Bengaluru-based Brigade Group will add 3.15 million sq ft (msf) of office space in Bengaluru, Chennai and Hyderabad by the end of FY25, Nirupa Shankar, joint managing director of the group, told Moneycontrol. Additionally, the company has 1.4 msf under construction and eyes a revenue potential of Rs 380 crore from both developments.
The upcoming pipeline includes 1.2 msf of office space in Bengaluru, 1 msf in Hyderabad and the rest in Chennai.
"We currently have 7.5 msf of operating office assets. However, within the next two years, we are looking to add a total of 4.5 msf in the three cities. With these new additions total operating office portfolio stands about 12 msf in the next four years," Shankar said.
In Bengaluru, the group is looking at the eastern IT hub of Whitefield for upcoming developments. Currently, the company also has 1.3 msf of office assets in north Bengaluru and that is set to be completed by the first quarter of the next financial year.
The upcoming office developments will mostly have major office parks across the cities. Additionally, the company has a land parcel of 3.5 msf close to the international airport where it plans to develop a built-to-suit.
Built-to-suit is a construction contract wherein the landowner and the tenant of a commercial property enter into an agreement to tailor the property to the tenant’s specifications.
Over the next fiscal, the group plans to retain its focus on Bengaluru, Hyderabad and Chennai, apart from enlarging its presence smaller cities like Thiruvananthapuram and Kochi.
Stable performance
In Q3FY24, Brigade Group posted a net profit of Rs 56 crore, up 31 percent over the previous year, on revenue of Rs 1,208 crore. In the offices segment, the company leased out 0.49 msf for a revenue of Rs 247 crore.
Shankar added that in the quarter, the offices and retail spaces segment contributed about 20 percent towards total sales, with the residential segment clocking a share upwards of 65 percent.
As of December 2023, the company had a net debt of Rs 2,775 crore.
Bullish on the flex segment
Brigade Group currently has 3,110 seats under its flex office space portfolio under the brand BuzzWorks.
"We are looking to add 400 seats by the Q1 of FY25. By the end of the next financial year, we hope to add a total of about 1,000 seats in the flex segment—almost double of what we added last year," Shankar said.
Today, she added, the flex segment contributes to 25-27 percent of the overall office segment with central business district areas seeing very low vacancies. "However, we see the flex segment percolating into tier II cities, which is an indication of how the office market is moving in general. We see a lot of potential clients also transacting in such cities," she said.
To almost double its retail portfolio
Overall, the company said it plans to almost double its retail portfolio by adding one destination mall in Hyderabad covering about 0.6 msf. The company also plans to add two smaller malls in two under-development townships in Bengaluru. These would have an area of about 0.2 msf in total.
In the last financial year, the group's retail rental income stood at Rs 156 crore, up 60 percent over the year earlier, with a footfall increase of 106 percent.
"Even in Q3 of FY24, we saw about a 10 percent increase in overall footfalls in our mall spaces. However, except for the upcoming destination mall in Hyderabad, we plan to add smaller retail malls to upcoming townships," Shankar said.
She added that as Bengaluru expands horizontally, a lot of new areas are being unlocked as smaller real estate pockets. "One such area is towards the southeast in Sarjapur, where we see several residential pockets coming out. Such catchments hold major potential for upcoming malls in the city, especially when Bengaluru has only six or seven destination malls to date," she added.
For its hotels segment, Shankar said the company is looking forward to adding four more properties—one each in Chennai, Hyderabad and two in Bengaluru. The total potential development of the hospitality segment will be 1 msf and will be launched by the end of FY25. Additionally, one hotel in Mysuru which is under construction is expected to start its operations by Q3 FY25.
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