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| JLLM Hosts 'Advantage Tenant: Strategies for Corporate Occupiers in Challenging Times' |
| Announcement / Corporate Nov 26, 2009, 19:53 IST |
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Outlook for Pune's commercial real estate is encouraging in the mid-to-long term
To help its Pune-based clients understand the city's current market dynamics in terms of commercial real estate, international property consultants Jones Lang LaSalle Meghraj arranged a corporate occupier meet and panel discussion entitled ‘Advantage Tenant - Strategies for Corporate Occupiers in Challenging Times' at Le Meridien, Pune on November 24, 2009.
In the course of the panel discussion, which featured prominent industry stalwarts, it emerged that caution and intelligence in terms of real estate portfolios are now definitely the watchwords, but that the outlook for Pune's commercial real estate is encouraging in the mid-to-long term from an investor perspective.
From an Occupiers perspective, this is probably the best time to lockin real estate space as the current valuations are attractive.
“With ‘Advantage Tenant…’, our primary objective was to impart to and exchange insights with our Pune-based corporate occupier clients on the city’s current and future outlook in terms of the office space market,” states Sanjay Bajaj, Vice President – Markets, Jones Lang LaSalle Meghraj. “This is the first of a series of such interactive meetings that we plan to conduct all over India, and we chose Pune as the launching pad for very pertinent reasons. Because of its huge potential, this city is a major focus for corporate occupiers from the IT / ITES, BPO, automobile and manufacturing communities. This is where a large part of the action has been and will continue to be. Our clients in Pune are an integral and important part of the future of corporate real estate in India.”
Precisely because of its immense promise, potential and track record, Pune has also taken a large part of the blow that the recent downturn dealt to the real estate sector.
“We are looking at the dawn of better times ahead, but there are still challenges to be addressed,” says Sanjay Bajaj. “During the panel discussion, we managed to get a clearer picture of what lies before us. The objective of advising Pune’s corporate players on how to reduce their real estate costs by adopting a smart approach was fully achieved.”
“Most of our clients continue prefer leasing rather than purchasing space. Nevertheless, we have also seen a significant increase in the number of purchase transactions in 2009, owing largely to very attractive purchase options. Considering Pune’s growth prospects, investing in self-owned real estate assets is likely to yield capital appreciation sooner than later, and market valuations continue to be very attractive at this point in time,” says Bajaj. “The price outlook in the short term is pretty steady for all three business models - SEZ, STPI and commercial offices. However, we do see indications that prices for SEZ and STPI units may move upwards in next 12-24 months. Government policies will play an integral part.”
STATISTICAL HIGHLIGHTS:
- The maximum demand for office spaces in Pune still comes from IT / ITeS companies, and from corporate offices on a more modest scale
- The city witnessed significant leasing activity within STPI during the third and fourth quarters of 2009. The absorption of office space in 2009 within STPI parks was to the tune of 59%, while SEZs saw an absorption of 34%. Initially, we observed that only large companies moving into SEZ, however, we have now observed that even small/ mid sized companies are considering the SEZ route.
- The non-IT sector accounted for 7% of the Pune’s office space absorption in this period
- 43% of the overall absorption in 2009 came on account of expansions, 31% from new businesses, 24% from relocating corporates and 2% from consolidating companies
- Most of the corporate space transactions deals in 2009 took place in Pune’s Eastern corridor (38) as against 19 transactions that took place in the Western corridor
OTHER OBSERVATIONS:
- The recession proved to be a boon for many occupiers, since it catalyzed far more attractive rentals and better infrastructure in new IT Parks
- Pune’s developers are now more proactive and are open to the idea of space reduction, and are carving out smaller floor plates to accommodate clients. Most of them are also aligning themselves with the new occupiers demand and are offering innovative and structuring favourable deals for the occupiers.
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