Embassy REIT expects GCCs to contribute 75% to portfolio in next 2 years

Embassy Office Parks REIT is sharpening its focus on global capability centres, which it expects to account for up to three-fourths of its portfolio as multinationals expand operations in India

Bengaluru-headquartered Embassy Office Parks Reit is sharpening its focus on global capability centres (GCCs), targeting GCCs to make up to 75 per cent of its overall portfolio over the next two years.

 

GCC clients already constitute 65 per cent of its portfolio.

 

Amit Shetty, CEO, Embassy Office Parks Reit, said the mix is expected to move decisively higher as multinational firms expand their India presence to tap the country’s technology, data science and artificial intelligence talent pool.

 

“That growth velocity should play out over the two years. We believe our portfolio will have about 65-70 per cent GCC clients in the same timeframe, driven by continued expansion from both existing centres and new entrants,” Shetty told Business Standard.

 

Within the Embassy Reit portfolio, technology firms account for about 30 per cent of GCC tenants, while banking, financial services and insurance (BFSI) contribute around 20-23 per cent. Co-working operators make up roughly 7 per cent, and IT-enabled services (ITes) about 9 per cent.

 

Moreover, the push comes alongside its strong Q3FY26 performance, with the company reporting a 17 per cent Y-o-Y rise in revenue from operations and a 19 per cent increase in net operating income (NOI), underpinned by steady leasing, higher occupancy and the addition of assets generating cash flow.

 

Shetty further noted that the improvement in operating metrics reflects several “embedded levers” across the portfolio. Occupancy by value rose to 94 per cent in Q3FY26 from 93 per cent in the previous quarter, supported by 1.1 million square feet of leasing during the quarter.

 

One such lever, he said, is contracted rental escalations. Embassy Office Parks Reit has secured escalations across 7.2 million square feet for FY26, adding built-in growth to its cash flows. In addition, the Reit is benefiting from assets moving from development to rental yield status.

 

Shetty remains optimistic on the mid-term outlook for office leasing, indicating a robust 2025 for the Indian market. Leasing activity during the calendar year touched 82.6 million square feet, while new supply stood at about 57 million square feet, taking India to one billion square feet of total office stock.

 

He noted that vacancy levels declined to 20 per cent from around 21 per cent. In key micro-markets, vacancies are as low as 5-7 per cent, putting upward pressure on rents. “Across the country, rental rates have firmed up by about 10-12 per cent,” he said, adding that industry forecasts point to absorption of 82-85 million square feet annually over the next two years.

 

In addition, Embassy Reit distributed ₹613 crore to unitholders during the quarter and expects to be on track to meet its full-year guidance for around 10 per cent growth in distributions per unit (DPU).

 

For FY26, the Reit has guided to 13 per cent growth in NOI and portfolio occupancy of 90-91 per cent by area, translating to about 94 per cent by value.

 

While Shetty declined to comment on forward-looking projections, he said Embassy Reit’s assets under management (AUM) currently stand at around ₹64,000 crore and market capitalisation at ₹42,000 crore.

 

On the geographical development, Embassy Reit has a pipeline of 7.6 million square feet, requiring an estimated capital expenditure of about ₹4,000 crore. Once stabilised, this pipeline is expected to generate around ₹740 crore of NOI. This would further increase the company’s leasable area by 19 per cent. Shetty noted that it is Embassy Reit’s core growth engine.

 

While Bengaluru dominates 75 per cent of the portfolio, Embassy Reit also operates in Mumbai, NCR, Pune and Chennai. Further, the Reit is eyeing Hyderabad entry.

 

With an estimated 400 million square feet of Reit-ready assets still untapped and close to 50-60 million square feet of new supply entering the market each year, Shetty expects the sector to expand significantly over the next five years. “We believe this is a $25 billion market today that could grow to $60-65 billion. There is enough room for everyone,” Shetty added.