High-interest rates may not impact demand for office spaces: Max Ventures

Max Ventures & Industries is not expecting any impact on demand of office spaces due to high interest rates. Speaking to CNBC-TV18, Sahil Vachani, MD & CEO of the company said that they are targeting to achieve volumes of 1.5 million square feet in the residential segment.

“Max Ventures is in two verticals – commercial and residential real estate. On the commercial real estate we do not see a significant dip in office demand as a result of the rate hike. In 2022, we are seeing demand of office space back to pre-pandemic level of 2019. On the residential side there might be some impact on demand at a macro level for housing as the cost of borrowing will increase. However we are still targeting a volume of 1.5 million square feet in the residential segment on a yearly basis.”

He expects their exposure in Noida and Gurgaon to move up from 2 million square feet to 7 million square feet.

“We have already announced 2 opportunities in Noida – first is for 1 million square feet of residential development and second is for 1.2 million square feet of office development. In addition we have also announced acquisition of a 7 acre land parcel that entails a potential development of 1.6 million square feet in Gurgaon. So it is approximately going to be a footprint of 7 million square feet across office and residential in Noida and Gurgaon. We are currently at about 2 million square feet in total, so this will be a significant jump.”

He added that the company is at pre-COVID levels on rental leases and realisations.

“We started leasing at Max Tower at Rs 95 per square foot in 2019 and through COVID not only have we been able to get a 100 percent occupancy but our last close rental is at Rs 130 per square foot. So we are very confident of a significant rerating as most of the leases come to expiry over the next 5-6 years or so. So we see a significant uplift in terms of our rental realisations moving forward.”

Max Ventures stock is up nearly 21 percent in the last one year. The company posted a revenue of Rs 273 crore in Q1FY23 versus Rs 186 crore in Q1FY22. The company’s operating margin stood at 31.8 percent on a year on year basis.