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Business News/ Companies / DLF looks to expand office space portfolio
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DLF looks to expand office space portfolio

For its office projects, DLF will focus on the 4 key markets of Gurgaon, Chennai, Hyderabad and Pune to build new projects as well expand existing projects

A file photo of the DLF Infinity in DLF cybercity, Gurgaon. DLF’s leased office portfolio of about 30 million sq. ft house over 250,000 employees of more than 200 companies. Photo: MintPremium
A file photo of the DLF Infinity in DLF cybercity, Gurgaon. DLF’s leased office portfolio of about 30 million sq. ft house over 250,000 employees of more than 200 companies. Photo: Mint

Bengaluru: DLF Ltd, India’s largest property developer by market value, plans to add 2-3 million sq. ft of office space every year to its rental portfolio after significantly slowing down on residential project launches.

For its office projects, DLF will focus on four key markets—its home base Gurgaon, Chennai, Hyderabad and Pune—over the next few years to build new projects as well expand existing projects.

DLF is seeking to replicate its success in building a nearly 30 million sq. ft commercial office portfolio over the last decade.

“The growth opportunities for the company’s office business will be strategic and organic for both existing and new projects, and not exponential growth," said Amit Grover, national director–offices, DLF.

“We have almost 650 corporate clients across our office space and need about 2 million sq. ft of new space every year just to accommodate the existing clients’ growth," Grover said.

Grover said demand for commercial office space has matured over time, and today, it is more project- and location-specific.

DLF’s leased office portfolio of about 30 million sq. ft is next only to global investor Blackstone Group LP’s 50 million sq. ft of office area in the country, spanning 16 assets in five cities. These offices house over 250,000 employees of more than 200 Indian and global multi-national companies.

This year, DLF has started work on a 2 million sq. ft office project in Gurgaon and will add 1 million sq. ft to its information technology (IT) park in Chennai.

Next year, it will add another 1.5 million sq. ft to its Hyderabad project and about 800,000 sq. ft will be completed in its 29-acre Hinjewadi special economic zone (SEZ) in Pune.

The firm’s move to build new space is strategic and comes at a time when the commercial office space sector is performing far better than its residential counterpart. Not only have lease transactions been steadily even in the two-year long slowdown, property analysts expect demand for good quality office space to only rise.

“Over the last two years, growth in commercial real estate has been coming back as we see companies expanding and leasing momentum getting better. We are hoping to see the office sector driving the revival in residential real estate as well," said Manish Aggarwal, managing director-NCR at property advisory Cushman & Wakefield India. NCR is short for National Capital Region centred on Delhi.

DLF has also sought expressions of interest from top investors to sell a 40% stake in its rental assets arm as it seeks to pare debt, Mint reported on 11 April. The company had 21,396 crore of debt as of 31 December.

The rental assets arm holds about 20 million sq. ft of leased-out office space and is valued at about $2 billion. Discussions are currently on between the developer and potential investors.

Considering the size of the portfolio, more than a single investor may buy stakes in the office rental unit.

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Published: 20 May 2016, 09:58 PM IST
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