JV with GIC to drive faster growth in development of office, retail space: DLF Chairman

Realty major DLF would achieve faster growth in the development of offices and retail space on the back of its partnership with Singapore's sovereign wealth fund GIC, the company's Chairman KP Singh said.

However, he said the parent company DLF would also continue to build commercial projects, separate from the joint venture with the GIC.

Singapore's investment firm had bought 33.34 per cent stake in DLF's rental arm DLF Cyber City Developers Ltd (DCCDL) for about Rs 9,000 crore. DLF has the remaining 66.66 per cent stake in the JV firm DCCDL.

"Acknowledging the strength of your company, GIC Real Estate has entered into one of the largest transactions by becoming a shareholder in DLF Cyber City Developers Ltd (DCCDL), which has a huge annuity portfolio," Singh told shareholders in the annual report for the 2017-18 fiscal year.

DLF's partnership with GIC has positioned your company for faster growth in the office and retail space, he said.

In addition to capturing the growth within DCCDL, he said DLF could continue to develop offices or retail malls outside the JV.

DCCDL currently holds about 27 million sq ft of rent-yielding commercial assets, largely in Gurugram, with annual rental income of about Rs 2,400 crore. This portfolio is expected to more than double in the next 10 years.

Talking about the housing segment, Singh said, as a business strategy DLF would "try to sell its products only when the project has progressed to a stage where the uncertainties linked to development are significantly reduced".

He expressed confidence that DLF was well equipped not only to tide over the travails of transition but also to remain at the forefront of real estate development.

"Our unique business model shall cushion the impact of market down cycles given the different types of incomes and geographic diversity," Singh said.

As part of its new business model, DLF had recently said that the company would sell apartments only when it gets occupancy certificate after completing the project so as to remove any uncertainty regarding costs and delivery timelines.

DLF currently has completed inventory worth about Rs 13,500 crore, which would be sold over the next 5-6 years. The company would continue to build fresh inventory of completed product.

The decision assumes significance as the Indian real estate market, especially Delhi-NCR, has been facing huge delays in project executions, forcing home buyers to protest and move courts.

Lakhs of home buyers are stuck in various projects of developers like Jaypee group, Amrapali, Unitech and The 3C Company.