DLF eyeing acquisition of Aerocity projects

 DLF, India’s largest real estate developer, is currently in discussions with Bharti Realty to acquire under-construction phases of Aerocity in Delhi. The total development potential of the project is estimated to be around 17 million square feet. Out of this, approximately 5 million square feet will be allocated for retail purposes. Once completed, the project is expected to generate an annual rental income of ₹5,000 crore.

Bharti Realty and Brookfield’s involvement in the project

The first phase of Aerocity was constructed by Bharti Realty. However, Canada’s Brookfield Asset Management later acquired a controlling stake of 51% in Rostrum Realty, which is a real estate joint venture company co-owned by Bharti Enterprises. GMR holds the lease for the entire area until the year 2066. DLF initially participated in the bid for the project but it was ultimately awarded to Bharti Realty. Now, DLF is actively pursuing the acquisition to further strengthen its rental portfolio.

Create a special purpose vehicle to facilitate the deal

Sources state that as part of the deal structure, DLF is likely to create a special purpose vehicle (SPV). DLF Cyber City Developers (DCCDL), the rental arm of DLF which already operates close to 40 million square feet across the country, is expected to take care of the asset. A DLF spokesperson declined to comment on market speculation when asked by ET for a statement. Bharti Realty has not yet responded to an email query regarding the matter.

Potential development and completion of Aerocity

Bharti Realty has already started the development of about 6.5 million square feet in Aerocity, with an investment of over ₹6,595 crore. The goal is to transform the project into a global business hub. Of the total area, approximately 3 million square feet will be allocated for retail purposes, including the creation of one of the largest malls in the region. In subsequent phases, around 10 million square feet will be developed, with 2 million square feet dedicated to retail. In the initial phase, Bharti Realty successfully built Worldmark 1, 2, and 3, encompassing around 1.5 million square feet. These properties are now under the ownership of Rostrum Realty, a joint venture between Brookfield and Bharti Enterprises. Each office tower will include a retail component, as well as a separate mall, with space for over 10,000 parking spaces. The commencement of providing possession is scheduled to begin in late 2024. The Worldmark portfolio will expand to include Worldmark 4, Worldmark 5, Worldmark 6, Worldmark, and Worldmark 7. Together, these new assets will form a commercial precinct, offering approximately 3.5 million square feet of leasable area, making it nearly three times larger than the existing Worldmark assets. The new assets are part of an integrated development spanning around 60 acres. DLF’s potential acquisition of under-construction projects in Aerocity shows the company’s continued focus on expanding its rental portfolio and further establishing its presence in the Delhi real estate market. With the project’s considerable scale and expected substantial returns, this move signals DLF’s commitment to driving growth and capitalizing on emerging opportunities in the real estate sector.

Sumit Mondal Content Analyst at Square Yards
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