NEW DELHI: With demand for quality office space rising, Bengaluru-based realty firm Sumadhura Group today said it will invest about Rs 500 crore over the next three years to develop a commercial complex with a leasable area of one million sq ft.
The group, which has developed about 30 projects in Hyderabad and Bengaluru over the last 16 years, has bought an 8-acre land parcel in Whitefield from Alembic group for this project, its Chairman and MD Madhusudhan G said.
"There is a great demand for Grade-A office space. We want to focus on creating commercial assets for rental income. We did a small commercial complex in Hyderabad long back. Now, we are entering into a commercial real estate in a big way," he told PTI.
Sumadhura Group will develop a commercial complex at Whitefield comprising 1.5 million sq ft of built-up area and one million sq ft of leasable area.
Asked about the investment, Madhusudhan said the project cost would be around Rs 500 crore, including land and construction cost.
The investments would be met through internal accruals and construction finance from non-banking financial companies (NBFCs) and banks.
The construction of the project would start early next year and get completed by the middle of 2021, he said.
"We do construction on our own. It's our core competence," Madhusudhan said.
Unlike the housing sector, the commercial segment especially office space is doing extremely well. About 40 million sq ft of office space gets leased annually in major cities. The new trend of co-working space is also driving demand for office space.
Many real estate developers are planning to monetise their rent-yielding office assets through the Real Estate Investment Trusts (REITs) which has been allowed by the government.
DLF has set up a private-REIT by diluting 33.34 per cent stake in its rental arm to GIC for about Rs 9000 crore.
Embassy-Blackstone JV is gearing up to launch the country's first REIT.
At present, Sumadhura Group is developing four housing projects, of which three are in Bengaluru and one in Hyderabad.
In June this year, it roped in cricketer MS Dhoni as its brand ambassador.
Madhusudhan said the company is currently developing housing projects in a price range of Rs 60 lakh to Rs 1.5 crore, but now plans are there to enter into affordable housing with a ticket size of Rs 20-50 lakh. To develop a project, the group buys land as well enter into a partnership with landowners.
The group posted a revenue of Rs 365 crore during last fiscal, he said, adding that the company has been growing at 20 per cent annually.