Real Estate

Despite Covid-19, Embassy REIT bullish on India

Our Bureau Bengaluru | Updated on July 20, 2020 Published on July 16, 2020

Embassy REIT has seven office parks and four office buildings in prime locations of Bengaluru, Pune and Noida

Says India continues to offer employee cost advantage, affordable rentals

“While our rental collections since the outbreak of the pandemic are encouraging and remain healthy at over 90 per cent, demonstrating the resilience of our office business, we recognise that we are still in early stages of this global business disruption,” said Michael D Holland, CEO Embassy REIT, in a note to shareholders.

“There is uncertainty, many views, and speculative comments about the potential impact of issues such as social distancing, work from home, workplace de-densification, business travel reductions, liquidity squeeze, and so on. In addition, we are still operating in a restricted environment today, and it is difficult to estimate with a reasonable level of certainty as to how long the current challenges will persist,” he added.

Flexibility in employee work styles

Listing out positive views on several areas amid the uncertainty, Holland said “Firstly, the office market will witness a significant reduction in the densities of the workplace, given the increased priority to employee wellness. Some of this de-densification, but certainly not all, will be offset by more flexible work styles, including work from home. The work from home experiment in India has delivered in this crisis, but our recent interactions with many corporate occupiers lead us to a preliminary assessment that while the industry may see more flexibility in employee work styles, the total business environment which Embassy REIT provides to its occupiers and their employees cannot, in India, be replaced by solitary work from home measures.”

STEM talent

Secondly, it is clear that a sector which is shining in the Covid-19 world is technology. “As a facilitator of new lifestyles – and, as we have highlighted in the past, our existing portfolio continues to be around 50 per cent technology occupier focused. We have a positive bias to India’s leading tech city, Bengaluru, further enhancing the resilience of our business in times such as today,” said Holland.

Technology companies are the fastest growing businesses in the world and accounted for most of the new leasing in many markets, including the US and India in 2019. With over two million students graduating each year in STEM, India leads in STEM talent for technology assignments and the cost is also favourable relative to the rest of the world.

According to Holland “It is because of this tech talent that, in 2019, India absorbed more office premises than any other national market in the world. Further, Bengaluru, which is our key market, continues to be the #1 location in Asia for technology occupiers. Hence, we underline our previously articulated message – we have a bias to the right sector, the right product, and the right markets in India.”

Employee cost advantage

Finally, pointing to certainty of the company's business, Holland said: “We are focused on delivering best-in-class office premises and amenities to the best corporations globally and in India, that we entered this phase with record office demand and low vacancies, and we foresee a dramatic tightening of new supply. Our core customer base operates here in India because this remains the global hub for technology talent.”

Further, he added that India continues to have a significant employee cost advantage and affordable rentals. “In fact, again, technology has become even more important to the functioning of the global economy and consequently, many technology companies are prospering in this environment.”

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on July 16, 2020
This article is closed for comments.
Please Email the Editor