While the residential real estate market of Pune is going through a definite slowdown, the office space market is experiencing a veritable windfall. As per the latest reports of CBRE Commercial Real Estate Services, of the 7.3 million sq ft of office space supply in the Indian market in the fourth quarter of 2013, Pune saw an addition of 2 million sq ft.
The report, which compared the addition of the office space in various metros, placed Bangalore and Hyderabad below Pune’s market. The reason for the good performance for Pune was the delayed completion of a number of commercial and Special Economic Zone (SEZ) projects in the last quarter of 2013.
High vacancies and lower demand levels had resulted in quite a few projects getting delayed in the previous quarters of 2013, leading to a significant supply addition by the year-end. Areas like Viman Nagar, Magarpatta, Aundh, Baner, Shanker Seth Road, Senapati Bapat Road and Pune Ahmednagar Road saw the maximum supply to the tune of 62 per cent. Around 1 million sq ft of IT SEZ space was added to the city’s existing stock with the completion of EON SEZ in Kharadi.
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Pune’s total office space absorption in 2013 stood around 2 million sq ft, with the fourth quarter contributing to about 520,000 sq ft — a q-o-q growth of around 23 per cent over the absorption in Q3 2013.
With supply numbers overriding absorption levels, rental values remained under pressure and continued to maintain stability across most micro-markets during the review period. While off CBD rental values in the IT/IT SEZ segment remained stable, the commercial segment saw a negligible appreciation of about 1-2 per cent in rental values, owing to persistent demand from corporates preferring to set up offices in the region.
Realtor Atul Goel said Pune has emerged as a preferred destination for many companies based out of Mumbai. “The growth in Pune is fuelled by many sectors. Thus, even if there is a slowdown in one sector, the growth in others ensures that the industrial health of the city is good,” he said.
He added that of late many auto ancillary companies, which were based out of Mumbai, have started shifting to Pune as the real estate is cheaper. “This growth of the city as per the commercial real estate scenario would last unhindered for the next three years,” he said.
S K Jain, president of the Mahratta Chambers of Commerce Industries and Agriculture, said although the economy is going through a slow phase, overall sentiments are optimistic. “In anticipation of the stability that would come post the general elections of 2014, many industries are making plans of expansion. Pune is slowly emerging as a preferred destination for expansion as working here is much easier than cities like Mumbai,” he said.