There are all kinds of real estate firms out there. But most see eye to eye on one thing: selling property is a damn tough job. The recessions and the ensuing pain have forced many real estate companies to fold in distress. The industry is suitable only to those possessing the tenacity and the vision to roughly calculate future market trends to keep ahead of the pack. Those that survive, mostly thrive.
Despite not so hot real estate market, DLF Limited (Delhi Land & Finance) has flexed its muscles again. As if to prove ‘down time’ is not for everyone, almost arrogantly. India’s leading real estate developers will invest approximately 500 crore to develop an Information Technology Park in Chennai. Besides being in sound financial health, the realty major is also relying on the improvement in the commercial real estate market in key cities.
DLF has leased out, rather exhausted, over 32 million sq ft of its commercial stock to global tenants and is primed to make close to 2, 700 crore in rental income in the current fiscal year from its portfolio. Dissimilar to housing sector, which is quite sluggish right now, the leasing of office space has picked up in at least seven major cities in the country. The creation of buildings has begun.
The company is following a strategy to aggregate leasing in favour of ‘higher value’, large and high credit customers. Although by doing this, it has taken a hit on the BSE, where its shares fell 4 per cent in the middle of general market meltdown.
This has been the strength of Kushal Pal Singh, the gritty owner of the real estate giant… to take the leap of faith and not worry too much about certain pitfalls. From delivering its first-ever residential project, Krishna Nagar in East Delhi, completed in 1949, to the latest project in Chennai’s IT Park, the aim has always been to consistently deliver finer buildings, residential or commercial.
Kushal Pal Singh, according to the Forbes listing of richest billionaires in 2009, was the 98th richest man in the world and the world’s richest property developer.
Perhaps, one of the other reasons for DLF’s longevity and power has been its approach towards its famous land purchase program, which has a humane approach so that the sellers do not feel short-changed. In order to achieve this connection, DLF partnered with farmers so that even they received a share of profits. It followed a system where it created a land bank and then sold plots to buyers after demarcation. The profits from the sales were subsequently shared with farmers, which encouraged more farmers to come forward and partner with DLF.
In today’s environment where realty companies are viewed with suspicion, it is crucial to build not just buildings, but goodwill, too.
Interestingly, the vision of the company is not limited to constructing office buildings alone. DLF has forayed into road construction as well, where it has entered into a 50:50 cost sharing arrangement with the Haryana Urban Development Authority (HUDA) to create a 16- lane, 10.5 km road network in Gurgaon. This stretch from NH8 Toll Plaza to Sector 55/56 in Gurgaon with six underpasses, one flyover and freeways will substantially deliver the city from its traffic woes.