Evidently, post COVID, the reliance on automation is going to grow. “Industrial parks is one of the asset classes that is going to boom the most post COVID,” believes Aditya Virwani, COO, Embassy Group.In an exclusive video interview hosted by CONSTRUCTION WORLD, Virwani shares more on the group’s large footprint in the real estate segment in various asset classes, its business strategy, its revenue yielding assets, and more... Excerpts: Diverse offerings We started in the late 80s, predominantly in the residential space. Back then, IT had not really come in to India. We were in the luxury segment selling residential units. In the early 2000s, we saw a massive inflow of IT companies coming into India to outsource backend labour. So at that time, our chairman and my father Jitu Virwani capitalised on that opportunity and started a new concept of business parks. We were anyway building standalone offices in the city centre, and started selling those to investors to generate cash flow. We then started aggregating large pieces of land and built these total business environments for these tenants – IBM, Microsoft, Yahoo – among our first few tenants; IBM is our largest tenant today. And it was a huge success. And then we wanted to capitalise more on the office space. Of course, we kept producing more residential apartments as well. But we slightly moved our focus to more office and we saw great success. So in that way, we are partners across various different assets, across various different countries; Blackstone being our largest partner. We have listed some of those stabilised assets into a REIT. We then got into a new asset classes by default; hospitality for example is something that is located in every one of our office parks. And they make great success because they add value to the parks – it is like an amenity: almost like a clubhouse in a residential complex. Warehouse is something that is quite interesting. We saw our existing tenants asking for the need for warehousing. When we did the math behind it, we pretty much saw the same thing – the rents are lower but the construction costs are cheaper and the land cost is cheaper. So we actually saw this as a futuristic asset class to be in. And back in 2012, we partnered with Warbus Pincus, a fund similar scale to a Blackstone and went out on this venture. We believe that is going to be hugely successful, and it has been hugely successful. To provide a small stat – only 1.5 per cent of India’s retail is online pre-COVID, compared to the US, which is 15 per cent. That’s a huge difference, and with e-commerce and the industrial side of it growing in India, it has a huge growth capacity, and the more digitisation happening, the faster the growth will be. The need for storage spaces near consumption hubs in going to huge. There’s a lot of consolidation that’s going to happen – from illegal non-compliant warehousing to Grade-A quality warehouses – so there’s a huge shift happening. And, we are one of the few players in the space right now. Our two newer verticals: WeWork – for which we partnered with the largest co-working company, making that complimentary to our office. And we have now launched co-living with our brand Olive, which we think will disrupt residential and change the way people live. Industrial warehousing facilities One of our industrial warehousing facilities – in Farrukhnagar in the NCR – is 108 acre or around 3 million sq ft and we have leased out about 50 per cent of this facility already. Similarly, we have five other parks operational. Farrukhnagar is the largest we have, then we have one at Bilaspur, which is half the size of Farrukhnagar, we have one in Chakan and another one in Hyderabad, which we are churning up. Location is a key For every business, location is a key element. And for the warehouse business in particular, location is even more key because you have to also factor in the land cost and the margin and that’s where this business becomes viable. In terms of construction cost, there is only so much you can optimise to provide a great air quality space and we don’t compromise on that. Also, the right land has to also have the right infrastructure. So a lot of times we look at land that has existing infrastructure, an existing industrial and warehousing hub that has highway connectivity. But in some cases, we actually go out and build out that destination. In Farrukhnagar in the NCR of over 100 acre, for example, we went there and started aggregating the land – there was nothing close to us. We created that destination. And, it is extremely viable from a commercial point of view because the land cost is much lower. We got in clients, and today, it is our showpiece park. We will continue this combination of looking at existing hotspots, but also, if there is availability to aggregate large pieces of land we can actually create those destinations. And we have done that on the office side – Embassy Manyata being the perfect example, a 10 acre plus park where there was nothing in the north of Bengaluru, but we created that kind of destination. The trick to that is we probably lose money initially, we then do deals, get in anchored deals, and then build it up. But when you look at it as an overall project, it is absolutely viable. Automation in industrial parks post COVID Post Covid, industrial parks is one of the asset classes that is going to boom the most. Of course, the e-commerce shift is been more profound in the last few months and that has given people a lot of encouragement that it can be successful. From the e-commerce side, it gives them more bullish growth because they need it. There is a lot of need for retail goods online. E-commerce is something that is going to be hugely profound. We were always bullish on this but it has just helped accelerate that even further. From the industrial side, this is where the government can be more involved. This is where India needs to capitalise on the China opportunity is what I call it. A lot of firms are going to be hesitant in selling their factories in china. Now India, historically, has been more in the services sector; 55 per cent of the outsourcing in the world happens in India - our biggest GDP is in the services. And, commercial office spaces boom because of that. But now is the opportunity to actually capitalise on the manufacturing units. We have the population, we have the capability. I think with the help of the government easing out land restrictions, zoning, consumptions on land, even on the tax side, I think the industrial side has the big opportunity to capitalise on this right now. Watch the full video to know more on what Virwani has to say on industrial parks and thefirm’s future plans...Also check our video interview with Dr Niranjan Hiranandani, Co-Founder and Managing Director, Hiranandani Group, and President, ASSOCHAM and NAREDCO here.  Also check our video interview with MR Jaishankar, Chairman & Managing Director, Brigade Group here.  Also check our webinar on ‘COVID-19: Lessons from Asian cities’ here.  Check our webinar on ‘Roads to Recovery’ here. Check our webinar on ‘The Real Estate Challenge’ here.  Check our webinar on ‘The Architect Challenge’ here. Check our webinar on ‘Infrastructure: National Infrastructure Pipeline – the Rs 102 trillion opportunity’ here.  Stay tuned for Construction World’s FREE webinars. View our complete webinar calendar and previous webinars here.