Shapoorji Pallonji's realty arm bucks trend

At a time when others are cutting on development of commercial property, plans to add 50% more of IT space

The Mumbai-based Shapoorji Pallonji Group plans to expand its infotech properties by 50 per cent. The addition by the conglomerate will be in existing properties, increasing its portfolio by around two million sq ft next year.

This comes at a time when most other big developers are going slowly on commercial properties.

The group, headed by billionaire Pallonji Shapoorji Mistry, is into construction, textiles, power and engineering, among other segments. The real estate arm of the 148-year-old group will further develop commercial space  in its existing projects at Chennai, Pune and Mohali.

Shapoorji Pallonji operates information technology parks under the SP Infocity brand in IT and IT-enabled services (ITeS) at software technology parks and Special Economic Zones. It has IT parks and SEZs in Chennai, Gurgaon, Manesar, Mohali, Nagpur and Pune, with 4.6 million sq ft of space.

“We got into development of IT space in a significant way in 2005-06 but due to the global downturn, which significantly affected demand requirements of IT and other companies, faced a setback in 2008 and had to scale back plans. Post 2011, we are seeing a revival of demand in our projects. We continuously assess  the market and potential clients and then take market-based decisions in adding space to our ongoing projects,” said Kekoo Colah, chief executive of Shapoorji Pallonji Real Estate

Consultants said Shapoorji Pallonji was among the few entities adding to commercial properties. “Most of the big developers are not launching new projects. There is a clear slowdown in demand for commercial properties. Clients are mostly consolidating and moving places to cut costs,” said Ashok Kumar, managing partner at Cresa Partners, a commercial realty services firm.

Rajeev Talwar, executive director at DLF, the country's largest developer, said the company was not adding any new IT spaces in the near future. "There is no new demand coming from our clients and lessees. However, we are exploring opportunities in Bhubaneswar, Kolkata and other cities," he said.

However, Cresa's Kumar added that demand for SEZs was improving, as availability of such space is limited. “If developers have taken permission, they have to launch such properties to avoid lapsing of approvals,” he added.

Of the total demand for commercial properties, 80 to 85 per cent consists of demand for IT/ITeS spaces. “Clients are cautiously bullish and they see prospects and business visibility,” said Colah.

Besides, Shapoorji Pallonji plans to launch two new residential projects in the next financial year. It is plans to launch a  premium housing project in Bangalore in the current financial year, to see a development  of 1.2 million sq ft in the first phase.

“At the right price and location, and if the developer has a good reputation and track record of delivery, demand is there,” said Colah.

The company was also exploring opportunities in the Mumbai Metropolitan Region, Pune, the National Capital Region, Kolkata, Chennai and other cities to develop residential projects, he said.