolidated revenue stood at Rs 1,123 crore in Q2 FY22 as compared to Rs 1,040 crore in the year-ago period. The company’s renewal percentage, which used to be in the 90s, has now dropped to 85%.
Khattar said de-densification is something that the tenant-partners are exploring.
In downtown Chennai, construction of 2 million sq ft of phase one is in the works, and DLF has completed seven floors, with another nine floors to go. The third tower is about 1 million sq ft, construction of which should begin soon.
“The capex programme is going on very smoothly. The total capex that we have for DLF downtown Gurgaon and Chennai is about Rs 1,500 crore, which I think will be spent over the next 15-18 months. Capex is going as per schedule except for the three month delay because of the Covid second wave,” Khattar told investors.
Khattar said that the number of site visits has gone up and is at 75% of the pre-Covid level that is resulting in more enquiries, which in turn, are resulting in more negotiations and closures.
“I also see that the level of termination and notices has been reduced. At the same time, leasing velocity has improved. I see the trend continuously improving,” Khattar said.
Strong business growth and aggressive hiring plans by IT/ITeS will aid in the recovery and growth of this segment.
Source : ET