Mindspace Business Parks REIT Flourishes in Madhapur, Hyderabad's Thriving Hub

Mindspace Business Parks REIT, a significant holder of Grade-A office portfolios in India, has reported substantial leasing achievements for the second quarter of the fiscal year 2023-24 (Q2 FY24), with a specific focus on its properties in Hyderabad.

As Hyderabad's real estate market continues to thrive, Mindspace's leasing endeavors in the city have made a significant contribution to its overall growth and market value.

During Q2 FY24, Mindspace Madhapur witnessed remarkable leasing success, with a total leased area of 149 thousand square feet (ksf). This bustling tech hub attracted tenants in technology development. Additionally, Mindspace Madhapur reported an additional leasing achievement of 92 ksf in the same quarter, further solidifying the city's reputation as a thriving commercial center.

Hyderabad plays a pivotal role in Mindspace REIT's portfolio, with a total leasable area of 14.1 million square feet (msf), constituting 43.7 percent of the company's overall portfolio. The market value of Mindspace's Hyderabad assets stands at an impressive Rs 107 billion.

According to the report, Mindspace Madhapur offers a leasable area of 13.1 msf, of which 9.6 msf is already completed, boasting a committed occupancy rate of 91.9 percent. Another property, Mindspace Pocharam, offers 1.0 msf of leasable space, with 0.6 msf already completed and a committed occupancy rate of 37.5 percent.

Mindspace is actively preparing for a surge in demand in Hyderabad with ambitious redevelopment and expansion plans for Mindspace Madhapur.

The 1A-1B redevelopment project, with a leasable area of 1.3 msf, is currently in the excavation phase and is estimated to be completed by Q4 FY26. The Experience Center project, with a leasable area of 0.13 msf, is currently in the basement works phase and is expected to be completed by Q3 FY25, with a balance cost of Rs 1,000 million. The 7/8 redevelopment project, offering 1.6 msf of leasable space, has completed demolition and is projected to be completed by Q4 FY27, with an estimated construction cost of INR 8,032 million.

The Commerzone Raidurg property, offering 1.8 msf of leasable space, has already been completed, with 1.8 msf leased and rent commencement for Phase I and II.

In Q2 FY24, Mindspace Business Parks REIT reported revenue from operations in Hyderabad amounting to Rs 2,326 million, reflecting significant growth compared to Rs 2,056 million in Q2 FY23.

Key insights from Mindspace's Q2 FY24 report highlight robust leasing activity in Hyderabad, driven by new entrants and expansion efforts from existing tenants.

Madhapur has emerged as the most sought-after market in Hyderabad, benefiting from its excellent connectivity and well-established infrastructure.

"The locality accounted for approximately 78 percent of the city's net absorption in the first three quarters of 2023. While IT/ITeS companies have traditionally driven leasing activity in Madhapur, recent years have seen a diverse range of industries, including BFSI, coworking, telecom, and healthcare, expanding their operations in this thriving submarket," the report stated.

Furthermore, the report noted that rents in Madhapur have consistently grown, with a Compound Annual Growth Rate (CAGR) of approximately 4.5 percent between 2016 and the first nine months of 2023.