DLF buys 11.76 acre of land for Rs 15 billion in Gurugram, plans expansion

The country’s largest real estate development firm, DLF Limited, has bought 11.76 acre of land at Udyog Vihar in Gurugram for Rs 14.96 billion. The emerged the highest bidder in the e-auction organised by the Haryana State Industrial and Infrastructure Developent Corporation (HSIIDC). 

HSIIDC concluded its e-auction on Monday night for the 11.76-acre plot on NH 8 in Gurgaon. According to HSIIDC officials, a subsidiary of DLF has emerged the highest bidder. Others, including Indiabulls, Bharti Reality and Experion Developers, also took part in the auction.

While the reserve price was around Rs 6.86 billion, which translated into around Rs 596 million per acre, the e-auction catapulted the price to Rs 1.2 billion an acre, a record high for Gurugram, sources at HSIIDC said. Earlier in 2017, HUDA sold a 10-acre plot to IKEA for Rs 800 crore. The current deal has been sealed at a 40 per cent hike in the commercial land price in Gurugram.

“The land is located in Phase V of Udyog Vihar, opposite the existing central business district of Cyber City, which is managed by DLF Cyber City Developers Ltd (DCCDL). After development, it would provide more than two million square feet of commercial space,” said sources close to the company.  

According to industry insiders, it makes sense for DLF to buy the plot as it falls in the periphery of Cyber City, where rentals are already in excess of Rs 120 a square feet. “This will help them augment the supply in coming years at higher rents. Given the current development potential, it translates into a rental of Rs 136 per square feet. By the time the project will be ready, the rentals should go above Rs 150 to Rs 160 per square feet level,” a senior real estate analyst said.

Hoping to be a debt-free company by 2018-19, DLF will focus on selling ready-to-move-in flats worth Rs 150 billion over the next three to four years, and launch new projects for sale only after reaching advanced stage of construction.

Out of Rs150 billion worth of housing units, inventories of around Rs100 billion are in Gurugram. The real estate sector, particularly housing, is facing multi-year demand slowdown, resulting in sluggish sales and unsold inventories. In an investor presentation, the country's largest realty firm said the company has modified its business model for residential segment.