Sriram Khattar, Managing Director, Rental Business, DLF, spoke about the second JV with Hines, GST council decision on lowering the effective GST rates and rental business, during an interview with Rajat Devgan, Zee Business. Edited Excerpts: 

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Q: DLF Ltd and Hines have formed a joint venture to develop a commercial project in Udyog Vihar, Gurugram, at an investment of Rs1,900 crore. Tell something about the JV and provide a timeline of the project?
A: DLF and Hines share a 10-year-old established partnership and our first project, One Horizon Center, is in DLF Golf Course Road. It was a joint venture project and is developed by Hines, which engaged its best architect and other people from across the world including the US to design and develop the project. The project has turned up to be a landmark. 

DLF purchased a parcel of land in an open auction by Haryana Government and Infrastructure Development Corporation (HSIIDC) about a year ago and Hines approached us to say that they will be happy to extend the partnership and would like to collaborate in this project. Things were finalised after talks and negotiations were over. Now, they are owning 33 per cent equity share of the JV with an option to increase its stake to up to 49 per cent. The project will be developed by Hines and we have requested them to use best international architects and designers to plan and design the project so that it turns up to be the best project in this part of the world.

Q: Provide a timeline for completion of the project?
A: The development and design plan of the project will be finalised in one year and then the construction work will be started. It is a huge project and that’s why it will take at least four to four-and-a-half years to complete it. So, the project will be completed in next 5years. 

Q: What is your take on GST Council’s decision in which it has lowered the effective GST rate on affordable housing and under construction property? How it will benefit the sector and DLF?
A: It will benefit the sector because a real estate project, where GST input is given, takes 3-5 years in completion. And, the GST council has provided a clause to companies, where they can opt between the new and the old tax rates. Thus, the companies have been given a chance to choose the tax system that will benefit them. 
When it comes to DLF then the calculations are on and any decision, whether to stick to the old tax regime or opt for the new one, will be taken after the calculations are over. 

Q: If we combine your both leasing and development business verticals, then let us know about the total area that is under construction at present and by when they will be executed?
A: I can’t talk about the development business vertical as I am a managing director of the rental business. I can update you on the rental segment. We are constructing 2.6-2.7 million square feet building in Cyber City, Gurugram, at present and it will be completed in the next few months. In fact, 85 per cent part of the building has been leased out and we have informed the tenants that the project will be completed soon. So, they, the tenants, may start fitting out in the building in the next 2-3 months. 
Similarly, we are also expanding Cyber Park, Chennai, by 1.7 million square feet. Interestingly, work on 0.7 or 0.8 million square feet has been completed and rest work will be completed by the end of the year. 

Q: Talk about the revenue or leased rentals that are expected from this property?
A: I can’t disclose it, but you know that the lease rental rate of the Gurgaon Cyber City revolves around Rs115-120/square feet. So, the calculations based on this rate suggest that the lease rentals from this building will stand around Rs350-360 crore annually. 

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Q: Earlier, you have said that the company is targeting 40 million square feet by 2022 in its rental portfolio. Are you confident about achieving your target?
A: Yes, we are ready and will achieve it. I have already informed you about the two buildings, Cyber Park in Gurgaon and expansion of Cyber Park in Chennai, and their completion will help us in completing five million square feet area of our target. Apart from this, we are also launching two new buildings in Cyber Park, Gurgaon, and one building in Hyderabad. These three buildings will help us in meeting our target in the next four years.