India is the number one office market in the world: Mindspace Reit

K Raheja-backed REIT plans ₹4,000 cr capex, portfolio expansion, and higher occupancy

K Raheja-backed Mindspace Business Parks Reit marked five years of listing on the Indian stock exchanges last month. The trust expects its net operating income (NOI) to rise by ₹900- ₹1,000 crore over the next 3-4 years. With a planned capex of ₹4,000 crore, the Reit aims to expand its portfolio through the redevelopment of older assets and acquisitions from both sponsors and third parties. Ramesh Nair, CEO & MD, and Preeti Chheda, CFO, shared insights on the Reit’s performance and growth strategy in a conversation with Prachi Pisal. Edited excerpts:

 

How has the journey been over the last five years?

 

Nair: If an investor had invested in August 2020, exactly five years ago, they would have earned an annualised return of 14.8 per cent. In today’s volatile world, that’s an excellent performance. Our revenues have grown from ₹1,629 crore in FY21 to ₹2,563 crore in FY25, while net operating income (NOI) rose from ₹1,374 crore to ₹2,062 crore. In Q1FY26, our distributions grew 18 per cent. The market has recognised this performance. Our share price has gone up from ₹300 to ₹432. On top of that, we’ve delivered about 5.8 per cent annualised dividends. It has truly been a strong performance, especially given the difficult years of 2020 and 2021. Market conditions have improved significantly since then. 

 

Your portfolio has 38.1 million sq. ft. (msf) of leasable area. How are you planning to expand it?

  Nair: Our focus remains on strengthening our presence in the top four cities where we already operate --Mumbai, Hyderabad, Pune, and Chennai. Growth will come both organically and inorganically. We have 3.7 msf of under-construction assets, much of it already pre-leased, and 3.4 msf of future development at the approval stage. We also have 1.9 msf of vacant space, which, once leased, will add to our NOI. In Hyderabad, we’re redeveloping part of our portfolio, increasing capacity nearly fourfold. This, along with mark-to-market rentals, is a smart way of growing organically. On the inorganic side, we continue to evaluate acquisitions from both sponsors and third parties. Our sponsors are developing close to 18 msf of assets. All of this combined should help grow our NOI by ₹900- ₹1,000 crore over the next 3-4 years, from ₹2,062 crore in FY25.

 

Mindspace currently has the highest occupancy in the industry at 93.7 per cent. What are the demand trends you’re seeing?

 

Nair: We expect occupancy to rise to around 95 per cent by year-end. Earlier this year, India-Pakistan geopolitical tensions slowed decision-making, but that’s now behind us. Interestingly, tariff-related pressures on American companies are encouraging more outsourcing to India through Global Capability Centres (GCCs). India’s cost arbitrage in talent and real estate makes it a preferred destination, and we are well-positioned to benefit. More than 35 per cent of demand today comes from GCCs, and they occupy about half of our portfolio. India’s strong economic growth, skilled talent pool, and cost advantage continue to support us.

 

Your net debt in Q1FY26 stood at ₹9,166.6 crore. Are you comfortable with this level?

 

Chheda: Regulations allow us to go up to 49 per cent loan-to-value (LTV). However, since listing, we’ve

guided that 35 per cent is our comfort level. Currently, we are at 25 per cent LTV, well within limits. We have planned a capex of about ₹4,000 crore over the next 3-4 years, which will also remain within our comfort zone. There are no immediate fundraising plans, unless we see a large acquisition opportunity.

 

With artificial intelligence-led disruption in IT and job cuts, do you see an impact on offices?

 

Nair: There is still limited data on the exact job losses. However, a World Economic Forum report suggests India could add nearly 5 million new jobs, driven by engineering talent. India’s strength lies in reskilling and its cost advantage, talent costs here are roughly one-tenth of the West, while real estate costs are one-eighth to one-tenth. Net leasing in India doubled from 25 msf in 2020 to 50 msf in 2024. India is the number one office market in the world, and we are direct beneficiaries.

 

There has been talk of giving Reits equity status. What is your view? 

Chheda: This has been a long-standing request from both the Reit and infrastructure investment trust industry. Currently, Reits are considered hybrid instruments. We’ve been urging the Securities and Exchange Board of India to classify Reits within equity indices. This would channel more passive money into the sector and improve liquidity. Over time, this shift could be very beneficial for the market.