In Conversation: We are realistically optimistic
Sep 16 2016
Sanjay Dutt, CEO, India operations, Ascendas-Singbridge India, spoke to FC on the company's plans
Can you describe the present Indian office market scenario, with particular focus on the IT space segment?
When we talk about Indian office market, it generally refers to the top 8 cities, which includes all the metros and large cities including Pune. Last year, India saw a net absorption of 36 million sq ft of office space. Bangalore remains the largest, followed by Delhi NCR. While Pune, Hyderabad and Chennai accounted for fairly large share, Kolkata was the lowest. This 36 million sq ft is basically growing steadily in the last 3-4 years, indicating that we are on a recovery path. The peak year in the recent past was 2008, when the net absorption was close to 40 million sq ft. It dropped to 25 million sq ft in 2009, in the wake of the global financial crisis. The 36 million sq ft that I mentioned for last year does not include captive office space developed by large Indian IT companies to build their own campuses on the land owned by them. If we include that, we may have touched 40 million sq ft. In short, it’s a very good situation in the country, with so much jobs being created. With money coming in, jobs are bound to be created. The Indian office market, as per our forecast, will continue to remain stable or grow for the next three years, except for some minor spike here and there, which could alter the absorption levels in certain years.
What role do you see Ascendas – Singbridge playing here, given the Indian office market scenario?
We as an organisation are realistically optimistic. The fact that we are very well established ourselves here in India and looking to move in Mumbai stems from that optimism. While so far, we have seven operational IT parks, we also recently added a very large capacity in Gurgaon, our eighth in the country. Today, we have the platform to build around 4-5 million sq ft of IT space in the next five years and in the next nine years, we intend to add 11 million sq ft, to our existing stock, through development of existing land. For future growth, we will look to either acquire land on an outright basis or acquire sanctioned projects, which we call as brown field development and also consider joint development options. We are keenly looking at opportunities to enter Mumbai, where we are not present.
We have been present in India for 22 years and have established very good relationships with three state governments – Karnataka, Tamil Nadu and Maharashtra – and their industrial development organisations. That’s a great position we have created and are enjoying the long-term supports of the state governments too. We have a strong team of professionals, with 15-20 years of experience each in development, which could be used for expanding our growth. Today, we work with close to 300 clients and around one lakh employees, who are working in our IT parks. We also acquired leased assets in Hyderabad and Pune. International Tech Park Bangalore also has a premium 5 star business hotel managed by Vivanta by Taj, besides a 52-room guest accommodation by Asiana in Chennai.
Ascenda-Singbridge is one of Asia’s leading sustainable urban and business space solutions provider, with large presence in Singapore and other Asian countries and has a strong legacy and reputation in India. The biggest differentiator for us is being a very professional and transparent organisation.
Our main focus has been always IT Parks here in India, when we first developed an IT Park in Whitefield, Bangalore. We will remain focused on that segment. However, we are also evaluating options in non-IT space. We have been very committed and focused on corporate office space, without diversifying into retail and hotel segments. Even the non-IT space that we have developed had happened as part of our projects as part of our mixed development offering. So far, we remained focused on five cities and in IT Parks and SEZs. We understand the occupier needs and our focus has been on how to create value for occupiers by bringing in innovations and green initiatives.
Somehow, in India, the development of IT parks and business parks has been looked under the real estate industry. But, we look at it as production space where one has to keep looking at ways to help the occupiers and their employees to improve their productivity. Apart from quality space and solutions, we also provide an international business lifestyle in our parks promoting work and play balance by organising lifestyle events and providing entertainment options for the employees.
Also, we have always held assets. We do not sell our space, which means we remain committed to manage our developments. Many of our clients who were there since we began operations in Bangalore way back in 1997 continue to be with us till today.
We at present own and manage 11 million sq ft of space, which is valued at around 1.9 billion Singapore Dollars (US$1.3 billion or Rs 8,900 crore). We are building another 11 million sq ft in the next nine years.
From heading an international property advisory firm to now heading an international business park developer here in India – what made you to take the leap?
The credibility of the firm, the opportunities in future and the desire to learn the development side – is what made me to take the bite. That is as simple as I could put it across.
Following the Gurgaon IT park, which nearly doubled the company’s IT space under management, is Ascendas-Singbridge finally poised for a pan-India presence?
We believe, we are perhaps one of the few developers in the country, who have a presence in South and North. Once we enter the Mumbai market, we will have a presence in all the key cities in India. We are not only the oldest, but also the largest foreign developer operating in commercial space. For future growth in the country, we also have to look beyond office space. May be, we will look at industrial warehousing and logistics. We are likely to grow in that space, with special attention on warehousing and logistics.
How well is the One Hub industrial park near Chennai proceeding?
I think it is doing good, but could have done better. There is lot of interests from manufacturing companies to locate themselves in the industrial park, since Chennai is an attractive destination for manufacturing because of the port connectivity. Lot of companies have been there in manufacturing sectors for long. As far as One Hub Chennai is concerned, there are interests from Japanese and even Chinese companies to locate there – since we offer a very sophisticated industrial park. As compared to IT Parks, industrial townships require more support from the developer’s side.