If festive season goes well, we'll cross last year's sales: Tata Realty MD

In a Q&A, Sanjay Dutt dwells on the big leasing deals his company has done during the lockdown and the good traction it has seen in housing sales

Tata Realty & Infrastructure, the real estate company owned by Tata Sons, is scaling up its presence in commercial properties as it looks to build 45 million sq ft of such properties in 7-8 years. Sanjay Dutt, managing director and chief executive of the company tells Raghavendra Kamath that the company has done big leasing deals during the lockdown and seen good traction in housing sales. Excerpts:

Q. Several companies have given up Office spaces and ended leases. What has your experience been?

A. Our Intellion Parks, Intellion Edge and Intellion Square, with over 6.3 million sq ft, have over 94 per cent occupancy. We have signed a term sheet of 800,000 square feet in Intellion Park, Navi Mumbai. We have also leased a 450,000 sq ft full building to a Fortune-10 tech giant in Intellion Edge, Gurgaon. We have mostly Fortune-500 clients across our assets.

Besides that, tenants can not exit mid way. Most of the clients spend Rs 2,000-4,000 per sq ft on interiors, which means they spend nearly as much as a developer spends on construction. Besides, several tenants enjoy SEZ and tax benefits. Why would they lose out on that?

Q. Recently, you said you will develop 45 million sq ft in 7-8 years. Isn't that too ambitious?

A. We are not doing that without demand. In many of our projects, we are in the design stage and are seeking approvals and so on. We are not building everything in one year. If demand comes back in time, we will be able to increase development. As and when we get approvals, we can quickly scale up. We will be doing development in different cities at different times. We are also doing built-to-suit projects. We have up to 20 million sq ft from existing land, of which 6.3 million sq ft is leased. Another few term sheets in Bengaluru, Pune and Chennai would add another to 12-14 million sq ft.

Q. So, are you becoming an office property-focused developer now?

A. We are already strong in residential and are present in 15 cities. We are scaling up office properties because of demand. It makes sense for us to grow commercial now. We are also doing data centres. In some point in time in future, we will also explore warehousing.

Q. What is the progress on your REIT plans?

A. We are qualified to do REIT even today, but will scale up our portfolio. Intellion Park SEZ will get occupation certificate for 800,000 sq ft by December and for another 800,000 sq ft in a year.

Q. What is the scene in residential properties?

A. South was better than West and North during Covid. Now West has also bounced back. We struggled in the first quarter like other developers. We had much better Q2. We saw 15 per cent sales growth in Q2 on a yearly basis. In September, we saw 2.5 times the sale of August. Since September, we are seeing more demand for larger houses. 

We have 80 per cent of last year’s revenues. My sense is that if the festive season and last quarter go well, we will reduce the gap. We will meet or exceed last year’s numbers.

We've mobilised construction workers faster than others. Pre-0covid, we had 3,500 hands. Now we have 5,000. Because of our ready-to-move inventory which doesn't attract GST, and promotion schemes, we're able to get good sales traction.

Q. What is your take on office absorption in the country this year.

A. Between January and September this year, 22 million sq ft of space was committed in the country. About 16 million sq ft came during Covid. If you recall, during the global financial crisis of 2008, office absorption declined to 19 million sq ft in the country. What we are facing now is Covid which is really disruptive and we have still not recovered. But our office demand suggests India clearly has an advantageous position in this disruption. Last year the country saw office absorption of 49 million sq ft. In one and a half to two years, you will see India touching 30-35 million sq ft of office absorption.