Blackstone Group Inc.-backed Embassy Office Parks REIT expects demand for office spaces to rebound in early 2022, as India's vaccination drive picks up pace and employees start returning to workplaces.
“Supply in the market is already declining. It has declined by 25% as per a recent research report by CBRE, we actually think it will decline even further, given the dislocation and the liquidity concerns in the market for developers today,” Vikaash Khdloya, deputy chief executive officer and chief operating officer of Embassy REIT, told BloombergQuint in an interview.
Rising demand and falling supply, according to Khdloya, gives them a "fantastic opportunity" to pursue growth. “Demand will definitely rebound in early 2022. It's more of a timing issue... and it's subject to third wave or some other unknown issue related to pandemic.”
Embassy REIT's revenue remained largely flat over the preceding quarter at Rs 737.64 in the three months through June. Profit, however, jumped 338% sequentially to Rs 204.9 crore owing to its acquisition of Embassy Tech Village in Bengaluru in December last year.
It collected over 99% of office rents on its operating portfolio of 32.3 million square feet. Occupancy remained unchanged at 89% compared to a quarter ago. The metric, however, dipped 2-3% year-on-year.
“There were 2-3% of occupiers who were directly impacted with Covid-19 related uncertainties so that resulted into the occupancy going down,” Khdloya said. “However, given the fact that we at Embassy REIT have over 190 occupiers, the portfolio has remained fairly stable and in fact over 70% are from the technology sector or global captives.”
These two segments, he said, have seen maximum growth and hiring because of which the REIT is hopeful about the future.
Watch the interview here:
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