Focus on the middle segment
Demand from the mid-range segment with homes costing Rs 50 lakh to Rs 1.5 crore is much stronger, Shankar said.
“It’s driven by double-income households, people working in IT, and employees with home loan options. It is a very structured and transparent customer profile that we have in it [segment] and we believe it also has the greatest potential for growth, ”she said. “Not just in Bengaluru, but also in Chennai and Hyderabad, where we are focusing on our market,” she added.
It is being driven by the demand for larger homes due to home work and online training during the pandemic.
Brigade Enterprises saw the average home area sold increased 150 to 200 square feet, the size of an extra-small bedroom or study, Shankar said. And it was helped by the affordability increase due to lower interest rates, she said.
The developer plans to open 1.91 million square feet of living space in the next four quarters. “We will mainly start in the mid-range apartment segment in Chennai and Bengaluru.”
And the company’s focus remains on Bengaluru, Chennai and Hyderabad before considering markets like the National Capital Region and Mumbai – the project is happening the right way. “
Office rental collections stable
According to Shankar, rental income for office space is 98-99%, although on-site occupancy is less than 10% due to remote working. The segment contributed 29% to Brigade’s revenue in the first quarter.
“Our tenant profile is heavily MNC-related,” she said. “Many of them still have home office policies, but many domestic companies are returning to their offices.”
India’s deceleration-proof commercial real estate could not escape the disruption of the pandemic, as occupancy declined before the second wave. According to real estate consultancy Savills India, rental activity in the six major cities fell to its lowest level in six years in the first half of 2021.
However, Shankar said the company has not seen any tenants leaving. “We actually signed on some smaller areas. We closed about 1 lakh square feet of new leases in the last quarter, but of course we’d like to increase that number. “
The strong recruitment dynamics in the IT sector will benefit the company as it is heavily exposed in this sector.
Visitor frequency in shopping centers at 60% of the pre-Covid values
Brigade Enterprise, the operator of three shopping malls in Bengaluru, said while footfall is 60% of pre-Covid levels, sales are back at 90%. According to Shankar, the occupancy of the shopping centers is 85%.
Rent billed in the first quarter, while higher than a year earlier, was still not at the level the company would like, Shankar said. “[But] We have seen that consumption has recovered to 90% or more of pre-Covid levels. “
BloombergQuint previously reported that shopping center vacancies remained extremely tight even during the second wave of the pandemic.
Brigade charged half the rent during the first wave of the pandemic and offered similar facilities during the second wave. “We have essentially focused on the minimum guarantee and not on the revenue sharing.”
Hotel occupancy at 42%
The hospitality industry is one of the hardest hit segments as demand is still low due to the pandemic and travel restrictions. Shankar said eight Brigade Enterprises-operated hotels saw occupancy drop to 25% pre-Covid levels in the first quarter. However, in July, business picked up, with occupancy at 42% of pre-pandemic levels.
“The current approach is to cut costs (operating and overheads) and focus on occupancy rather than the average room rent,” said Shankar.
