Tata Realty takes a fresh guard

The Tata Group company, Tata Realty and Infrastructure Limited (TRIL), a wholly-owned subsidiary of Tata Sons, is gearing up to explore the opportunities in the rapidly transforming domestic real estate market where corporate developers are expanding their share in a big way.  

Looking at the emerging avenues and tapping them in a more robust manner, the Tata group management, under the leadership of chairman N Chandrasekaran, took a decision in 2018 to integrate its other real estate development entity, Tata Housing Development Company (THDC) – also a 100 per cent subsidiary of Tata Sons – with TRIL. The move to amalgamate these two businesses into one was in sync with Chandrasekaran’s strategy to simplify corporate structures, leverage synergies and scale up businesses within the group.

Though set up in 1984, THDC remained dormant for several years before the management of Tatas decided to revive it in 2006 and it finally sprang back into action in 2008, when it announced a premium residential project, Aquila Heights, in North Bangalore, followed by a low-cost housing project, Shubha Griha, in a distant Mumbai suburb, in 2009. This was followed by several other residential projects in many cities in the following years.

TRIL was formed in 2007 to function as a third-party fund and develop infrastructure projects like metros, road and highway projects, airports, special economic zones and logistics. The fund couldn’t perform as per expectations and the company then decided to focus on development activities that, apart from infrastructure projects like roadways and metro projects, also include large retail and commercial developments. It also tried to enter residential development in a very small way but there was a clash of interest with the group company, THDC whose primary business was residential space.       

Having been integrated under one umbrella, the business now boasts of a well-diversified portfolio of residential, commercial as well as infrastructure projects. Though for technical reasons both the entities (THDC for residential and TRIL for commercial & infrastructure) still continue to exist, all these activities are now run under a single core management team headed by Sanjay Dutt, managing director & CEO, TRIL, who joined the company in April, 2018.    

Prior to joining TRIL, Dutt was chief executive of Singapore-based Ascendas-Singbridge’s India operations and private funds, where he was responsible for managing real estate asset management, development, and acquisitions, predominantly in the space of IT SEZ/parks and industrial townships. He also assisted the group with the acquisition of 1,700 acres start-up area of the new capital city of Amaravati, Andhra Pradesh. Dutt, who has over 24 years of experience in the real estate sector, had previously served as managing director at the foreign consultancy firm Cushman & Wakefield (India) and as CEO (Business) at JLL.

Over the last three years, Dutt has been busy amalgamating both the businesses, where the company, in its new avatar, has been focusing on five key real estate markets and city-centric locations. It has wound up a few of its proposed residential projects in smaller cities and has also sold its mall in Amritsar as per its new strategy where it looks to accelerate the entire construction process, emphasising faster delivery.

“We want to position ourselves as a strong force. The integration of both the businesses under one entity will provide us the much-needed scale and synergy to expand our share in the market in a big way. Under the new strategy, we will focus on five key markets. We have consolidated our portfolio by exiting our projects in other smaller markets. We will continue to have an equal presence in both residential and commercial properties,” says Dutt who is also a Governing Council member of Royal Institute of Chartered Surveyors (RICS), Advisory Council member of GRI & GBCI, and member of CoreNet Global.

Experts are of the view that this synergy and scale will help the company in expanding its presence in the real estate business where, despite being present for over four decades, it has not been able to make much of a dent. Moreover, in the last few years, after RERA and other policy initiatives, the domestic market has undergone a major transformation where discerning buyers prefer corporate and other reputed developers. This is where TRIL will have an edge. Many corporate developers like Godrej Properties, Mahindra Lifespaces, L&T and Adani Realty, as also reputed names like Oberoi, Puravankara, Brigade,  DLF, Prestige and Embassy, are gearing up in a big way with renewed vision and strategy to tap the market.

 “The domestic real estate market is consolidating in a big way and we definitely see an opportunity for well-established players in the industry. At Godrej Properties, we are geared up and well placed to explore these emerging opportunities and looking to expand our market share significantly. We have ramped up our resources and are all set to leverage our brand value going forward. Our focus on our four core markets, strong brand and existing portfolio leaves us on a strong foot to take advantage of these opportunities,” says Pirojsha Godrej, executive chairman, Godrej Properties Ltd.

Buyers will gain

“The market is consolidating in a big way and we see corporate players and other reputed players expanding their share in the market. Most of these players are ramping up their capabilities and preparing to rule the market, going forward. While the market is becoming more organised and transparent, the buyers will be the ones who will gain immensely from this transformation,” says Pranay Vakil, founder and chairman, Praron Consultancy.

