Sustainability is one of the most important pillars on which realty major DLF’s business stands, says Sriram Khattar, MD, Rental Business, DLF Group. In an interview to Realty & More Editor Palash Roy, the seasoned business leader said, sustainability was “more a state of mind”. Elaborating further, Khattar said whether it is the conservation of energy, or natural resources, or reduction in carbon footprint or ensuring the health of the people, DLF inculcates that in the entire set of people working in a building. Shouldering enviable responsibility of providing strategic and operating leadership to the rental portfolio of about 30 million sq. ft. office space and 4 million sq. ft. retail space, Khattar also talked to R&M about DLF’s new projects in the pipeline, its safety audit procedures and about the new emerging markets in office space.
Palash Roy: What is the next set of growth avenues at DLF? What are the new projects in the pipeline?
Sriram Khattar: The growth that is coming now is that we are planning DLF Downtown which is 10 million square feet site right on NH8. Of the 10 million in the DLF Downtown Gurugram, two million is retail, eight million offices and other mixed use. In addition to this retail, we are also exploring possibilities of retail into other cities as well. We are also in the final stages of closing construction activities at our Cyber Park in Chennai. Thereafter we plan to launch another big project in Chennai which is about 7 million square feet. We are also looking at expanding our Hyderabad IT Park from the present three million to about 6.5 million square feet.
PR: You said you are exploring possibilities in other cities. Which are those cities?
SK: We are looking at Goa and we are looking further in Delhi. Fortunately we have the benefit of not only having land parcels, but also the approvals for all these are in advanced stage. So our go to market or go to construction should not take very long. Delhi we may launch later part of this year, Goa we may launch early part of next year. The new DLF Downtown we will launch shortly by the end of this year or early next year, Chennai and Hyderabad also we plan to launch later part of this year.
PR: What are some key aspects that differentiate DLF Rental Business from others?
SK: There are four pillars on which our business stands. The first pillar is we have zero tolerance to safety and compliance. We ensure that our buildings are safe for the people who work there. All our buildings are fully compliant at all point of time with the applicable laws. The second pillar is we work a lot on sustainability and wellness and we ensure that we create buildings and run buildings which have a long-term sustainable advantage over others.
The third pillar that we stand on is ensuring that we give the best to the people who work in our buildings. The fourth pillar is that our construction provisions are the best in the industry, so solid that after a point of time the tenants’ employees continuously want to stay in our buildings, rather than move out. Because of this we have US Green Building Council Platinum rating for 90 per cent of our buildings. For safety, not only we have British Safety Council’s 5-star ratings but also Sword of Honour for most of our buildings, which is the highest award one can get for safety standards.
PR: Can you tell us more about sustainability and wellness initiatives?
SK: I think sustainability is more a state of mind and the appreciation of why sustainability is important for the building. Whether it energy conservation, whether it is natural resources conservation, whether it is for the longevity of the buildings, whether it is reduction in carbon footprint, whether it is the health of the people, whether it is ensuring the wellness of the people in the building and we have inculcated that in the entire set of people working in the buildings. We have a very strong process of monitoring the sustainability of these places. It is recognition to these that US Green Building Council has given us a Platinum LEED rating.
PR: Recently, fire safety has become the most important aspect of any office space. How does DLF ensure occupational safety at the highest standards?
SK: See it is the state of the mind and the culture that you build in the company around these areas. We have taken help of DuPont. They are our safety partners for the last seven years. They have assisted us in trying to create that culture in the people where it is always safety first. In order to ensure this they have trained our so many people that our trainers now further train the employees of our outsourced staff. We got more than 300 trained trainers at the moment.
Secondly we ensure regular audits that are done by international fire safety companies on various buildings and our operations to certify that everything is OK. Due to these measures that we British Fire Safety Council’s 5-star rating and highest number of Swords of Honour last year for any company in the world.
PR: Office space absorption has seen expansion in the last quarter. How do you see rental values moving in the light of such rising absorption?
SK: I think rentals will continue to be robust in certain micro- markets. It is not essential that rentals would be robust across the country in all the markets. If you take certain areas in Bengaluru, Hyderabad, Pune, Mumbai and NCR, there will be pockets which will do extremely well, because they are on preferential location on one side, and there are companies in these areas which are established and do expansion. So you will see robustness in these places.
PR: A stable government at the Centre for the second consecutive terms means increased confidence from occupiers to look at India with renewed interest. The Indian corporate sector is also mulling at expanding its operations to major markets. Do you see newer markets emerging for office spaces?
SK: Yes, I definitely see newer market emerging in office spaces. I also see that India with its young and English-speaking population, is youngest sort of brainpower in the world today, I see a lot of countries moving their back offices and coordination offices to India. With the kind of IT facilities across the globe, the world is flat. I see a lot of inboards coming in there. I see a lot of e-commerce and digital spaces companies coming to India. I see a lot of cloud computing backrooms and Artificial intelligence work happening in India. There will always be demand for corporate offices and there will be demand from sometimes telecom, sometimes FMCG, sometimes some other sectors, but the demand will always grow.
PR: What is going to be the demand driver for office space in the coming years? Will it be IT/ITeS, banking, logistics, consumer or any other sector?
SK: IT/ITeS and banking back offices will continue to be the biggest businesses but I see the growth in logistics would be very good. Since the base is small, the percentage of the growth would be much higher in logistics sector. But highest absolute number would be IT/ITeS and BFSI (banking, financial services and insurance) sectors.
- We are looking at Goa and we are looking further in Delhi. Fortunately we have the benefit of not only having land parcels, but also the approvals for all these are in advanced stage.
- We have US Green Building Council Platinum rating for 90 per cent of our buildings. For safety, not only we have British Safety Council’s 5-star ratings but also Sword of Honour for most of our buildings.
- We ensure regular audits that are done by international fire safety companies on various buildings and our operations to certify that everything is OK
- Rentals will continue to be robust in certain micro- markets. It is not essential that rentals would be robust across the country in all the markets.
- I see a lot of countries moving their back offices and coordination offices to India. With the kind of IT facilities across the globe, the world is flat.
- Since the base is small, the percentage of the growth would be much higher in logistics sector. But highest absolute number would be IT/ITeS and BFSI (banking, financial services and insurance) sectors.
- Co-working will also be very helpful for an Indian context for the MSME sectors where people will move to an environment where they have an office space, where they necessarily don’t have to rent an entire space, or own a space.
PR: Co-working office space segment has been witnessing good growth in the recent past. What kind of potential do you see in this segment?
SK: I think co-working spaces segment will always be able to create a niche for themselves, they will be able to fill in the gaps which comes in the needs of the tenants. For example a tenant needs a 10,000 square feet space in six months to one year, but he doesn’t need it immediately because his staff is growing at a certain space. So the swing arrangements will be very well filled in by the co-working spaces.
Secondly co-working will also be very helpful for an Indian context for the MSME sectors where people instead of working from basements or residences will move to an environment where they have an office space, where they necessarily don’t have to rent an entire space, or own a space. Over a period of time, I see the co-working sector occupying 5-6 per cent of the total occupancy of the office spaces.