India's second-largest real estate developer Unitech has dropped plans to develop two of its six information technology parks in the face of a slump in demand from the IT industry. At least 38 per cent, or 8.3 million square feet, of its projected commercial space of 21.4 million square feet in its six parks will thus remain indefinitely on hold.
The rentals from all these parks were expected to generate revenues for its AIM-listed associate Unitech Corporate Park, which has invested pound 317 million to acquire majority stakes in all the six seed projects in return of leasing rights.
The two proposed parks, one in Gurgaon and the other in Noida, have not yet attracted any leasing commitment from potential clients.
The completion of the remaining parks will be delayed as UCP has managed to get leasing commitments for just over 30 per cent of the total 13.2 million square feet area that was initially planned in the four IT parks -- two in Noida and one each in Gurgaon and Kolkata.
Sanjay Chandra, managing director, Unitech, said the lease commitments, including the area that has been developed already, stood at 4 million square feet, or 30 per cent of the total potential space.
As a result, the company has staggered the construction schedule of these projects beyond the original plan. As per the revised construction timelines, Unitech will be completing construction of just 3.1 million sq ft during FY 2009-10, approximately 2 million sq ft short of the original projection.
Terming the scale-back as a rational decision, Chandra said the projected capacities were based on pre-slowdown demand projections. "There will be lot of scale-back of plans across IT park projects. Seventy per cent of the IT parks planned in the country (not just those by Unitech) will not come through," Chandra said.
He did not give details of the future of the two IT parks that have been shelved.
According to him, the four Unitech IT parks where construction is going on currently are still generating customer interest. "The Gurgaon, Kolkata and Noida IT parks are doing well. As of now, we have a commitment of 4 million sq ft space. We are looking at a faster exit from these projects," Chandra said, adding that the rentals from the new contracts are lower than the initial projections.
