NEW DELHI :
The four waiters at Monsoon, a restaurant that serves Indian food with a twist, didn’t have much to do. It was the evening of 19 March, a Thursday. The normally bustling restaurant near Delhi’s Indira Gandhi International Airport had only four diners.
Monsoon, located in the food court of Worldmark, a 1.5 million-sq ft commercial development in Aerocity, can seat up to 40.
The busy complex of offices and retail spaces resembles a ghost town these days -- footfall initially halved since Holi on 10 March as customers stayed away from restaurants near the airport as COVID-19 cases started shooting up in India. Now, all of the 41 cafés, bars and restaurants across three Worldmark buildings here have fallen silent, as the nation-wide lockdown took effect.
Bharti Realty Ltd, the developer of Worldmark, now faces an unprecedented challenge. Restaurant owners want it to offset the loss in business by waiving rentals, until demand revives.
Many of them don’t expect restaurants to reopen even mid-April, when the lockdown ends. Even if they do, the disruption in the supply chain could mean it could take a couple of quarters for them to resume business.
Rahul Singh, founder and chief executive officer of The Beer Cafe, a beer chain, which has an outlet at Aerocity, said beer companies have stopped production since beer has limited shelf life. Even if demand returns later in April, his chain would be starved of supply. Additionally, those who work in restaurants and bars would have gone back to their villages. It would take time for them to return; some may not.
“There are many complexities because we as a developer have our own fixed costs. We have bank loans to cater to," said Mohit Pruthi, vice-president and head of retail and marketing at Bharti Realty. “There are costs we can’t control. So, waivers have a burden on our profit and loss statements as well," he added.
Bharti Realty is still deliberating on what to do with the waiver demands. “We are in discussions with the Board and accessing the situation," Pruthi said.
Rentals around Aerocity come at a premium. As per ANAROCK, a real estate services company, the current average monthly rentals at Worldmark range between ₹300-350 per sq. ft. on the carpet area. That is similar to what is charged at CyberHub, a retail zone located within developer DLF’s sprawling Cyber City in Gurugram. Spread over 13.2 million sq. ft., Cyber City is one of Delhi NCR’s largest business districts.
“Large developers work on revenue-share basis. There are minimum guarantees, though. If there are no revenues, restaurants can’t share anything. However, wherever there are minimum guarantees, developers need to respond at this point in time. Everybody is equally affected," said Mudassir Zaidi, executive director - north at Knight Frank India, a property consultancy.
Unlike in retail, there is less pressure on the leasing rates of offices right now.
“However, business decision-making has slowed down, or is kept on hold. If the coronavirus impact lingers, it would start impacting office rentals," Zaidi added.
Going ahead, Bharti Realty could face pressures even from the office segment.
Avanta Business Centre Pvt. Ltd, a co-working company, is one of the many companies that have leased space in Worldmark. Nakul Mathur, managing director, said the next two weeks are crucial.
“I have no doubt that the world is set for a financial recession and it could be the worst we have seen in our generation. New clients for our co-working centres want short-term deals, not long-term agreements."
Co-working companies charge by the seat—existing users may want the seat charge slashed in case of a prolonged slowdown. This, in turn, will increase pressure on developers such as Bharti Realty to renegotiate rates.