DLF Ltd, one of India's biggest developers, has bought a 11.76-acre land parcel in Gurugram for Rs 1,496 crore ($230 million) to develop a commercial project.
DLF said in a stock-exchange filing that unit Aadarshini Real Estate Developers Pvt. Ltd emerged as the highest bidder for the land parcel in an auction conducted by Haryana State Industrial and Infrastructure Development Corporation Ltd (HSIIDC).
This is the single-highest bid for any site in Haryana, HSIIDC said in a statement. DLF outbid three other companies to win the auction. DLF's bid was more than double the reserve price of Rs 686 crore and a tad higher than the Rs 1,446 crore that Beech Projects Ltd had bid, the statement said.
The land parcel is earmarked for mixed-use development and offers additional floor-area-ratio on payment of relevant charges. It has a total saleable area of about 2 million sq ft. DLF will build a commercial project on the site.
DLF will receive the letter of allotment after paying 10% of the bidding amount, while the rest will be paid in installments. The deal is being touted as one of the biggest in terms of valuation in the Delhi-NCR region.
HSIIDC said the successful bidding of the land parcel is a positive sign for the real estate market of Delhi-NCR, and may pave the way for selling other such sites and projects in the vicinity.
DLF had recently said that it was looking to acquire commercial projects, besides taking up developments under its newly created joint venture with Singapore sovereign wealth fund GIC Pte. Ltd. “The market is throwing up inorganic growth opportunities. We aim to acquire rent-yielding assets through leveraging the equity of the JV,” the company had said.
GIC had picked up a 33% stake in the rental arm of DLF from the promoter group for Rs 8,900 crore. The promoters have used a significant portion of the capital to cut down the holding company’s debts.
DLF’s joint venture with GIC was designed like a private real estate investment trust. It can sell completed yielding commercial projects to the JV, or build-to-suit yielding commercial assets for the platform. It can also sell land parcels earmarked for commercial development to the JV. The company said that it owns rent-yielding assets and land parcels in various locations across India and intends to bring them under the JV platform.
The move to acquire commercial projects by the DLF-GIC entity comes at a time when rent-yielding assets have been the only bright spot in India’s realty market. Investors from across the world have lined up to buy such assets. Canadian fund CPPIB, GIC and private equity giant Blackstone have been aggressively pursuing the space. Blackstone, which was the first to step on the gas, is now readying plans to float the first public real estate investment trust (REIT) in India.
Given the saturation in completed commercial assets, investors and developers would increasingly look at taking up green-field projects and add value along the completion journey.