Experts are happy about this new reform in Real Estate, this reform will take the Occupancy of IT SEZ Parks to a whole different level.
The Government of India, in this new reform, has permitted The SEZs(Special Economic Zones) to lease spaces in partial or in terms of floors. This will highly increase the occupancy of the office and business hubs giving a boom in the commercial Real Estate market.
This marks a long-awaited and positive step for India’s commercial real estate sector. Advantages like increased flexibility in conducting business within SEZs, partial de-notification, and simplified transactions between SEZs and DTA (Domestic Tariff Area or non-processing zone), along with a streamlined process for de-notification approvals, will safeguard the interests of both developers and occupants of SEZ developments, whether existing or under construction,” commented Anshul Jain, Managing Director, India & Southeast Asia, and Head of APAC Tenant Representation at Cushman & Wakefield.
This reform is brought through an amendment to the existing IT SEZ Rules, 2006. It will start denotification of Office spaces in a floorwise and partial manner. The new rules will permit operators to mark portions of the built-up areas in IT SEZ on floor by floor-by-floor basis making commercial real estate a great investment option.
This Partial denotification will free a huge amount of space in SEZ. A lot of commercial space will be available to diverse users giving a boost to the commercial real estate of India. This prospect will also make India a great choice for Foreign Direct Investment.
Till now the SEZ framework was very difficult and confusing between the tenants of the SEZ spaces and the DTA(Domestic Tariff Area) zone. The transactions between these two entities are going to be very clear and easier after the De-notification.
According to Anshul Jain from Cushman & Wakefield, businesses involved in exports, as well as those serving domestic clients, will no longer need to operate from separate office buildings. He also mentioned that a simplified approval process for de-notification is likely to prompt many landlords to make denotified spaces available shortly.
Ramesh Nair, CEO of Mindspace Business Parks REIT, explained that the change is to adapt to the evolving market and ensure that the commercial real estate industry provides everything businesses require in one place. He emphasized that it enhances the attractiveness of their high-quality workspaces, making them the preferred option for businesses looking to streamline operations. Additionally, Embassy Office Parks REIT, India’s first listed REIT, expressed approval for the amendment to the Special Economic Zones (SEZ) regulations by the Ministry of Commerce and Industry.
We are very happy with the government’s announcement, and we want to thank them for taking quick action to solve this problem. This is great news for India’s office sector, especially with the growing interest from global captive centers (GCCs). Right now, about 80% of our SEZ office spaces are occupied, and this change will make our premium grade-A SEZ office spaces even more attractive. It helps Embassy REIT move closer to the occupancy levels we had before COVID. Thank you,” shared Aravind Maiya, Chief Executive Officer of Embassy REIT.