Office leasing pipeline healthy despite slowdown in IT, says DLF
“The slowdown in IT is not impacting our office-space expansion roadmap,” said Sriram Khattar, Managing Director of DLF’s Rental Business, in an exclusive chat with CNBC-TV18. The company expects the Indian office-space market to grow well in the next five to seven years.
IT trade body NASSCOM may have warned of “cautious optimism” for the year ahead given the slowdown in the tech ecosystem, but DLF says it doesn’t expect its office-space absorption to slow down anytime soon.
“The slowdown in IT is not impacting our office-space expansion roadmap,” said Sriram Khattar, Managing Director of DLF’s Rental Business, in an exclusive chat with CNBC-TV18. “We expect the Indian office-space market to grow well in the next five to seven years.”
He added, “While COVID-19 proved that India has the digital backbone to provide the best IT services in the most trying of times, our talent and real estate of global standards that are available at a fraction of a cost, make India a compelling destination for growth of international companies. So, that growth will continue to happen.”
Khattar contended that while year-on-year IT growth in India has slowed down — NASSCOM projections has growth estimates at 8.4 percent for FY 23 against 15.5 percent recorded in the previous fiscal — growth will remain healthy on a base level that goes back five years.
Keeping such projections in mind, DLF’s deal and leasing pipeline, Khattar said, was more than healthy. He added that the company has managed to lease out all its office spaces even before securing occupancy certificates: “At any time, we have about 20 to 35 deals in progress on a pan-India basis.”
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Incidentally, nearly three to five of these deals, CNBC-TV18 learns, are “major” deals — in excess of 100,000 square feet. A large majority of leasing activity, Khattar said lies between 15,000 to 100,000 square feet of leasing space per deal.
“July to October last year saw a spike in deals, which then slowed in November to December when talk of recession began,” Khattar added.
He conceded that while deal growth remains “marginally subdued”, the company is looking forward to “moderate to good growth” in a few quarters.
"We are expecting DLF’s residential and rental business to grow in tandem in the next fiscal."
A year ago, DLF had predicted the end of 'work from home' as a practice in Indian IT, with Khattar terming it a "temporary and transient" trend since it had no widely accepted definition. Today, occupancy rates at the company’s IT parks have improved.
Khattar said that DLF Cyber City in Chennai — the company’s second-largest market — has an occupancy ranging between 80 and 95 percent while improving attendance in Cyber Hub Gurugram could take occupancy there, a notch higher. Interestingly, IT parks in Bengaluru, Khattar said, are seeing attendance continue to remain low at 30 to 40 percent. “But the next two quarters could see IT firms in Bengaluru recording attendance of between 60 to 70 percent.”
DLF will double its retail portfolio in the next five years — its mall in Goa is under construction while the much-touted Mall of India project in Gurugram will see work begin in the near future.
The company will increase rental across its commercial portfolio, with recommendations made to the board pending approval.
(Edited by : Pradeep John)
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