DLF to invest Rs 3,400 crore in IT block and data centre facility in Noida

Karun Varma, Senior Executive Director, North Offices Business, DLF

Real estate major DLF has launched the DLF Techpark in Sector 143, Noida, with an investment of Rs 3,400 crore in phases. The facility spread over 25 acres has a building potential of close to four million square feet (msf) of which close to 1.2 msf housing an IT block and data centres has been utilised, a top official of the company told Moneycontrol.

The project is a 45-minute drive from the upcoming Noida International Airport and 700 metres from the nearest metro station.

The listed company has attracted pre-commitments of 4.5 lakh sq ft for the first two structures that have gone live in Noida. One is an IT block and a data centre totalling about four lakh sq ft. While the data centre has been built-to-suit for the client, the IT block has received close to 70 percent commitments. The Noida data centre has received further commitments from the same data firm for another 3.7 lakh sq ft, which is currently under construction, Karun Varma, Senior Executive Director, North Offices Business, DLF, told Moneycontrol.

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“We have recently received inquiries for more IT space in the area, and that encourages us to plan for the next phase there. Out of the 1.15 msf that has already been constructed (as part of the first phase), one msf has already been committed by clients,” he said.

Real estate major DLF has launched the DLF Techpark in Sector 143, Noida

The next phase of development (second phase) is expected to be close to two msf, depending on the demand. “We are studying the market and also looking at the next phase of development, which is expected to be between one and two msf depending on the demand,” he told Moneycontrol.

Noida versus Gurugram

Commercial space take-up in the National Capital Region (NCR) witnessed close to nine to 12 msf of commercial real estate space being leased in the last three to four years. Of this, almost 80 percent of space take-up has been in the Gurugram market, 19 percent in Noida, and the remaining in Delhi. It should be noted here that the institutionalisation of the commercial real estate space in Noida has not kept pace with Gurugram. Having said that, “we now find that there is more interest from legal firms and IT firms and believe that Noida Expressway will be the next growth corridor,” Varma said.

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Asked if clients from Gurugram have evinced interest in commercial space in Noida as well, he said that while demand for commercial spaces in Gurugram emanates from existing clients, demand in Noida is generally from new customers. “New customers have transacted with us for commercial real estate space in Noida, unlike in Gurugram, where existing and new clients have taken up A Grade space in new properties,” he said.

In Gurugram’s Downtown project, more than two msf is already operational and occupied by marquee tenants, and another tower of two msf is under development, of which 95 percent has already been committed. “This is to be launched in the first quarter of 2025. It is a large project, and the next phase of development has a build potential of over eight msf of which approximately three msf is a mall and in excess of five msf are office spaces,” he said.

The company has also launched close to three msf in Atrium Place in Gurugram, he added.

GCC growth story

Varma said that lately global capability centres (GCCs), which are offshore units of large multinational corporations (MNCs) performing technology operations, are gaining traction.

“We recently leased an under-construction asset in Gurugram. Interestingly, 80 percent of the two msf are all GCC. This is expected to take another 15 to 16 months to be delivered for fit-outs. The GCC story is expected to continue for IT providers as well,” he said.

With several companies moving closer to where the talent is following COVID-19, there is a sudden spurt of growth in the NCR. “The entire market has benefited in terms of demand growth,” he said.

Dollar assets

The appreciation of the dollar has had an impact on commercial real estate leasing in India. “This has led to an increase in commercial rentals. While the Gurugram commercial stock, which is close to 85 msf, has rents ranging from Rs 70 per sq ft to Rs 150 per sq ft for A Grade commercial space, rents in Noida are between Rs 50 per sq ft and Rs 60 per sq ft,” he said.

SEZ Act

To a question on whether vacancy in SEZ assets has increased following the finance minister’s 2022-2023 Budget announcement that the Special Economic Zones Act 2005 would be replaced with the Development of Enterprise and Service Hubs (DESH) Bill, he said that “there is a grey area here since you don’t know how this will change and is it worth the while to look at the advantage of working in an SEZ versus a non-SEZ? That has led to confusion among new customers. During COVID-19, vacancies across sectors went up, especially in non-SEZ areas. While that has recovered, vacancies in SEZs may take longer to come back to pre-COVID levels, which I imagine would now be in double digits,” he added.

During an investors’ call earlier, Sriram Khattar, Vice Chairman and Managing Director of DLF Rental Business, said that SEZ has become a little bit of a concern in the market because of the sunset clause.

“Overall, the SEZ market has been a little weak. We have had existing tenants take up space. Fortunately, for us, vacancies have not increased because of that. We are quite hopeful that the Ministry of Commerce, the Department of Revenue, and the Ministry of Finance are in the final stages of issuing a gazette notification for floor-wise denotification for IT SEZs. Once that happens, I think the take-up will pick up quite well.”