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delay in replacement of special economic zone ,SageIndustry experts said the Development (Enterprises and Services) Hubs Act 2005, along with the Bill, 2022, is affecting the rental collection of large office parks, as corporates are hesitant to lease space in SEZ parks. Developers were hoping that the move would help reduce vacancies by denotifying vacant lots and leasing them out to domestic businesses.
Shriram Khattar, managing director, rental business, said, “The SEZ market is a bit worried because of the sunset clause. I would say there is a bit of soreness for the next few months, but I don’t see it lasting long. DLF, said during the Q4 FY23 earnings call. SEZ portfolio DLF SEZs have maintained a vacancy of 15%, while the vacancy in non-SEZ portfolio has come down to only 6%.
According to a report by ICICI Securities, from January 2023, global macro headwinds in the form of rising interest rates and tech MNC hiring slowdown have now led to a slowdown in large leasing decisions.
In addition, there was delay in the implementation of country bill The mood has further soured with fresh exit notices for FY24 by some large tenants in the January-March 2023 period. “As a result, all office REIT managers – Embassy, Mindspace and Brookfield – have refrained from giving distribution guidance for FY24 given the uncertain near-term outlook. While REITs may underperform in the near term, many factors which is driving this underperformance to reverse from FY25,” ICICI Securities said in the report.
One reason for this would be the conversion of SEZ into non-SEZ space. “The DESH Bill provisions are aimed at enabling developers to attract a new set of tenants to SEZs. The Bill is important for occupiers in SEZ zones as they will seek some clarity in matters of lease termination, while developers may have to deal with rising vacancies in case of further lag. Any clarity on bill movement and specific clauses will help occupiers plan for future leases, while developers can expect future occupancy will allow us to think of actions to sustain,” said Anshuman Magazine, CEO, India, South-East Asia, Middle East and Africa, CBRE,
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