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DLF Ltd
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[Audio Gap] cash generation of INR 382 crores during the full year. Demand in the residential business exhibited a strong comeback in the fiscal. New sales bookings for the fiscal stood at INR 3,085 crores, reflecting a year-on-year growth of 24%. We witnessed growth across geographies and product segments. We launched the initial phases of independent floors in DLF City in New Gurgaon, which received encouraging response from the market and witnessed healthy absorption, indicating demand for quality products in established locations. New sales booking from launch of the new product was INR 908 crores during the fiscal. We continue to bring further phases of this product across the Gurgaon market. We have worked hard on getting our cost structures in place and happy to share that we have successfully managed to reduce our cost or cash overheads from INR 775 crores to INR 458 crores during the current fiscal, a reduction of 40% plus. We are confident that we'll be able to sustain these levels going forward. On the finance cost side, we were able to bring down our interest cost to approximately 8.4% exit March, which is a reduction of 143 basis points on a full year basis, which resulted in cash savings of INR 50 crores during the fiscal, and this translates to an annualized savings of approximately INR 75 crores to INR 80 crores. We also saw a consistent ramp-up in our collections, and consequently, our net debt stood at INR 4,885 crores, a reduction of INR 380 crores during the year. We remain committed to bringing down debt levels in the medium term. We continue to work on our ESG journey and as a significant achievement during the fiscal, DLF Limited was the only real estate company to be included in the Dow Jones Index. We joined the rank of just 11 companies from India. We are hopeful that we will make further strides in our sustainability initiatives. We are enthused with the recovery witnessed in the residential market and expect this growth cycle to continue in the long run. Given the strong outlook for the residential segment, we continue to embark on this up cycle and remain committed to scale up our new product offerings across segments and geographies, including Delhi, Gurgaon and [ South ]. We plan to launch projects, adding up to approximately 8 million square feet during the fiscal. Our Q1 launches have got [Audio Gap] sales continues to exhibit growth and hiring activity is expected to rise, hence, we continue to maintain a positive outlook for the rental business in the long term. We strongly believe and remain confident that our strong balance sheet, quality assets and new product pipeline will enable us to withstand any short-term dislocations caused by the pandemic. We are ready and poised comfortably to ride the growth wave once normalcy returns to the market. I'll end here. I'll open the floor for a Q&A session. Thank you.
[Operator Instructions] Our first text question, which is from the line of Adhidev Chattopadhyay from ICICI Securities. The question is, what was the total office area which expired in FY '21? And how much of that was released? What other scheduled expiries or office portfolio in FY '22?
Okay. I am Sriram Khattar, I'll take that question. The expiry in the 33 million portfolio was in the -- was 1.5 million. And between 75% and 80% of it was released. In FY '22, the expiry is roughly the same. It's about 1.6 million and we expect the renewals to be between 75% and 85%.
We'll take our next text question, which is from the line of Vasudev Ganatra from Edelweiss. His question is, what is the gross new sales value for Q4 FY '21?
Yes. For the full financial year, it's -- new products are contributing to INR 908 crores and for quarter 4, it is INR 464 crores.
The total sale. Total sales for Q4.
Total sales for Q4 is INR 1,058 crores.
Our next text question is from the line of Murtuza Arsiwalla from Kotak Securities. His question is, can you provide breakup of pending construction cost for the extent development portfolio as well as the launch of new developments?
I think we've provided some details on that. I will just -- yes. So the total payables for -- the total payables we've shared is INR 1,242 crores, and of which construction payables are almost close to INR 700 crores. CapEx is INR 331 crore, and the new development is INR 230 crores. That's broadly the breakup of this INR 1,242 crores, which we've shared in our presentation.
But given that 1Q was obviously going to be pretty much a wash out, you think we can still maintain this INR 3,500 crores or maybe an annualized velocity of about INR 4,000 crores for fiscal '22? So that's the second one. And third is, Tyagi sir, basically, on this net debt slide, it seems to me that on Slide 28, you will pretty much -- I mean, in 2 or 3 years as this inventory rolls down, you should pretty much be 0 debt, I mean, given that you have this cash surplus. So should one assume that you will basically reinvest a lot in your new projects to effectively grow the business? Or I mean, effectively, will that debt come down to only INR 2,500 crores, INR 3,000 crores? Or will it go down to 0? That is basically the question I'm getting at.