TRIL is also looking to expand its market share. It has scaled up its development portfolio across commercial and residential properties. Currently, commercial projects account for almost 60 per cent of the total portfolio, while the remaining is residential, with 17 projects currently under construction. There are three commercial projects which are being built at present. While ramping up its portfolio, the company is looking to invest around Rs2,000 crore each in residential and commercial projects over the next two years.            

TRIL plans to have a commercial portfolio of 10 million sq ft by 2023 and 45 million sq ft by 2027, across key cities – Mumbai, NCR, Chennai, Bengaluru, Pune and Hyderabad. In the last three years, the company has scaled up its portfolio of commercial properties to 7.5 million sq ft from 5 million sq ft.  Of these commercial properties, IT and office space comprise around 80 per cent share; the rest is shared by non-IT/office space.

The commercial portfolio of the company includes projects like Ramanujan Intellion Park, an IT/ITeS SEZ strategically located at the heart of Chennai’s southern business district at Taramani – the gateway to the city’s rapidly developing IT corridor. Spread over 25.27 acres, the project, with a processing area of over 4.5 million sq ft, is fully leased out, with tenants like Amazon, AstraZeneca, Citi, TCS, Cognizant, HP, Infosys, Philips, Fidelity and Cisco. The Chennai IT Park project has been awarded a Platinum rating under LEED by the Indian Green Building Council (IGBC).

Intellion Edge Gurugram, situated in Gurugram’s Sector 72 is a flagship commercial office project with a total leasable area of 1.6 million sq ft. With a leasable area of over 800,000 sq ft in phase I, the project, also LEED Platinum certified by IGBC, is fully leased out with tenants like Vistara, Simpliwork, Genpact, GFK, TaskUS and PepsiCo. Currently, phase II of this project (leasable area 8,00,000 sq feet) is under construction.

Another commercial project, Intellion Park Gurugram, is a unique podium-style IT/ITeS SEZ campus with expansive workspaces, lush greenery and world-class amenities. With a processing area of over 500,000 sq feet in phase I, the project, LEED Platinum certified by IGBC, is also ready and the leasing process has just started. Phase II (1.5 million sq feet) of this project is currently under construction. 

In Mumbai, TRIL has an office park – Intellion Square (7,50,000 sq ft) – which has already been constructed and almost 90 per cent leased out, with clients like TCS, Tata AIG, BNP and Mphasis. Besides, the company is currently constructing an office project – Intellion Park  (1.6 million sq ft) in Navi Mumbai.   

“Most of our existing and under construction commercial assets are well planned and designed. Our projects host marquee tenants and in this challenging market we have also seen 8 per cent growth in rental with 100 per cent collection. The commercial space will continue to be our major activity, even as the residential share will improve a bit in the coming years,” says Dutt.

On the residential front, the company, under the brand THDC, is looking to strengthen its position in the market. It is into aspirational affordable to luxury projects and has a residential portfolio of around 18.3 million sq ft of already developed projects. In addition, it has around 11 million sq ft of under construction projects and around 10 million sq ft of development under planning. The entire portfolio is spread across 42 projects and 15 cities.

Maintaining growth momentum

Despite Covid-related challenges, the company saw its revenue in FY21 growing 120 per cent to Rs1,500 crore. Even in FY20, when the residential market continued to be subdued, the company’s revenue grew by 15 per cent and in volume terms, it sold 1,300 units. In the first half of the current fiscal year too, the momentum has been maintained with a revenue growth of 35 per cent. This is even more significant in light of the fact that in the current fiscal year, the first quarter faced the brunt of the lockdown.

During Diwali this year, the company launched phase II of its residential project Eureka Park in Noida, where it has around 1,100 units (average price Rs1.5 crore).  Phase I with another 1,100 units, launched around two years ago and has already generated good response. Phase II is still under construction. In the next 12-16 months, TRIL is planning to launch around five residential projects in key markets like Mumbai, Gurgaon, Bengaluru, and Pune.

Among the 17-odd under-construction residential projects, Tata Serein is themed around wellness and focused on the well-being of residents. The luxurious property, located on Pokhran Road 2, Thane West, has 650 units (price: Rs92 lakhs to Rs2.8 crore). Possession will start from September 2022, and it is 60 per cent sold out. 

