Unitech Corp Parks’ portfolio value 19%

Unitech Corporate Parks (UCP), the London-listed commercial property leasing firm, said its portfolio valuation has dropped by 18.8% to £310 million at present from £382 million in March due to weak commercial leasing market.

UCP invests in Indian commercial real estate being developed specifically for the IT and ITeS sectors.

The decline is largely because of an increase in weighted average cost of capital, weak demand, oversupply of office space and extension of the Software Technology Park Scheme till fiscal 2012, which would negatively impact the movement of tenants from IT Parks to special economic zones.

UCP has 60% ownership in its projects and the rest lies with the real estate developer Unitech.

UCP, which owns six assets, has been able to lease only 0.3 million sq ft of the portfolio of commercial space in the first half of the current fiscal.

UCP has overall plans to construct and lease about 21.4 million sq ft and has already constructed a superstructure of 4.98 million sq ft, of which 2.06 million sq ft is ready for occupation in Gurgaon and Noida.

Meanwhile, there has been delay of 5-7 years from the initial estimated completion date for the 21.4 million sq ft.

However, a company official said that they are seeing an uptick in the commercial leasing market and its rent yielding assets are expected to increase about 48% by June 2010.

In a statement, Atul Kapur, chairman, UCP, said, “Post-September we have begun to see sustained signs of recovery for the real estate market in India as a whole, and particularly for some of the assets in the company’s portfolio. With economies globally showing signs of stabilising, we expect demand for space take-up in our assets to pick up.”

UCP is listed on the London Stock Exchange’s Alternative Investment Market (AIM). Unitech sold 60% of its stake in six commercial properties such as SEZs and IT parks in Gurgaon, Noida and Kolkata to UCP before the listing. Unitech provides management services to UCP to get clients.

The company had an annual rental income of Rs 48 crore by September, which is expected to ramp up to Rs 53 crore as the market has started to improve.

“The attractiveness of outsourcing IT/ITeS to India is starting to become apparent again,” Kapur said.