Global Capability centres form around half of your leasing portfolio. Can you give more colour on this demand and dependence on GCCs?

So, first point is 50 percent of our portfolio is GCCs, 20 percent is IT services and 30 percent is large Indian domestic organisations. GCC demand is spread across sectors such as technology, BFSI, manufacturing and engineering. India currently has around 2,900 GCCs, which we expect to grow to about 4,400 by 2030. Employment in this segment is projected to increase from 1.9 million to 2.8 million, and the industry size from $65 billion to about $105 billion. Three things we have seen with GCC clientele. One, they are a lot stickier to their locations, they employ a significant amount of higher skill talent, and they have a lot less cyclicality compared to IT services.

GCCs are also willing to give us longer tenures, which means there is more stability of income for us. Typically, GCCs do not have a problem signing 10-plus year leases, with longer lock-ins

In terms of pricing, is there any pushback from large global occupiers and what is the trend in rentals ?  

Exactly the opposite. In my 26 years in the industry, I have not seen this kind of price growth as in the last two years. Let us not go by one-month data. Now, construction costs, for example, have gone up 6.5 per cent since January, but you should also remember that I do not buy all the paint right now, I do not buy all the cement today. I buy cement over a period of three months, I buy aluminium over a period of 2.5 years, so in that time I can spread out the costs

Are you seeing any slowdown at all ?

We have not experienced any slowdown ourselves. However, we are hearing from the market that in some cases decision-making has slowed. This could be due to limited international travel and some caution around capex. During periods of global uncertainty, historically, companies tend to slow down capex.

Your re-leasing spreads were about 40% this quarter. Is that sustainable over the next couple of years?

A 40% spread is strong, but for the next couple of years, a more sustainable number would be around 20%

Returning to rentals, how much of this rental upside is cyclical versus structural?

Demand is currently exceeding supply in most markets. Hyderabad is a great example—vacancy in key micro-markets like Madhapur is around 2%. In Mumbai’s BKC, vacancy is below 1%. Another important factor is industry consolidation. While there are about 14,000 developers in India, only 15–16 have a multi-city office development strategy. We are among that group, which gives us a competitive advantage.

So, both cyclical supply constraints and structural factors like asset quality are driving rental growth

Is your high exposure to Hyderabad a risk?

Not at all. In fact, it is benefiting us. Hyderabad is a very strong market today, with about 46% of new GCCs setting up there. It is seeing over 25% rental growth, supported by strong infrastructure, talent availability, and social infrastructure. Today we are benefiting so much from this 40% in Hyderabad.

Your presence in Chennai has increased. What is the strategy there? Also, when will be assets be integrated and start contributing to your NOI and distribution?

When we evaluated which market to enter for acquisitions, Chennai came out on top. The vacancy in Chennai is around 7%, compared to the national average of 15%. When we assessed markets across India over the next two years in terms of upcoming institutional supply, Chennai again ranked highest, given the relatively limited supply pipeline. That is why we chose to acquire two assets there—where we can effectively control supply and build a strong market position. With these acquisitions, we become the second-largest owner/developer of office space in Chennai.

There are a few key aspects to these assets. Both were acquired from institutional players—K Raheja Corp and CapitaLand. They are premium, high-quality assets with strong sustainability credentials and low carbon footprints. They are also trophy business parks with clear mark-to-market potential.

By mark-to-market, I mean that while the assets are currently leased at existing rents, we have the ability to re-lease them at higher rentals going forward. All these factors aligned, which is why we went ahead with the acquisitions.

One more point on Chennai - pre-Covid, it was a 3 million sq ft market; today, it has grown to around 6 million sq ft.

The deals should close in the next 5–10 days. Once stabilised, these assets are expected to generate around ₹220–230 crore in NOI

How much headroom do you have for growth, especially inorganic growth?

Our LTV (loan-to-value) ratio is currently around 24 per cent and will increase to about 29 per cent after recent acquisitions, which is still healthy. Growth will come from both organic and inorganic sources. Organically, we have 7.3 million sq ft under development or planned and about 1.3 million sq ft vacant space to lease. Plus there is contractual escalations of 5 per cent every year the mark-to-market potential of 20 per cent going forward, and the 40 per cent which we just achieved last quarter. Inorganically, we will continue acquiring from sponsors, third parties, and even within our existing parks. Every quarter or the other, we keep buying 50,000, 1 lakh, 2 lakh square feet within our parks.