Okay. So let me -- Saurabh, let me take the first question on -- your question of so-called rising vacancies and whether INR 4,500 crores rental. We are on track for that for '24, '25. I just want to share some data on the vacancy. As of March 31, our vacancy is around 12%. In the entire portfolio of 33 million [indiscernible] and also with the same focus on Camellias where we -- year-on-year, if you see for the past say -- I can safely say, 3 to 4 years. There has been a consistent delivery on sales with an increased value of per unit sales as well as both gross and net numbers. So that also -- and that being said, even this quarter, the start has been pretty good for all the restaurant inventory. And we are on line with -- in line with whatever the guidance that we provided. So both this year, Part A as well -- as I'm sorry, as the rest of the business and Camellias and Super Luxury, we will be able to make those numbers.
Okay. Sir, Akash, just one follow-up here. Have you taken any price hike in any project at all?
Yes, Saurabh. I'd be happy to announce to you that you asked that, not only here, just last quarter, when we launched the floors. Let me tell you just one zone of that floors, in one of the geographies, in just about 3 launches in about 6 weeks, we took the price up by INR 1,500 a square foot. In the other zone, which launched in, say, about 2 weeks from that time, we took the price up by 4,000 -- between INR 2,500 to INR 4,000. So not only to your question in every business of ours, across the residual inventory, I'm saying, which at one point in time, Saurabh, in 2018 with respect I'm saying, you guys thought it was all done, but we have now been able to not only sell well and also create value in terms of increase in our net gains and all that. So everything has gone up. Plus, let me tell you, again Camellias alone, if you see our -- you will see there's a price increase of almost every phase of the independent floors that Akash is launching. Every page is priced slightly higher than the previous. And the market so far has been accepting that. In fact, one of the very interesting things that broker in Gurgaon will tell you that ever since from November, we bought a independent floor in the market. The price of the plots has jumped by anywhere from 30% to 40% in the secondary market [indiscernible].
I'm also happy to tell you that Alameda, which is in New Gurgaon is now retaining at about over a 1 lakh square yard and not one sales, Saurabh, almost I'd say, about over 20 sales. So I think these, we are demonstrating enough strength on ground. But not talking about it right now, but I think the numbers will show.
Our next question is a text question, which is from the line of Puneet Gulati from HSBC. The question is, what drove increase in finance and construction costs in Q4? And is this run rate a new norm? Your notes to account talk about some acquisition of some entities. Can you talk about what do these relate to? And what is the balance construction CapEx for DCCDL?
So the acquisition of the entities, Puneet, basically, you may recall that we had a -- plus of entities with whom we had entered into development agreements over the course of the last decade. So even though the development rights of those entities was completely with DLF. But the nominal title of those entities was still with those third part entities. And across the last 12 months, we have, in different phases, been acquiring those entities to ensure that we have a 100% title on those lands. So I'm very happy to mention that with the entities that we acquired in this quarter. Now almost 100% of those Gurgaon and rest of India lands that were earlier with us, who have development right or 1 development agreements have now been fully acquired by us. And so I mean, from a time standpoint, from a future growth standpoint, I mean, now we are sort of -- this is in a far more secure position than what we were say a year back. So that, as far as those acquisitions of those land only, about 35-odd land owning companies are concerned.
Yes. Now on the CapEx for -- this is the Chennai CapEx you talked about, I think that the number is close to INR 150 crores or INR 155 crores to be precise. On the finance cost, full year basis, Puneet, the number has dropped by almost 40%, but your question is more on quarter 4 which is the exit cost for quarter 4 is INR 191 crores, which compared to quarter 3, is down from INR 198 crores. And if I compare year-on-year basis, it is down by 19%. So the cost is on a declining trend. That's one, right? So if you're asking me, is this something we are able to sustain on a full year basis? The answer is yes. In fact, if you really look at our cost for this quarter, we are confident of bringing our costs down by another 20 basis points even this quarter. So we are not only confident of meeting this number, but beating this number.
Our next text question is from the line of Milan Mehta from HSBC. The question is, when is our GIC JV project scheduled for launch? Any specific debt reduction target for FY '22?
So on the GIC JV retention project, look, that is going through some approval issues in the -- in Delhi. I mean just to sort of put it in perspective, this is the biggest single project from an approval standpoint that Delhi has seen since Capital Green's launched about a decade back. So even their approval priorities are sort of being tested, if I will, and the lockdown didn't help. But we are optimistic to be launching it hopefully in Q3 of this year with all the approvals in place. So that is as far as that is concerned. The second thing, Milan, on the net debt, as Vivek mentioned earlier, look, we are clearly focusing on reduction of net debt. But as a principle, except for the sales guidance, we do not offer a explicit guidance on the net debt number for fiscal '22 but clearly, the trajectory should continue on a downwards spiral.
