The Bengaluru-based real estate developer Brigade Enterprises Ltd plans to scale up its office rental business by around 25 per cent to 10 million square feet in the next couple of years despite the slowdown in the new leasing space after the spread of COVID-19. The companies in the IT services industry are continuing with work-from-home (WFH) model, however, they maintain the office spaces by paying the rentals, said Pavitra Shankar, Executive Director, Brigade Enterprises.
"WFH in India is a lot harder, compared to the US in terms of infrastructure and connectivity. So I think there will always be a substantial percentage of the population working from office. So we are confident in terms of 2 to 3 years of business outlook and continuing building office space," said Shankar. In the case of finalising the office space, usually there will be a team in big companies and they are mostly based in overseas. Because of travel restrictions, they are not able to visit the locations in India and take the decisions, she added.
Brigade Enterprises, which has a market cap of Rs 6,000 crore, is a diversified real estate builder with residential, office, retail and hospitality verticals. The company, which built three World Trade Centers - in Bengaluru, Kochi and Chennai - is looking to start construction of the same in Thiruvananthapuram and Hyderabad. In the first nine months of this financial year, the company has posted a loss of Rs 112 crore, compared to a profit of Rs 175 crore in the same period last year.
Brigade has seen a sharp come back in the residential real estate business, which comprises 75 per cent of its business, in the second and third quarters. It has a pipeline of ongoing projects of 15.96 million square feet and upcoming 2.62 million square feet to be launched. "The pandemic was the reason for many people to think about owning a home or basically having a home of their own rather than living in rented houses," Shankar said.
Brigade also launched flexible payment plans besides using the ultra low interest rate situation to market the new residential spaces. It is focused heavily on the mid segment - Rs 50 lakh to Rs 1.5 crore - which moves faster that other residential segments. On the retail side, Brigade, which has three malls in Bengaluru, has seen footfalls picking up substantially in the last few months. It is now at 70-80 per cent of pre-COVID levels. In hospitality, it has eight operating hotels and all of it has been affected by the pandemic.