Tata Realty looks to increase share of commercial portfolio

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SME Times News Bureau | 14 Sep, 2020
Buoyed by healthy leasing demand, and the traction for data centres, Tata Realty & Infrastructure (TRIL) plans to focus more on the commercial segment and increase the share of commercial assets and take the portfolio to 45 million square feet, said the MD and CEO Sanjay Dutt.

Speaking to IANS, Dutt said the company currently has nearly 100 per cent leased portfolio of 6.2 million square feet, which is likely to be 20 million from existing land banks owned by TRIL.

In addition to this, the company has signed a few term sheets that would allow us another 14 million square feet.

Currently, the overall portfolio of the Tata Group company has more residential properties and the commercial segment accounts for 30 per cent of its total portfolio.

Speaking to IANS, Dutt said that the company wants to balance the asset diversification and expects to increase the share of commercial portfolio to 60-70 per cent of the total projects soon.

"We already have a very large residential portfolio, so it makes sense for us to increase the commercial segment also. Because earlier it was skewed towards residential, we want to balance the business. So our immediate focus is to grow commercial," he said.

He noted that all of its commercial assets have been leased and hence, the company wants to build more of such assets. Dutt was of the view that a major benefit in the commercial space is that there is no oversupply in the segment as compared to residential realty.

The Tata Realty CEO told IANS that the company started to emphasise more on the commercial segment in 2018.

The company is also banking on the investment through listing of its Real Estate Investment Trust (REIT).

Tata Realty also is planning to invest in data centres along with IT parks. Dutt said that at the locations where the company is constructing IT parks, it is also exploring opportunities to build data centres.

Talking of operations amid the pandemic of the commercial business, he said that its commercial portfolio was largely unaffected amid the pandemic as it received nearly 100 per cent rent for its 6.2 million square feet of leased properties.

"We have had nearly 15 per cent rental growth last year and expect similar performance this year. As you know most predicted office to be severely hit but current data points suggest net absorption for H1 2020 is at 11 million square feet and is projected to be 22-27 million square for 2020. Considering the work from home and Co-Work and Artificial Intelligence taking jobs and so on, this is a good absorption and demonstrates the depth of talent India has and the cost arbitrage that we continue to monetise," he said.

Dutt said that among ongoing projects, nearly 8 lakh square feet of Intellion Park, Gurgaon will be ready by November and the remaining 8 lakh will be ready by March-April, 2021. He also said that construction work of Intellion Park, Navi Mumbai has commenced.

In the residential segment too, he said that the company recorded sales at pre-Covid levels in the past few months and it is in a better position compared to its peers.

He said that demand for good quality homes and flexibility of schemes and promotions provided by the company has helped the company attract home buyers.

"We have a very decent line of projects where the inventory is ready to move inventory, where there is no GST and occupancy certificates are in place and the buyer can immediately occupy, there is no risk and concern," Dutt said.

For the revival of the sector he suggested stamp duty cuts, reintroduction of input tax credit for real estate under GST and foreign direct investment in ready-to-move-in inventory, which is not permitted now.

Dutt said that FDI into ready-to-move-in properties would bring private equity to the stuck projects and address the liquidity concerns.