Designed to be one of the tallest residential towers in Alipore, Kolkata, Tata 88 East is an exquisite residence, complemented by landscaped gardens. Launched in 2018 and 40 per cent already sold out, the ultra-luxury project has 176 apartments (Rs3.12 crore to Rs15 crore).

Tata New Haven Bahadurgarh is a gated community, located in the fast-evolving belt of Bahadurgarh in the north-west of Delhi. This mid-segment residential project, built using the superlative aluminium shuttering technology, has 500-odd units. Priced at Rs66-96 lakhs per apartment, the project is almost 95 per cent sold out.

In South India, the company has Tata Santorini Chennai. It is influenced by both Spanish architecture as well as the colourful nuances of Chennai’s culture. This affordable project (Rs30-70 lakh per unit) with 450 units, is 85 per cent sold out.

Among the ready to move projects, Tata Amantra in the Bhiwandi Kalyan Corridor near Mumbai is a mid-segment residential project with 1,350 units (Rs60-90 lakhs). The project has also generated good response, with 75 per cent of its inventory sold out.

Apart from strengthening its network of channel partners, TRIL has embraced digitisation in a big way. “The past year has tested every organisation’s ability to be agile and adapt to the new normal. We were one of the first companies to embrace digitisation at a rapid pace and that helped us stay relevant in these unprecedented times. Throughout the lockdown, we provided financial assistance to homebuyers, many of them being first-time buyers, to invest in their safe havens amid this pandemic. The influence of NRIs also played an important role in the recovery of the sector, with organic enquires coming from Nigeria, Singapore, Australia, Greenland, USA and UK for our properties. Going forward, we will continue analysing the data to understand the needs of our customers and increase the growth prospects for our existing projects,” says the TRIL CEO.

“Our marketing campaigns are based on homebuyer insights and we take pride in our ability to delight our customers. FY20-21 was challenging but it allowed us to push the boundaries and focus more on digital performance and continuous engagement through social media. The strengthening of distribution channels like channel partners, referral and Tata employee programmes were crucial to drive sales. The response to these efforts gives us the confidence to continue with our marketing strategy, which is a holistic 360-degree approach,” says Sarthak Seth, chief marketing officer, TRIL. 

New positioning

“TRIL is now looking to make its presence felt in the market. With the recent merger, and two entities under one umbrella, the company appears to have positioned itself strongly in the market. This new positioning will certainly help it in more ways than one and in building its presence and leveraging the Tata brand and its credentials in a more effective manner,” says Vijay Jain of Noida-based property brokerage and consultancy firm, Star Estate which has sold TRIL’s properties worth around Rs125 crore during the present calendar year 2021. The firm, one of the channel partners of TRIL, has been involved in a total transaction of around Rs2,000 crore in CY2021 (CY2020: around Rs1,000 crore) across names like Godrej Properties, ATS, Birla Estates, DLF and others.   

While post-merger, TRIL has significantly improved its residential portfolio (since THDC has predominantly been a residential development business) it now has a more diversified portfolio with a good mix of commercial and residential properties. Going forward, the company is planning to take this mix to 50:50 in the next three years from the present 60 per cent in favour of commercial.

“Despite being in the real estate business for many years now, the Tatas have not been able to leverage the brand and the credentials it enjoys in the market. However, with this merger, the group is now looking to explore opportunities in a more determined manner. This will help them expand their share in a market where, today, buyers are keener than ever to deal with corporate and large developers,” believes Sachin Kumar, founder of Bengaluru-based brokerage firm, PROPEVE, which has been a channel partner to many large developers like Puravankara, Brigade, Birla Estates and Mahindra Lifespaces.

 Meanwhile, the real estate market, particularly the residential segment, has bounced back rapidly in the last six months, belying all doubts. Experts are of the view that if the new Covid-19 variant, Omicron, doesn’t create any disruptions, the market will continue to gain momentum. With offices and commercial establishments also gradually opening up, this segment of the business will also recover soon. 

With all these developments in place, TRIL in its new avatar and with renewed vigour and intent, appears to have left its mark in the market. Despite being a part of a reputed group, the real estate business, divided across two separate entities, had not been able to perform in the past. But now that both entities are being run under one umbrella, the business is poised to make a dent in the transformed market where buyers are eagerly looking to deal with corporate and reputed developers. However, it remains to be seen how the new set-up positions itself in the market and explores the same in a more effective manner.