Tata Realty and Infrastructure Ltd (TRIL), owned by Tata Sons Ltd, plans to ramp up its commercial real estate portfolio as part of its strategy to create a balanced project mix between residential and commercial, said a top company executive.
The Mumbai-based company intends to step up growth through land acquisitions, funded by existing investor Actis as well as parent Tata Sons, adding nearly 10-15 million sq. ft in the short term.
Currently, TRIL has 5 million sq ft of commercial space, which is completed and leased. Another 2 million sq. ft is under construction and an additional one million sq ft will be launched by the end of this year. It has also signed term sheets that will add 12 million sq. ft in 2019-20.
“We want to be a dominant player in the commercial real estate space. The new acquisitions will balance the portfolio between residential and commercial. We believe in building, leasing, retaining our properties and potentially, a REIT among other options. The aim is to not just be a housing company or a commercial real estate developer, but an all-rounded developer," said Sanjay Dutt, managing director and chief executive officer (CEO) of TRIL, said in an interview. Dutt is also the managing director and CEO of Tata Housing Development Co. Ltd.
Commercial real estate for TRIL includes developing corporate offices, information technology parks as well as shopping centres, Dutt said.
In 2015, TRIL and Standard Chartered Private Equity formed a ₹3,000 crore investment platform to buy commercial assets and has deployed some of the capital to purchase land parcels and commercial assets across cities.
In 2018, UK-based Actis replaced Standard Chartered as TRIL’s investor partner, when the growth markets investor bought out Standard Chartered Bank’s Principal Finance Real Estate business in Asia.
Given the current real estate slowdown and the liquidity crisis, particularly in the residential sector, it’s not a surprise that a company like TRIL would strengthen its commercial office portfolio, which typically generates stable annuity income compared to the housing sector.
In the last one year or so, since Tata Sons announced the merger of TRIL and Tata Housing, a single management team was formed with Dutt heading both the businesses, along with Tata Value Homes, a unit of Tata Housing that develops affordable homes.
Currently, between TRIL and Tata Housing, the commercial to residential ratio is around 20:80. But that is set to change.
“...As of now, we remain committed to commercial real estate, and selectively, residential," Dutt said.
Though Tata Housing’s current portfolio has homes starting at ₹30 lakh, the company’s new investments and projects would be aimed towards building more aspirational homes at a starting price of ₹45-50 lakh.
The plan is to focus on a few markets that are likely to witness strong demand. While National Capital Region (NCR), Mumbai, Bengaluru, Pune, Chennai, Kolkata, Hyderabad are the focus area, major part of the portfolio of investments would be concentrated in the first three property markets.
“Commercial real estate is always the driver of the property sector. For every 100 sq ft of jobs or employment you create, every person needs 1,000 sq ft of residential space, Dutt said.