Our next question is from the line of Abhinav Sinha from Jefferies. Mr. Sinha would firstly like to congratulate Mr. Tyagi on his elevation to CEO. There have been other board and management changes as well, including induction of 2 family members on board. Can you please detail the thought process behind these changes a bit? Such as any realignment of responsibilities? Second question is on residential business. Can you provide some granularity on new launches in the Value Homes segment? Premium and luxury housing? And third question is on lease business. Has there been any reduction in office rentals in key markets such as Cyber City and Chennai?
Okay. So thank you, Abhinav. From an induction of the 2 daughters of Rajiv Singh, our Chairman, on to the Board. Frankly, I think both Savitri and Anushka are now in their mid 30s. And I think it was generally felt that from a promoter family guidance and ownership standpoint, this was the appropriate time for them to come on board in an nonexecutive capacity right now and start observing the operations of the company in far closer detail, if you will. And hopefully, sort of give them the right experience to go forward as things progress. So that is really, as far as that is concerned. As far as the appointment of the 2 CEOs is concerned. As you know, we had 2 CEOs who retired last year, Mr. Mohit Gujral and Mr. Rajeev Talwar. So even from a statutory standpoint, there were vacancies that existed. And hence, 2 of the whole time directors were redirected as the CEOs. Okay. The next question...
Was on the sales.
Was on the sales, just thinking of Gurgaon. Yes. So the next year, we are looking at total launch plan of 8 million square feet and the details we had shared in the analyst deck, but I'll just briefly summarize it for your benefit. Of this 8 million, the independent floors we talked about based on the success we had in the last 6 months of last fiscal. We'll be continuing with that, close to 1.8 million launches, right? That will be in Gurgaon market. We are looking at launching 1 million-plus of commercial in DLF 5, New Gurgaon and Delhi market. And then Value Homes of close to 3 million we are planning in Gurgaon, Tricity and Chennai, right? I'll hand it over to Akash to build on this.
Yes. So basically, what we're also seeing is that consistently, there has been a demand in all segments. And if you saw our performance last year can also previous one, right, whether it's the superluxury segment or the value homes or now the new products that we've launched at the close. I think what I am seeing in the market is people because of our lack of new launches, I think that space that was created was taken over by others. And I think it's an overwhelming response that I can respond to [indiscernible] were to do those comparisons. This further goes to demonstrate that today, real estate, of course, being an asset class that has been preferred. But I think if you compare it with any other developments or other real estate companies, it's a very interesting fact. You will see our collections are even doing, I'd say, almost at par with the sales where people are -- have the confidence today to actually break their mutual funds, don't know if you would like that. But -- and now actually divert this money to real estate assets, which I'm seeing and earlier, I thought it was an aberration in our last call, but now I have seen this as an endorsement of what we've been doing all along. So I think that's a message that I'd like to give you all. On the question of the rental rates in Cyber City, Gurgaon and in Chennai, 2 facts. One, there is no increase that is happening. And two, the rental rationalization is happening at the periphery, but that is happening for a short period of time. And there is always a risk-reward ratio, which we weigh in terms of trying to keep a place vacant or rent it out at marginally rationalized cost for the next 3, 4 years, but have the rental ticking in. There has not been any dramatic reduction in rates.
Our next question is a follow-up from the line of Milan Mehta from HSBC. He would like to note that does the sale guidance stand if GIC JV project gets delayed?
Yes, Milan, the sale guidance of INR 1,000 crores a quarter is well cushioned even in the extremely unlikely event of the GIC JV getting delayed.
We'll take our next text question, which is from the line of Nikunj Mehta from HSBC Asset Management. The question from Mr. Mehta is, how do you see traction in Camellias in terms of sales velocity and pricing post completion of clubhouse?
Thanks. So if I can just quickly go back to the last, say, couple of years or 3 years of traction of Camellias. It's consistently perform at a certain level and there's a price increase. So if you've seen, there's almost been a 35% increase from, say, what we started of -- in say about 3.5 odd years. But going forward, the clubhouse, unfortunately, because of the second wave, everything had to be deferred. But that is something that people are yet to see and believe that a product like this can exist, forget India, I'm benchmarking this with anything else that is ever built in the world. I don't think there's anything that can come even close to a Camellias and the clubhouse in the whole world. It has put to shame a lot of 5 star hotels. And we are also making sure that the services levels of the Camellias are backing this up to the [indiscernible]. So there is nothing left to judge. To answer that question. Yes. We are already seeing -- in fact, let me answer this in a way that everybody will understand. So we started a rental program that you all asked about -- asked us in the last call. Happy to now announce to you that just 2 days back, and the smallest apartment size is 7,400 square feet. Got leased, and that was not our apartment. It was our investor's apartment, got leased at 7 lakh, 25,000 a square foot.
