Tata Realty & Infrastructure Ltd (TRIL), a subsidiary of Tata Sons, plans to augment its office space portfolio to 30 million sq ft over the next seven years from the current 10 million backed by expansions in Mumbai, Bengaluru, Pune, and NCR, Sanjay Dutt, managing director and chief executive told ET.
Since most of its current portfolio is part of Special Economic Zones (SEZs), TRIL is applying for their denotification in line with recent government rules. Last December, the government revised SEZ rules, allowing partial and floor wise denotification. This amendment opens new avenues for space utilisation within SEZs, particularly benefiting IT and ITES firms that currently dominate India’s SEZ landscape.
Dutt said as per the Act, TRIL can seek denotification for up to half of its total portfolio.
“The majority of our portfolio right now is SEZ, and we have already crossed several stages of approval. We are going for the denotification of up to 50% of our existing portfolio, in phases,” he said.
Dutt said India meets global infrastructure standards, and with institutional landlords present, the current scenario is conducive to commercial real estate growth.
“We have made two new acquisitions in Pune and Bengaluru, which will make us a pan India developer except Hyderabad, which we are yet to acquire. In addition, there are some other opportunities in our portfolio that we have not included in the targeted development of 30 million sq ft,” said Dutt.
The company also has a five-acre plot in Colombo where it may consider developing 2.5 million sq ft.
“Between those seven years, we will obviously add more to the portfolio. We are not looking to acquire ready-built buildings as these are not designed as per our design,” Dutt said.
On launching a real estate investment trust (REIT), he said, “Those options are always there. At that point in time, we will take a call. We don’t want to comment right now because it’s very fluid. Right now, our goal is to scale our portfolio and become meaningfully sizeable”.
Elaborating on its expansion strategy, Dutt said TRIL will continue its focus on Tier 1 cities and has no plan to venture into Tier 2 cities.
He noted that growth of flexible workspace operators is the biggest emerging trend for the company.
“This segment will continue to grow, but it is very volatile. Operators lease a property, then sublease it. If the market experiences a shock, a company with an AAA rating can absorb it. However, a young entrepreneur or company, whether listed or not, may not have enough capital to withstand such shocks. The structure of their lease agreements is very risky,” Dutt said.
He said TRIL will give space to flexible space operators very selectively with certain terms and conditions, making sure the occupier has a credible background and the terms are suited to them, protecting the company’s interest.
“I think this model is evolving. Right now, because there’s a lot of flexibility that corporations want in their business models, they are trying this, but in the end, it’ll come down to quality and productivity,” he said.
The company is also expanding its residential business. It currently has about 13 million sq ft of residential properties under development across NCR, Mumbai, and Bengaluru with an estimated revenue potential of about 18,000 crore. It will also develop a boutique luxury residential project at Hailey Road in central Delhi.
