With offices opening after the Omicron wave and a ‘strong demand outlook’, Embassy Office Parks REIT, India’s first publicly traded real estate investment fund and Asia’s largest by area, doubled its forecast of rental space to 5 million square feet in FY23.
Approximately 3 million square feet are expected to be new rental activity. The occupancy rate should be around 90% for the current year and will continue to be driven by the technology sector. Markets like Bengaluru are recovering “very well” too.
“With around 90% occupancy and demand picking up, as well as consolidation towards fewer players (ongoing), we believe we are entering a growth phase,” Vikaash Khdloya said. , CEO Designate of Embassy Office Parks REIT. Activity area. Khdloya takes over as CEO from July 1.
According to Khdloya, the commercial space provider will look at growth opportunities beyond its core market of Bengaluru and will look at acquisition opportunities in Chennai and Hyderabad.
“There is a 5 million square foot property in Chennai that we are evaluating at the moment. We have the right of first offer there,” he told Embassy Office net operating income Parks REIT grew 23% 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, reception are improving
In FY22, it leased 2.2 million square feet at 18% across 47 transactions and achieved rent increases of 14% on 7.7 million square feet across 89 transactions. According to Khdloya, rentals in Bangalore have already started to increase by 5-7% overall.
The average office park population in Bengaluru has increased by 18% and is expected to reach 25% by June. In March, the park’s average population was about 11%. In Mumbai, this number is already 55%.
The hospitality sector is also seeing an improvement – occupancy rates up 40-50% – he said, as international travel has opened up. “Hospitality and hotels are seeing massive improvement,” he said.
While 94% of Embassy REIT’s value is office space, hotel presence is through Hilton at Embassy Golf Links, Four Seasons at Embassy One, and Hilton Garden Inn at Embassy Manyata.
May 01, 2022