RIL Property sets eyes on co-working space business

■ „Says ‘new norm’ creating demand for co-working spaces ■ „Bets on an increase in flexibility working arrangements

As the coronavirus pandemic has upended how people work to a greater extent among other things, RIL Property PLC, a leading ‘Grade A’ office space provider in the country, has set its eyes on venturing into co-working space business.

When it comes to co-working, the property company either lets or sublets office spaces with office equipment and other amenities required to support work to individuals or teams, who could work independently or in collaboration on projects.

“We would also explore the potentiality in setting up co-working spaces in order to meet the demands arising out of the new norm,” RIL Property CEO L.K.A.H. Fernando said in his annual letter to the shareholders.

The company, which rents out ‘Grade A’ office space in Colombo, is betting on the increasing level of flexibility afforded to employees by a growing number of companies, to create a need for such shared work places beneficial for both the employee and employer.

While in certain cases the employers could rent office spaces in co-working spaces for the short to medium-term periods, if they want to station a team of their staff, who work on a project.

“After a transitory downturn, co-working spaces are a growing area of interest with strategy being redrawn to accommodate a heightened level of flexibility in working arrangements,” Fernando added.

While flexible and remote working appeared somewhat a distant future for Sri Lankans, the coronavirus pandemic and the resulting mandated social distancing added a flywheel to it, as both the public and private sectors embraced it with mixed success.

While the co-working spaces had mushroomed even before the pandemic to cater to the new generation of workers, who prefer a colourful atmosphere to that of a boring and dark office environment, they are still located within Colombo. However, if remote working to be more meaningful and to make it more popular, the co-working spaces should be set up in suburbs, as a large majority of the Colombo office-based workers are suburbanites, who spend hours on the road. According to town planners, co-working spaces are an ideal way to ease the congestion in cities while it could bring down the real estate prices in Colombo, creating a more liveable city for everyone.

RIL Property currently owns two commercial office complexes, Parkland and Parkland 1, with 202,000 square feet and 68,000 square feet, respectively and the company said it maintained an average occupancy rate of 94 percent between the two facilities during the year ended March

31, 2020. For the financial year ended March 31, 2020, the company reported revenues of Rs.1.0 billion, up from Rs.762.2 million, mainly supported by rental income from its Parkland 1 building. The company also reported earnings of Rs.1.0 billion for the period, compared to Rs.803.8 million in the previous year. At group level, the company however reported somewhat subdued top line and bottom line performances, due to the net losses from its 100 percent subsidiary Foodbuzz Private Limited, the operator of the Breadtalk franchise and its 51 percent subsidiary United Motors Lanka PLC.

At group level, RIL Property reported revenues of Rs.11.2 billion, compared to Rs.13.9 billion in the previous year.

The company reported earnings of 74 cents a share or Rs.589.2 million for the year, compared to Rs.1.15 a share or 905.9 million in the previous year, as Foodbuzz and UML reported losses of Rs.59 million and Rs.410 million, respectively.