Mumbai-headquartered Mindspace Business Parks REIT reported a 28% year-on-year increase in net operating income (NOI) to ₹788 crore for the quarter ended June, while occupancy rose to a record 95.8%, MD and CEO Ramesh Nair told CNBC-TV18. The company also announced a ₹442 crore distribution to unitholders for the first quarter of FY27.
Mindspace REIT leased 0.9 million square feet of commercial space during the April-June quarter. Its distribution per unit (DPU) increased 15% year-on-year, with Nair saying the company has delivered double-digit DPU growth for the past four quarters.
“Our current occupancy numbers are at 95.8%. This is the highest we’ve been,” Nair said. He attributed the strong performance to robust office demand, particularly from global capability centres (GCCs), which now account for 53% of Mindspace REIT’s tenant profile. The REIT has a presence across Hyderabad, Pune, Navi Mumbai and Chennai. Office absorption across these markets has remained strong despite macroeconomic and geopolitical challenges. Net absorption in the first six months of the year grew 12%, while absorption across the four markets had grown by 18%, 16% and 15% over the previous three years, Nair said.
The tightening availability of quality office space is also supporting the market. Of India’s roughly 950 million square feet of office stock, around 530 million sq ft is considered relevant supply, with vacancy in this segment at 9.9%. “In cities like Bombay, this is the lowest vacancy we’ve seen in the last 15 years,” Nair said. GCCs are currently driving around 40-45% of overall office demand, according to Nair.
Mindspace REIT has benefited from this trend through its presence in markets where GCC demand remains strong. The company also expects its development pipeline to support NOI and DPU growth in the coming quarters. Mindspace REIT has around 6.6 million sq ft under construction, of which approximately 4.7 million sq ft is expected to be completed during FY27. Most of this space has already been leased, Nair said. While Mindspace REIT does not typically provide guidance, Nair said the development pipeline should have a direct impact on NOI and DPU.
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IT services companies continue to take up office space despite relatively muted headcount growth. Nair said companies are increasingly seeking ready-to-occupy offices in major cities rather than building their own campuses or moving to locations further from city centres. Mindspace REIT’s tenant mix currently comprises 53% GCCs, 18% foreign multinational companies and 27% domestic companies.
IT services account for around 18% of its portfolio, down from about 25-27% previously. This is the slightly edited transcript of the interview. Q: Your distribution per unit (DPU) this time around grew 15.2% from last year. What’s your target for FY27, and how is the leasing landscape looking currently? How is it likely to pan out for the rest of the year? Ramesh Nair: DPU went up 15%.
One interesting aspect is that over the last four quarters, we’ve been giving double-digit DPU growth. This quarter, like I said, it was 15%. Before that, again 15%, and two quarters before that, 13% and 10%. So, we typically don’t give guidance. But given that we’ve been doing a lot of development in our portfolio, we have around 6.6 million square feet of under-construction space, of which around 4.7 million square feet is due this year, and most of that is already leased.
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All this will have a direct impact on NOI and on DPU. Q: Give us a sense of the occupancy and leasing trends. So, number one, last quarter we understand it was close to 94%. You know, has there been any uptick or downtick over there? And going forward, what are the kinds of trends that you’re seeing, especially given the fact that some of the newer places that you are onboarding may see slightly lower trends? Ramesh Nair: So, our current occupancy numbers are at 95.8%. This is the highest we’ve been.
The absorption in all the markets, the four markets where we are present, the absorption numbers have been phenomenal. Over the last three years, actually, we’ve seen all these markets across the country – the absorption numbers grew at 18%, 16% and 15%.
And I was just checking the net absorption of the first six months of this year, where, again, the market has gone up 12%, in spite of all the macro and geopolitical issues we have had in the first six months. So, another good data point which I saw recently was the relevant vacancy today, which is good-quality space.
India today has around 950 million square feet of office space. In that relevant stock, the relevant supply is around 530 million square feet. In that 530 million square feet, the relevant vacancy is at 9.9%.
And in cities like Bombay, this is the lowest vacancy we’ve seen in the last 15 years. Everyone knows about the GCC story.
Today, GCCs have around 40 to 45% of the demand in the market. So, we’ve been beneficiaries of all that with the right product at the right time in markets like Hyderabad, Pune, Navi Mumbai and Chennai.
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Q: A couple of quick questions. Number one, you know, when you speak about GCCs, we understand growth there has been quite strong, but we also understand that additions, as far as traditional IT services are concerned, have been quite muted. So, has that offset each other, or will you be net positive on account of demand coming in from IT services and GCCs? And number two, you know, give us a number as to how much operational capacity you will be adding this particular year, and what could be the occupancy at the end of the year?
Ramesh Nair: So, from a GCC point of view, today our tenant profile, if you break it up, 53% is GCCs, foreign MNCs are at around 18%, domestics at around 27%. And overall, if you look at IT services, both from the foreign point of view and the Indian point of view, that’s 9% plus 9%, which is around 18% of our portfolio towards IT services.
One very interesting trend I have seen is that in the last one year, we’ve actually seen many IT services companies come in and take space with us. And I was wondering, when the net headcount has not been growing, where is this demand coming from? So, two things we have realised.
When the IT services companies are pitching for GCC kind of work, global work, there’s a lot of decision-making internationally where those clients want to be in the main cities. That’s helping us. Secondly, previously, IT services companies would typically go to their own campuses.
They would go to Tier 2 cities or be in far-flung locations. Within the bigger cities, that’s changed because, given the pace at which all industries are changing, they’re looking for ready-made space which they can occupy in three to six months.
So, both those things are definitely benefiting us. Definitely, the growth rates of GCCs are much higher. Previously, our portfolio used to have around 25 to 27% IT services; today, that’s dropped to around the 18% mark.