7 lakh...
Sorry 7 lakh, 25,000 per apartment and plus the maintenance. So what that actually means is today, we are at -- at the Camellias, we are at about INR 37,500 net of we are doing, say, about INR 33-odd thousand. This can easily has the potential of going up by, if you even capitalize that rental, that's about INR 14,000. So I mean, I -- first, yes, we -- even in this quarter, we have -- as I mentioned to you, we have increased the -- receivables have gone up because our discount patterns have come down by almost half. But I assure you, going forward, the potential is what I just mentioned, per square foot is reasonably high.
And velocity of the sales.
Velocity of the sales. As you see in results have continued to be there. In fact, in the pandemic after this whole thing left and people kind of got a breather, within that, there were about almost 3 to 4 Zoom calls. And then, of course, as soon as it ended, there were about 5 to 8 site visits, which were done in the first 3 days of the lockdown ending. So I am seeing traction. I am seeing demand. We worked very hard over the last couple of years to create that. The messaging is all over the world. And I think if you ask me, with regard to how many people are right now interested. I can safely tell you there are upwards of about almost 50, 5-0, people that we having a conversation with, who are on the -- in the A category, which is -- which I call the hot category. So I think we are -- we will make sure that, to your point, we will make sure that not only the price goes up, but also the value does. Thanks.
We'll take our next question, which is an audio question, from the line of Kunal Lakhan from CLSA.
So we have about a lease area of about 3.3 million square feet in our under construction portfolio. And of which, almost 2.5 million square feet is in Chennai alone. So my question is with the kind of slowdown that we are seeing in new leasing in the mid-term [indiscernible]
1.5 million are already pre-leased to the extent of 500,000 square feet. And these will be ready by Q3 to early Q4 of FY '22. We believe by the time they come up, we are making all efforts to see that they are predominantly preleased.
Sure. Just let me ask this differently. So in case, in a hypothetical situation, if we don't end up preleasing or if there is no execution of the option value, where would that INR 4,300 crore or INR 4,400 crores rental stand at the end of [ FY '22 ]?
Yes. So let me explain that. I think let me first correct it. The question which Saurabh had asked, I had answered that FY '22, the exit rental will be in the -- the March exit rental will be such that FY '23 will be INR 3,700 crores, INR 3,800 crores. And please appreciate that in addition to the existing rentals that we have, Cyber Park, which is 2.5 million will be at its full potential by the end of this year. In terms of the tenants having to start paying rentals, it's already reached about 70% of it's full potential. The block 12 in Chennai will also give the full rentals. So -- and then we will have the benefit of One Horizon Center acquisition for the entire 12 months. So given that, we will reach INR 3,700 crores, INR 3,750 crores for FY '22. And based on the exit rate, we will move on also aided by the fact that retail, which we have a normal potential of 700,000 to 750,000. In the current year, we are projecting about INR 375 crores to INR 400 crores. And this will become -- this will have it's full potential in the coming year. So I think we are fairly in line to achieve what I mentioned earlier.
And with respect to your question on the REIT. So I think what we will be, hopefully, is that we should be REIT ready in about 4 quarters from now. We have more or less frozen the restructuring decisions that we need to take. And I think now it's the pressure of implementing them through the various modalities as what would have been required. Now when the REIT actually gets listed, it's fairly a decision between the 2 shareholders, DLF and GIC and the state of the market at that time, frankly. So that, I would rather defer to how things are in 4 quarters from now. But we clearly are targeting that we should be completely REIT ready by that time from a structuring standpoint.
Sure. That's very helpful. My second question is on -- you mentioned earlier in your comments that you may have surpassed INR 4,000 crore sales. Considering we are looking at an up cycle in housing and the strength of our brand and balance sheet. Do you think we can return to a sales run rate of INR 7,000 crore to INR 8,000 crore annually, which we used to clock, say, prior to 2012?
Yes, we can. I mean, I don't think there is a doubt that we can't, but the issue is also frankly that -- and in all fairness, we don't want to necessarily be on a treadmill where we are generating 10% to 15% EBITDA and generating a INR 10,000 crores or INR 8,000 crores of sales per annum. That has never been our goal, that will never be our goal. So I think we have -- what we will rather be focused on is a certain EBITDA and certain margin run rate. And hence creating products, which not only sell well but also our EBITDA accretive and generative. But clearly, with the kind of launches that Akash has planned, with the complete potential of the GIC joint venture, which is about almost 9 million square feet across the next 4 to 6 years. I mean I see no reason why this INR 4,000 odd crores a year should not keep on growing as long as the overall macro situation remains constant. In all fairness, we have detested from giving attractive growth path right now. But we believe that once we have a few quarters of consistently 4 digit sales per quarter behind us, we can lay out a -- layoff hopefully a faster growth part as well.
