Pune real estate see demand coming back: Colliers

Quality supply in the commercial space remains scarce

The Pune real estate segment is seeing some positive traction in both the residential and commercial space. While Pune remained one of the better-performing residential markets in the country, but for commercial spaces, the city does not have quality projects in spite of the demand, said a study from Colliers International study.

According to the third quarter study by Colliers, quality supply in the commercial space remained scarce and the trend is likely to linger in subsequent quarters. Although a few new projects were launched this quarter, new supply is not scheduled to come in until Q3 2017. So, large floor plate size deals are unlikely to take place for the next few quarters, said the report.

A slight uptick in absorption was observed in the Pune commercial market since last quarter with 0.9 million sq ft, making it 2.74 million sq ft year-to-date. Pune market promises significant talent pool in the Information Technology (IT) and IT-enabled services (ITeS) industry and hence the industry continues to thrive in the region.

Accordingly, a big chunk of leasing activity was taken up by the IT-ITeS sector in this quarter as well, amounting to around 68% of the total transaction volume, said the study. This was due to one of the largest deals this year by ZS Associates who signed up for 240,000 sq ft at Kharadi location. Engineering and Manufacturing came in next with 18%, followed by Banking, Financial services and Insurance with 8%, consulting and other industries with 3% each. Engineering and manufacturing demand shall flare up in the future owing to promising developments in the automobile industry at peripheral locations such as Chakan and Ranjangaon.

Although new supply remained scarce this quarter as well, around 0.14 million sq ft of space was added to the office inventory; a significant increase since last quarter. Stellar Spaces in Kharadi, Pushpak Business Hub in Wakad and Vasu Kamal in Baner admeasuring 65,000 sq ft, 60,000 sq ft and 16,500 sq ft respectively were new additions to the office stock this quarter. In spite of these new inclusions, quality office supply remained restricted.

The residential market continued to see demand with significant demand from sectors like IT, education, and manufacturing. Developers too are moving their focus towards mid-end and affordable segment projects to tap into the demand.

"There was about 2% quarter-on-quarter (QOQ) increase in the number of units launched this quarter with little over 5,700 units, making it about 12,900 so far in 2016. Most projects launched were in the range of Rs 50-70 lakh (Rs 5 - 7 million) catering to mid-end segment offering spacious configurations to match the widespread demand dynamics," said the Colliers report.

More than half of the unit launches were in Northwest Pune (57%) primarily at Hinjewadi and Baner locations. Peripheral locations such as Bavdhan and Bhugaon in the west comprised 25% of the unit launches, while 16% of the launches were concentrated in Keshavnagar, Wagholi, and 2% in Kharadi. Baner, Hinjewadi and Kharadi have emerged as favoured residential catchments due to the adjoining employment hubs.