Newly-listed managed office space operator Indiqube Spaces Ltd's co-founder and CEO Rishi Das said that despite recent concerns about demand in the office segment due to job cuts at some major Indian IT services providers, the company continues to see demand from multinational players in the form of global capability centres (GCCs), as well as new demand avenues from major Indian corporates.
Das, in an interaction with Moneycontrol, also noted that the IT services players beyond the top four players have recorded robust growth due to their agility, and have continued to fuel demand for office space, as have startups after a period in the wilderness due to funding issues.
"Commercial real estate absorption is quite robust. And the key driver is the global capability centre, where I will say a large part of real estate absorption is today. At the same time, the domestic economy is doing well. So we are seeing very good absorption from various Tata group companies or automotive companies. The startups also were down for a while, many companies are on the IPO (initial public offering) way and they are now profitable," Das said during the interaction.
He added, "I think where we have a bit of a challenge at this point of time is the IT services. Within IT services, the top 10 players typically own real estate. Players like TCS (Tata Consultancy Services) lease spaces but it's nothing comparable to what they own. And various state governments have given them huge subsidies to put up big campuses in their state... The results of mid-cap IT companies have been good, like Persistent or the others. They have been able to be more agile."
Elaborating on the trend of major Indian corporates seeking out managed space operators, Das said that Indiqube has signed leasing deals with six Tata group entities, including the group's super-app Tata Neu, as well as Air India. Besides, Indiqube also plays host to companies such as Mahindra Logistics, Aditya Birla Group's UltraTech Cement and the TVS group.
Last week, Indiqube, the newest managed space office player to list on the bourses, declared its first financial results post-listing, posting a Q1 revenue of Rs 309 crore, against Rs 242 crore in the corresponding period last year. Earnings before interest, taxes, depreciation and amortisation for the quarter came in at Rs 65 crore, nearly double that of the year prior. With entry into two new markets—Kolkata and Mohali—its seat count rose to 1,93,000 at the end of the June quarter.
Das noted that while tariff-related concerns continue to cloud the Indian economy, especially textiles and gems and jewellery, office demand is not expected to be affected significantly, with gross leasing in the ongoing calendar year expected to touch a record 90 million square feet, according to observers. Supply of quality office space, however, is expected to be a challenge, he said.
According to him, tariffs are not playing much havoc because they typically have an impact more on handicrafts, gems and other such sectors that are not typically the occupiers of office space. "If you see on the supply side, there is a crunch. Because most of the good micro markets, whichever city you pick, they are all running in 94-95 percent occupancy," he added.
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