Just a related question on that. So do you think beyond the launch pipeline that you've highlighted, there is potential to bring in a lot of plotted developments across our portfolio?
No. So most of the plotted developments, actually, what we are doing in the last -- since October, November and will continue over the next 2 years, is to convert them into floors and monetize them that way, which clearly is a more lucrative way. But I mean like throughout this year, except for the GIC JVs, we're not planning the launch of any of the high rises in Gurgaon. I mean at some states, those will state to come back and those will state a significant comeback. And that's when the sales growth should start gathering momentum even further, maybe except for one-off in the plotted launch, there may not be too many plotted launches per say, am I right, Akash?
Yes.
No, I was saying that plotted, as you know, has had its own traction and acceptability. But to immediately convert that into flows or create value, I think that has been lapped up much faster. So plotted, as far as the land is concerned, well has its own plusses and that will remain. But I think today, the demand and both from the point of view of condominium living and yes, living independently with a certain amount of services to name. I think both those things are running as far as those demands are running concurrently today. And so today, the customer wants a ready-to-move-in opportunity rather to -- rather than get into a mode of construction. So I think that's what Mr. Tyagi is saying, we will monetize it through that process.
Thanks again. And congratulations, Ashok, on your elevation to the CEO.
Thank you.
We have -- we'll take our next question, which is a text question from Samir Baisiwala from Morgan Stanley. Firstly, he would like to congratulate and give his best wishes to Mr. Tyagi. His questions are -- first question is, what are your thoughts about golf course extension micro market? Is there a business rationale for you to build presence there? Second question is on commercial leasing. The question is, when do you expect new leasing markets to open up at pre-COVID levels? When do you expect completion of downtown Gujarat -- Gurgaon and Chennai? And any plans on Phase 2 downtown Gurgaon? The third question is, he would like to know your updated thoughts on Tulsi Wari and Chanakyapuri. And the fourth question is, how much time do you give yourself to sell down Camellias inventory?
So would he like to know about golf course extension growth from a residential development point of view or from the commercial development point of view?
Maybe, sir, you can come to the...
So okay. So I'll leave the leasing question to Sriram. But on the 2 questions pertaining to the resi market. So the golf course extension growth, frankly, especially ever since the entire Cybergate to golf course road and the enterprises got constructed. And actually become a pretty attractive micro market. And the players there are doing well. We have one extremely strong site of 25 acres there, which is on our radar and at some stage, will come in the launch pipeline. But clearly, golf course extension road has emerged and has a good micro market in that piece of the entire geography. Your question on Tulsiwadi and Chanakyapuri. So Tulsiwadi, the strong rehab activities are going on, they were impacted in the last 3 months because of the Mumbai lockdown. So like there is one tower, which is now ready on which the entire rehab process will commence once the lockdown gets completely lifted. We expect and I don't fully understand the nuance of the Mumbai [indiscernible] but what I'm told is the first phase of the sale building should be at least technically available for launch in the next about 9-odd months. Now the exact timing of launch and all of those things will obviously have to be discussed between the 3 shareholders and besides, as you know, we only own about 27.5% shareholders in that JV. But clearly, we do believe that now the hard -- the grant towards -- a significant chunk of that is behind us. And hopefully, the sale pipeline should commence in the next 9 to 12 month process. Chanakyapuri, I think clearly, we are -- we continue to work on the planning and all of those things. As we had mentioned last time, we are still hopeful if we can get some additional approvals to be able to increase the development potential of that -- of that entire township. And that may still be maybe 1 to 2 years away from actually completing the planning process, really. The -- most of the legal issues with respect to that have all gone away, including its eligibility for developing residential and all of those things. Now it's only a question of how much development potential are we able to eventually get around that front.
On the 2 questions on the rental side. The first one was, when do we expect the leasing to get to pre-COVID levels? To answer that, the pre-COVID levels office leasing were between 6 million to 7 million square feet in terms of gross leasing per annum. I believe that if this vaccination program continues and a substantial portion of the population is vaccinated by this year-end, FY '23 should be near around that level, if not the full 100%, at least 90% of that level, which FY '23. In terms of completion of Downtown Gurgaon and Downtown Chennai, Downtown Gurgaon will be -- the first 1.5 million will be completed late Q3, early Q4 of FY '22. And Downtown Chennai is in the first phase, 2 phases. The first phase will be completed by the middle to third quarter of next calendar year. And that the block that we are building of 1 million square feet, which is already preleased, will be completed within 12 months after that.
