Residential share will go up to 50% in the next five years, hopes Embassy

Bengaluru-based Embassy Group, one of the biggest office property developers in the country, is upbeat on its residential projects segment, which, it hopes, will grow from a mere 15 per cent to a whopping 50 per cent in the next five years.

“We see in the next five years this (residential) will be the biggest market,” said Jitu Virwani, chairman of Embassy Group, which has partnered Blackstone for office projects.

Embassy, which was hitherto focusing on luxury projects, is now planning to float a platform with investors to foray into the affordable housing segment.

In February this year, Bengaluru-based Prestige Group and HDFC Capital Advisors formed a fund to invest in affordable housing projects. “We have already brought down the cost of affordable housing to Rs 1800 per sq ft," said Virwani said. In premium projects, the cost of construction is Rs 3000 per sq ft.

Virwani said the company was planning to take up projects in the mid-income and affordable housing segments.   

The Embassy Group has recently signed a deal with e-commerce giant Amazon to offer smart homes, priced between Rs 3.6 million and Rs 8 million. The houses that the group is offering will come with Amazon Echo pre-installed and Amazon Alexa pre-enabled in order to attract millennials.

"Bangalore residential market is doing well, especially the mid-income segment. With the robust absorption in the IT space, demand for quality residential spaces from reputed companies will continue to be on the rise," said Somy Thomas, managing director (valuations and advisory) at property consultancy Cushman & Wakefield.

Embassy is currently developing 4.5 million square feet of residential properties and 10 million square feet of infotech office properties. Virwani denied that Bengaluru office market was seeing any headwinds. "We do not have zero availability now, and leased 3.5 million square ft in the six months, and have seen 25 per cent jump in rents," he said.

According to PropTiger, Bengaluru saw 9,557 units getting launched during the first quarter of this calendar year, a jump of 173 per cent over Q4 of last year. Absorption went up 45 per cent in Q1. Bengaluru has beaten Chennai and Hyderabad in absorption of homes.