With offices opening up post the Omicron wave and a “strong demand outlook”, Embassy Office Parks REIT, India’s first listed real estate investment trust and Asia’s largest by area, has doubled its leasing space guidance to 5 million sq ft in FY23.

Approximately 3 million sq ft of this is expected to be new leasing activity. Occupancies are expected to be at around 90 per cent for the ongoing fiscal and will continue to be driven by the technology sector. Markets like Bengaluru are picking up “very well” too.

“With occupancies being around 90 per cent and demand rebounding, plus consolidation to fewer players (happening), we believe we are entering a phase of growth,” Vikaash Khdloya, CEO designate of Embassy Office Parks REIT, told BusinessLine. Khdloya takes charge as CEO from July 1.

According to Khdloya, the commercial space provider will look at growth opportunities beyond its core market of Bengaluru and would look at acquisition opportunities in Chennai and Hyderabad.

“There is a 5 million sq ft property in Chennai which we are evaluating at the moment. We have the right of first offer there,” he said. Embassy Office Parks REIT’s net operating income grow by 23 per cent to ₹2,491 crore in FY22 and it declared a distribution of ₹499 crore or ₹5.26 per unit for the fourth quarter of FY22.

Rentals, hospitality improve

In FY22, it leased 2.2 million sq ft at 18 per cent spreads across 47 deals and achieved 14 per cent rent escalations on 7.7 million sq ft across 89 deals. According to Khdloya, rentals in Bengaluru have already started inching up by 5-7 per cent in general.

Average office park population in Bengaluru has inched up to 18 per cent and is likely to be at 25 per cent by June. In March, the average park population was around 11 per cent. In Mumbai, this number is up to 55 per cent already.

The hospitality sector is also witnessing an improvement — occupancy rates up at 40-50 per cent — he said, as international travel has opened up. “Hospitality and hotels are witnessing a massive improvement,” he said.

Although 94 per cent of Embassy REIT’s value is in office spaces, the presence in hotels is through Hilton at Embassy Golf Links, Four Seasons at Embassy One and Hilton Garden Inn at Embassy Manyata.

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