The back to office trend, post Covid, has been “gradual and encouraging”. However, SEZs with primarily IT services companies “have been slower” on the back to office trend as compared to those that have “global captives and tech product companies”, Vikaash Khdloya, CEO, Embassy Office Parks REIT said.
According to him, Bengaluru is one of the cities that is witnessing a quick rebound in occupancy post opening up. For instance, at the Embassy TechVillage, where there is a large proportion of global captives, the park population has risen to 45 per cent.
“There is a strong rebound in demand. Enquiries are up. We believe that as the current attrition concerns balance out, there will be more positive ramp-up on back to work by the IT services companies and we will see more demand,” he told
New notifications mandating at least 50 per cent back to office and additional compliances for those who continue work from home, should lead to a positive trend for occupiers in SEZ premises that predominantly have IT services companies., says Khdloya.
“We will have to wait and watch but we think this will help the back to office ramp up, especially in properties in cities like Pune and Noida,” he added.
‘Leasing highest this Q1’
Against a total leasing guidance of 5 million sq feet for FY23, the Q1 (April - June) ;leasing was 1.8 million sq ft across 25 deals – one of the highest in a single quarter for the company in the last seven years.
The leasing for Q1 includes new leasing of 415,000 sq ft at 31 per cent re-leasing spreads and “at above market rents”; end-of-tenure renewals of 850,000 sq feet - mainly by IT services occupiers at Pune and Noida; and 550,000 sq ft pre-commitment.
“We ended the quarter with a stable occupancy of 87 per cent and one million sq ft of new deal pipeline,” Khdloya said.
Embassy REIT reported a 12 per cent jump, y-o-y in revenue from operations to ₹829 crore for the quarter ended June 2022. Net Operating Income grew by 9 per cent YoY to ₹677 crore The NOI margins were at 82 per cent. The company’s EBITDA grew by 9 per cent to ₹655 crore. The Distribution per Unit declared were ₹5.33 for Q1.
According to Khdloya, Embassy REIT continues to evaluate “numerous third party opportunities” including in markets like Chennai and Hyderabad.
The REIT is still evaluating the Right of First Offer opportunity received from Embassy Sponsor in January in relation to Embassy Splendid TechZone, a 26-acre business park in Chennai, totalling around 5 million sq ft when fully developed. Of this, 1.4 msqft is fully complete and 85 per cent occupied and an additional 1.6 msqft is currently under development.