Regus, the London Stock Exchange-listed service office provider, plans to penetrate deeper in Indian metros and expand in other cities, even as it is facing challenges in international markets.
Recently, Regus India took around 100,000 sq ft of space in two commercial buildings — Platina and Trade Centre — from the Wadhwa group of property developers in the Bandra Kurla Complex (BKC) here. it already ran a business centre in BKC.
Regus provides offices, meeting places, virtual offices and videoconferencing on rent to companies who do not want to own or lease office spaces for long. It takes spaces on management and shares a percentage of its earnings with property developers.
Regus earns 60 per cent of revenue from domestic business houses and international companies which have Indian offices. But, when it opened its first business centre in 2005, nearly 80 per cent of its business used to come from large multinational firms.
“A lot of demand is coming (now) from the local business community and trickling in from multinationals,” says Madhusudan Thakur, country general manager, Regus India.
Regus operates over 950 business centres in 70 countries, of which 24 are in India.
“International demand has become local. Earlier, multi-national firms wanted space to set up their operations, now they want space to expand,” Thakur adds.
Regus’ focus on growing markets comes in the backdrop of challenges it is facing in international markets, especially in the West, where the economic recovery is slow. The company’s pre-tax profit fell from £149 million (around Rs 1,000 crore) a year before to £86.9 million (Rs 582 crore) in the 12 months ending December 31, 2009.
The average occupancy rate fell from 83 per cent to 78 per cent during 2009. “Though there is a demand, it has a few caveats with it. We are careful about that. But, by the end of 2010, we will be on a strong wicket,” says Thakur.
Apart from Regus, others serving the same market are ServCorp, Avanta, DBS Business Centres, Apeejay Business Centres, among others.
However property consultants are not very upbeat about the prospects of business centres. “Though a lot of MNCs have entered the country in the past 12-14 months and are ready to pay extra for good services, most of the business centres have not reinvented themselves,” says the a leasing head of a large international property consultant, who did not want to be named.