Our next question is an audio/video question from Mr. Puneet Gulati from HSBC.
This is a follow-up question. Just on the same interest cost and construction cost. So if you noticed, in Q3, your finance cost was INR 128 crore with -- went up to INR 211 crore. Similarly, construction costs, Q3 was INR 232 crore, went up to INR 394 crore. So that's what I really want to understand. In Q4, what really led to this increase in the construction cost and finance cost?
No, I think you'll have to repeat the question, please, right, for my understanding.
Yes. Sorry. So in the cash flow statement, there is a finance cost, which has gone up to INR 211 crore from INR 128 crore in Q3. And similarly, on the construction cost, it is INR 394 crore versus INR 232 crore in Q3. So what is driving this increase in the -- in both these costs?
So finance costs, clearly, I think that's to do with the NCD interest what we've paid. So as you know, the NCD interest gets paid in the month of March. So while we improve it every quarter, but the payment happens annually. So that's almost close to INR 90 crores, right, that got paid during the quarter. So that's answering the first question. Second question is on your construction cash phasing. INR 207 crore, INR 230 crore, that's largely to -- linked with the construction activity as the construction activity has increased, if the payments are actually linked to that. So it's nothing but a large part of the payments, almost close to INR 400 crores got paid because of the increase in the construction activity during quarter 4. In fact, I would say, second half of last year. While it picked up in December quarter, but a large part of the outflow happened in December -- in March quarter.
So is INR 394 crore kind of quarterly run rate is what one should assume going forward as well?
No, no. I had given the guidance. It's around INR 1,200 crores. So you can take a run rate of INR 275 crores to INR 300 crores.
Okay. Understood. Yes. Yes. Okay. That's understood. And similarly, there is an other income increase for DCCDL. What does that relate to?
So the other income increase in DCCDL is primarily due to the accounting standards, which requires us to do the fair market valuation of the asset acquired. We have acquired one Horizon Center completely in February. And since the earlier acquisition of about 50% bought at a rate lower than what we acquired second 50% at, the difference between the 2 was acquired and has come as other income. That's primarily the other income.
Yes. Got it. Understood. And for the balance construction cost for Chennai, you said INR 150 crores is the balance construction cost for Downtown Chennai, what would be the balance for Downtown Gurgaon?
Yes. Let me share the figures with you. The first 2 towers of 2 million, the total cost is about INR 800 crores. We have incurred about INR 200 crores to 250 -- INR 275 crores, and the balance, INR 500-odd crores will be spent. On the third tower, which is pre-leased, we have not spent much at the moment. I think in terms of mainly the architectural fees, et cetera. But the -- that, which will be constructed over the next 24 to 30 months. The cost of that is about another INR 400 crores to INR 450 crores.
Okay. And for Downtown Gurgaon?
Downtown Gurgaon, we -- the first 1.5 million, out of INR 600, we spent about INR 350 crores, INR 375 crores, and the balance INR 200-odd crores will be spent, INR 225 crores will be spent in the next 1 year. Typically, what happens is that even after the building is up and running because of retention and other clearances, the payment for that, it continues for a period of 12 months after that. And the carryforward is roughly 10% to 15% of the total project cost. So whilst -- I mean, if you take Cyber Park as an example, we -- while the total project cost was in the ballpark of INR 1,350 crores to INR 1,400 crores, we still have about INR 100 crores, INR 150 crores of retention money and other monies to be released to the contractors for Cyber Park.
Now the Gurgaon, the physical construction is almost complete.
The physical structure is complete. The MVP and facade work is ongoing. It got a little slowed down because of the second wave but I think we are well in line to get our occupancy certificate by end of this calendar, early next year.
Understood. And for the balance, 1.5 million second phase downtown Gurgaon, how much would you need to spend?
1.5 million in downtown Gurgaon?
Yes.
Yes. So that, I think we can go with a ballpark figure of about INR 4,500 a square foot on 1.5 million. So that's another INR 600 crores that we need to spend on that.
Okay. Inclusive of all approval costs?
Yes, I think, yes, it's inclusive of approval costs and architectural fees, etc cetera.
Understood. My last question is on the Board composition. So now you have 2 additional members on the family side joining, replacing the earlier CEOs. And in your notes, you also mentioned 2 independent directors resigning. So is the balance between independent and nonindependent still the same? Or do you have to recruit more independent directors now?
