After several quarters of muted growth, DLF Ltd, the largest real estate developer in the country, sees revival in the commercial leasing sector, especially in the IT and banking space. The realtor is expecting to lease 3-4 million square feet (msf) of commercial office space in fiscal 2011, a growth of 390-520% over 0.76 msf of office space leased out in the last fiscal. The New Delhi-based developer has already started seeing an uptick in lease enquiries as 0.6 msf of the total 0.76 msf of office space was leased out in the last quarter.
Its rental income grew from Rs 540 crore in 2009 to Rs 750 crore in 2010. Caraf, the holding company for DLF Assets Ltd (DAL), has merged into DLF and the integrated entity has combined leased assets of 19 msf. Analysts’ covering the company expect the entity to yield around Rs 1,600 crore of rent in the current fiscal. About 5 msf and 7-8 msf of office spaces in DLF and DAL, respectively, are under advanced stages of construction and most of the project work is complete, while the rest would depend on leasing activity.
The developer does not intend to start new office projects in the near term. The DLF spokesperson was not immediately available to comment on developments. With the commercial leasing market improving slowly, DLF is expecting to float its DAL real estate investment trust in Singapore in the next 6 months. The merged entity has eight rental assets with a leased area of 9.7 msf, current assets of Rs 2,200 crore and debt of about Rs 2,500 crore.
The rentals in Gurgaon are about Rs 50-55 per sq ft, Chennai is at Rs 45-48 per sq ft and Hyderabad at Rs 40 a sq ft. It is looking to lease about 6 msf of office space before approaching the capital markets. The developer is currently generating cash of about Rs 700 crore from projects which it believes would be sufficient for its construction activities and debt repayments.
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