DLF to invest Rs 900 cr on construction of new office complex

Realty major DLF will invest about Rs 900 crore over the next three years on construction of its new commercial project in Gurgaon covering about 2.2 million sq ft of office space.

The project will be developed on a 14-acre land.

"The company has just initiated development of a 2 million sq ft (approx) office complex in Cyber City Gurgaon," DLF said in an analyst presentation.

When asked about the project cost, DLF Chief Financial Officer (CFO) Ashok Tyagi said the land cost is already paid and the construction cost would be around Rs 800-900 crore.

DLF has started construction of new office complex as leasing activities have picked up unlike housing sector, which continues to be sluggish. Moreover, the company is left with limited office space in Cyber City, Gurgaon.

Country's largest realty firm has a rental assets of about 30 million sq ft, largely in Gurgaon, with an annual rental income of about Rs 2,400 crore. Of this, about 13 million sq ft is in Cyber City area where current monthly rentals are ruling at Rs 95-100 per sq ft.

Explaining the rationale for starting the construction of this new office complex, DLF's CEO (Rental Business) Sriram Khattar said: "Cyber City has become a preferred destination for the corporates. There are certain USPs including highest rating from British Safety Council."

Last year, DLF received the 'Sword of Honour' award from the British Safety Council for maintaining highest safety standards in its 17 office buildings in Gurgaon.

In the presentation, DLF said that its offices and retail business would continue to show decent growth and the company is planning to monetise its rental assets.

"The company has created a large platform of rent yielding commercial office and retail assets which is now ready to be partially monetised through sale of equity. This strategy shall allow the company to sharply reduce debt and also create growth in shareholder value," it added.

On retail side, DLF said the company is looking forward to begin commercial operation of its shopping complex 'Mall of India' in Noida upon receipt of regulatory approvals.

The shopping mall with 2 million sq ft of leasable area has been developed at an investment of Rs 1,100 crore.