So we had 9 independent directors, of which 2, Dr. Kapur and Mr. Memani retired. Dr. Kapur was about 90, Mr. Memani was about 82, and they have both retired. Their tenure ended on March 31. And obviously, because of their age and the fact that they served those 2 terms under the new company's act and were not eligible for reappointment, they retired. So the number of independent directors is now 7. And the number of nonindependent directors, including the executive Directors, with the inclusion of these 2 new board members, which is also 7 now. So we are now at 7 and 7, which is what is mandatory for [indiscernible].
The next question is from Saurabh Kumar from JPMorgan.
The first question is on this Hines JV. I mean, the Hines JV, is there any preleasing you have done Khattar sir there? Or that's just Hines' responsibility and you are pretty much done on that?
No. So the Hines JV, Saurabh, as you know, is 2/3 DLF and 1/3 Hines. And the master planning is just about finishing. And because the master planning is finishing, the excavation work, et cetera, has started, but the physical construction will take another few months. We have yet not started marketing it.
But the leasing responsibility resides with DLF or Hines or...
At the moment, it's combined. I think we have a very deep relationship with Hines for the last 10, 11 years. And we plan to lease in a manner that are able to leverage on each other's strength. I think Hines connects in the U.S. from where a number of multinationals come to set up their back offices and [ captures ] of an extremely high order. And DLF and our leasing teams are very strong in the local markets. So we plan to create a synergy between these 2 to create the best leasing that we can do for that project.
Understood. Second is, sir, on this REIT structure, I just want to understand what DLF's corporate structure will evolve to. It seems that the REIT will be a subset of DCCDL, right? And it will probably -- like would you put office and retail both in this? And what do you think about the development pipeline? So I mean you have a 67-33 and then DCCDL's owns like a single REIT? Or is it 2 REITs? If you can give some clarity on how your eventual corporate structure evolves around with this REIT.
Saurabh, I'm delighted that you are finally getting interested in the REIT structure.
I'm not sir, but have decided to go ahead with it.
But to be fair, I mean whatever little we have -- I mean, sort of drawn this trauma with the fact and in everything. Actually, the REIT most probably will come above Cyber City. So the REIT will be owned by the 2 shareholders in the prelisting. And then Cyber City and other entities will fall below the REIT. That will be the most efficient mechanism from an income extraction stand.
And this is just the office business, sir? Or...
No that again, sir, is something that we'll obviously work with the banker. So there only 2 decisions to be taken, one is the office and retail only office. And b is, how do we ensure that the development pipeline is at a commercially acceptable level of whatever comes in the mid-teens and does not grow beyond that. So does that need certain restructuring. Those are the 2 pieces that Sriram; Vivek, I -- Sriram and our CFO, Navin, all of whom are sort of working with the tax consultants and the GIC books.
Okay. And the third thing, sir, on this parent company cash flow. So your 2 projects, the GIC, the JV, Horizon Center is a JV, right? So after, as Vivek said, INR 1,200 crores construction outflow, you're pretty much done on the existing projects. So I was just wondering because your -- I mean the Delhi sales will probably not reflect either in your P&L or in your cash flow statement. So should we expect that from here on after this INR 1,200 crores, like you just have inventory and maybe just INR 800,000 crores of CapEx because from whatever is like...
Look, the sales responsibility for the GIC JV is ours. So you still see that sales number appearing in the presale. But you're right, from a P&L and an income recognition standpoint, that will follow a more complex method of revenue share and other income heads. So there are certain income heads identified as per the JV agreement by the DLF tax income and their certain income and GIC gets the income. So that will be driven by both streams in that sense. Like any JV with a sovereign fund, but this is responsibility will completely rest with our industry.
No, I was asking mostly from a cash flow perspective. So we don't see either...
No, that doesn't come from both industries. So you're right, the fair cash flow will go to the JV and when the JV pays out those brand fees and revenue share fees and all the other fees to both the shareholders, that's how the cash flow will start exactly.
Okay. Okay. So after this INR 1,200 crores, whatever you have to spend, basically, it's all new projects, right?
That's right. Absolutely. Absolutely. Yes. That's absolutely right.
The next question is a text question from the line of Sourabh Taparia from UBS. His question is, when do you expect to generate operating cash on the DLF levels as even with INR 1,000 crore of quarterly average sales and reduced OpEx, one-offs like tax refunds, et cetera, are helping generate positive cash?
So I think, first of all, I think this -- the last financial year itself, I think we've generated almost INR 382 crores of cash. But yes, you're right. Technically speaking, yes, the income tax refunds actually aided that generation. No doubt about that. But I think, as I already said, our collections, which are improving quarter-on-quarter. Our cost base, which has been set, and payables, which I talked about, INR 1,200 crores, including all commitments for our inventory, right? And as new products, we start launching and they start generating cash. We are confident that this year, we will be able to sustain, if not improve the performance on the cash front. I think this quarter may be a bit challenged, but we are still trying our best. But on a full year basis, we certainly are committed to improving our performance compared to the last financial year.
