Awfis Expanding Portfolio in Tier 1 & 2 Cities, Says Amit Ramani

In an exclusive conversation with Deccan Chronicle, Amit Ramani, Chairman & MD of Awfis, shares insights on the company’s impressive growth, strategic expansion plans, and market trends in India’s office space sector. Ramani discusses Awfis’ unique business model, demand for different office space categories, and the potential of tier 2 cities.

What drove Awfis’ impressive 42% year-on-year revenue growth in FY25?

We have been in the business for 10 years, and post-COVID, the narrative has transformed. We took advantage of the tailwinds and expanded significantly. In March 2020, we had around 50 centres, and now we have 210 live centres with another 40 on the way. We added 40,000 seats in FY25, building on the 95,000 seats we had in FY24. This seat capacity addition drove growth. We also launched elite centres, which did well, especially for multinationals and GCC clients. Our design and build services business, which contributes 25% of revenue, grew 36% year-on-year. Allied services like food and beverage, IT services, and mobility products also saw significant growth. These factors combined led to revenue growth and improved outcomes in EBITDA, PAT, and return on capital employed due to minimal CapEx investment in some services.

How has Awfis’ business model and offerings evolved over the past decade?

When we started, the industry was nascent, and we were solving for accessibility, flexibility, and ease of use. We have achieved our goal of having an office setting within a 5-10 minute driving radius across 7 metros. Our managed aggregation model, where we share risk with landlord partners, differentiates us globally. Today, 67% of our 210 centres are in this model, ensuring we are risk-averse. We have also evolved from targeting startups and mid-corporates to enterprises post-COVID, adding managed offices to our portfolio. We have added multiple services, including design and build services, IT, transportation solutions, and food and beverage services, making us a one-stop platform for commercial workplace needs. We are expanding further by backward integrating into furniture manufacturing. This evolution over 10 years has made us a unique platform delivering all services under one umbrella.

How do you plan to optimise capacity and drive occupancy in the first half of FY26?

We added 40,000 seats in FY25 on the back of 95,000 seats in FY24, and our occupancy stands at 73% blended and 84% for mature centres. It typically takes 6-12 months for a centre to reach 85% occupancy, which is our ideal state. As we add new centres, the proportion of mature centres will increase, driving occupancy and contribution margin improvement. We are seeing strong demand for GCC clients with our Elite product and plan to launch more centres. For FY26, we are projecting 30% growth with 40,000 additional seats. We will focus on building standalone businesses for these services, so margin improvement may be limited this year. However, this will set us up for future growth.

How does Awfis’ design and build approach help clients

When clients come to us for co-working or managed office spaces, design and build becomes crucial. For co-working, the design quality, aesthetic quality, materials used, wellness focus, and amenities all impact the client’s decision. Well-designed spaces make a difference, and quality infrastructure is a key decision-maker. From a build standpoint, controlling quality and speed are essential, as clients expect flexibility and fast delivery.

For managed offices, design build allows us to deliver spaces according to client specifications while controlling quality and speed. Our ability to differentiate across product categories, such as flagship, gold, and lead, relies on design build. Even in conventional spaces, design build works well, and with only 5% of our portfolio in co-working, there's a large opportunity for design build in the remaining 95% of conventional spaces.

By controlling the entire supply chain of design build, we can deliver high-quality spaces at affordable prices and at a faster pace. This supports our overall business, and with the co-working industry accounting for only 20% of the leasing market, we see a significant opportunity for growth in design build services.

Can you provide a breakdown of the demand for different categories of office spaces, such as flagship, gold, and elite?

About 15% of our portfolio is in gold and elite, while 85% is in our flagship product. The flagship product generates the majority of our revenue, while gold and elite deliver higher revenue numbers, contributing around 20-22% of the overall revenue. We expect to maintain this mix going forward, as we believe that the demand for flagship-level offices is higher in India, catering to a larger portion of the market. The premium segment, like gold and elite, has limited demand.

What benefits does the Managed Aggregation business model bring to Awfis’ growth and profitability?

The Managed Aggregation model benefits Awfis’ growth and profitability by sharing the risk with landlord partners. We ask landlords to invest 80% of the capital, while we invest 20%. Once the centre reaches a certain occupancy level, we provide a minimum guarantee fee or a 70-30 profit-sharing ratio. This model allows landlords to earn a higher return than pure rental, as we are providing a complete end-to-end solution. We have successfully implemented this model across 50 locations, 18 cities, and 58 micro-markets in India. Today, 67% of our portfolio is in managed aggregation, which has helped us maintain high returns on capital at 70% last year. This model has proven to be unique globally and supports our growth and profitability.

Can you elaborate on the strategic capacity expansion plans for the second half of FY26?

For the second half of FY26, we plan to continue expanding our capacity, adding around 14,000 seats this year. We will enter Vijayawada as a new city and expand in Tier-1 locations, which account for 85% of our portfolio. Our top Tier-1 cities are performing well, and we will strategically explore micro markets with demand. In tier 2 cities, we will consider expansion opportunities where we see potential. Our goal is to have 4-6 centres in each city to ensure consistent customer experience, which requires establishing the right processes, technology, and people. We will maintain our portfolio mix of 55% flagship and 15% gold and elite. Additionally, we will scale up our vertical businesses, including design brand, mobility solution, and office tech labs, in FY26.

What trends are you seeing in Tier-2 cities in terms of demand and growth?

Tier-2 cities have seen tremendous growth post-COVID as people realise the benefits of being closer to home, lower cost of living, and improved infrastructure. Cities like Indore, Nagpur, and government investment in these areas, have made them attractive. For example, Indore had 45% vacancy 3-4 years ago, but now there’s no space left. We believe tier-2 cities will play a significant role in India’s economic growth, driven by government incentives, developer investment, and infrastructure development. However, compliance supply is a current roadblock in some cities.