Amidst the boom in residential property sales in the country , Tata Realty & Infrastructure (TRIL) is looking to take share of its commercial properties, branded as “Intellion”, to 70% in next three years from 50% now. The company hopes to be be a sizeable pan India commercial developer in three to four years.
MD&CEO Sanjay Dutt, said this was a long term strategy because commercial properties is a strategic fit. “Office absorption will sustain at 35 million square feet per annum in the next 10 years in top 7 cities. This way we can earn annuity income every year,” said Dutt said.
The company has maintained an average revenue annual growth of 20-24% and is hopeful of maintaining the same in FY25, he said .
However, the residential property business with 10 million square feet of area and a top line of over `16,000 crore under development, will continue to remain an important business, Dutt said.The company has increased the property prices by 7-10% and may further increase it by at least 5% in FY25.
Dutt said 90% of the land is bought on an outright basis and this approach will remain the same in the coming years.
The developer already has 10 million square feet built are and is incrementally adding 20 million square feet of commercial properties. All would be Green Platinum certified (system to evaluate a building’s environmental impact and performance), of which some are with the likes of CPPIB of Canada,UK’s Actis and General Atlantic. Experts said the developer is looking to reduce over reliance on residential properties which are cyclical.
“As Tata Realty shifts its strategic focus towards commercial real estate, it marks a deliberate effort to diversify its portfolio amidst the ever-changing market dynamics. This pivot into the commercial sector serves as a proactive measure to mitigate risks associated with an over-reliance on residential assets, particularly in the face of market fluctuations and economic uncertainties,” said Sangram Baviskar, MD-real estate at TruBoard Partners.The other motivating factor could be the Real Estate Investment Trusts (REITs), which have brought about a paradigm shift in India’s investment ecosystem, Baviskar added.
With CPPIB, Tata Realty is developing properties in Gurugram and Chennai .In sector 72 in Gurugram, it is building 850,000 square feet and completed similar quantum of properties. The second asset is fully built (IT SEZ) in Chennai with 4.7 million square feet and has 112 Key “Taj Wellington Mews” hotel.
With Actis, it is building a 3.5 million square feet of commercial properties in sector 57 in Gurugram of which 50% is completed and leased. The second asset is its largest mixed use development measuring 12 million square feet with Actis in Navi Mumbai.
The company is also setting up world class sports and recreational amenities to engage with office communities besides wellness initiatives.
Going forward TRIL is exploring co-working spaces in its upcoming commerical properties to give flexibility to its clients in space management, he said.
“We are also looking to compliment our commercial developments with hotels for the benefit of our clients. We have committed two new projects in Navi Mumbai and Pune recently, which will take the total room inventory to just under 500 rooms,” he said.
Dutt said with change in IT SEZ Act, the sector is witnessing accelerated leasing across the cities and rents are going up across SEZs.
The firm has increased sizes in in residential projects under Tata Housing brand by 7-10% as customers’ space needs have changed to suit better and healthy lifestyle, he added.
“Ownership and management control facilitates effective management of our projects, especially office, retail and hotel portfolio as it allows us to repurpose, continuously upgrade and invest in the project to serve our clients better,” he said.