We'll move on to our next question, which is from the line of Manish Ostwal from Nirmal Bang Securities Private Limited. Firstly, congratulations to team DLF on good set of numbers. His question is, what would be the second wave's impact on retail portfolio in terms of rent waiver or vacancy levels? And when do you see DCCDL to pre-COVID occupancy level, which is 95%? On DLF resi DevCo business, how is current sales inquiry and converting sales trend? Your views recently approved model tenant act and overall housing rental market development in your key markets.
So let me take the questions on the retail business and what we plan to do and when do we look at occupancy levels to pre-COVID levels. See, on retail, let me take you back last year where DLF retail took a leadership position in the industry and decided to support the retailers by charging no rental during the period where the malls and the shops of the retailers were shut down. Whilst we have not taken a final decision on this, we expect that the program this year will be on similar lines. However, unlike last year, where the come back to the malls were slow, we believe that this time, because of the vaccination program. And because of the various precautions that we have taken, we believe that the retailers will have a better year compared to last year with the footfalls coming back. So how the whole program pans out, I cannot say. But I can only say is that I believe that we should support the retailers this year also by not charging rentals during the period that the malls were shut. On the -- when will we reach our occupants of pre-COVID levels? I would tend to think FY '23, we will be somewhere near the occupancy of the pre-COVID levels. And what was your third question?
Sales in resi, trends in resi.
So with regard to the sales inquiry, I'll -- let me give you something that happened in April, immediately after the lockdown. So I give you an example of [indiscernible], where there was some [ residual ] inventory that was lined with us, which we were planning to bring out in any case in Q2. And then, of course, launch the second phase of [indiscernible]. But the inquiries and this whole option of having a second home which is an extension of your first home, I think that became a reality. And in 3 days, flat, we sold about -- we sold that entire 90% of inventory in 3 days. Now so not only inquiries, to your point, but also people are immediately wanting to make those commitments and putting the money down. One is that. So that was one area. We saw similar tractions in Tricity, which is [indiscernible] and [indiscernible]. We saw in Indore, we saw in the floors, as I was telling you, just as we have started to open, I was making that point about Super Luxury. I'm happy to let you know that as we stand today, we are already in the numbers, as I said, almost coming close to the double-digit in Super Luxury sales in just this quarter. So I am seeing an increase in residential investments, residential demand. I am seeing that happen for 2 reasons. I'm seeing a very clear trend of people wanting to upgrade or increase the size of their homes. That is -- I saw that the first time I participated in one of the webinars in June, I had made that comment where at that point in time, it wasn't substantiated but as we saw in quarters going forward, it's -- that's what it is. So I see a big demand in residential apartments and residential -- I see a big demand that in that business. I also see people now very clearly looking at second homes as not an option anymore, but as something which has become a necessity. So that is something which is good, where an extension and a second home is now becoming a priority for people. That is very clear. The trends are clear and so are the sales closures. So hopefully, both those points are taken care of. You talked about the model tenancy, that I feel is more or less, we've been conforming to most of that even previously. So if you look at deposits of 2 months versus 6 months in commercial, I think for us, we've been following that. But I think it will only add to the -- I think some of these residential agreements that have recently happened, maybe there is an uptick I see there. So I think there also, we will see some kind of increase and confidence that the market will have. This will only -- all these measures I'm seeing are only going to increase the demand for the residential sector.
Ladies and gentlemen, that was our last question for today. I now hand over the conference to Mr. Tyagi for closing remarks. Over to you, sir.
Thank you. So thank you all for joining us on a Saturday afternoon. This seems to be our preferred time for inviting you anyway. And all of us are emerging from a pretty tough COVID situation. And I hope all of you and your families are safe and continue to be safe. I think, clearly, the -- residential sales is gathering traction. And the commercial leasing business also after some [ interval ] on account of the COVID, I'm sure has a extremely strong roadmap to grow. We believe that we are now geared up well for leveraging the opportunities offered by both of these businesses. And hopefully, we'll continue to stay engaged with all of you. Later part of the year, hopefully, as travel becomes more prevalent and then the residual COVID issues die down, would love to host all of you in Gurgaon again and show you not only the new Camellias Club, but also the completed Cyber Park, the advanced completion stage of Downtown and whatever else is happening. So clearly look forward to continued the engagement. Thank you.
Thank you.
Thank you.