GURUGRAM, India, April 12, 2021 /PRNewswire/ — The absorption level in the Pune propelled in Q1 2020, where 79% of half yearly leasing was recorded in Q1 2020. IT-BPM sector accounted for the major leasing of the region i.e. 81% followed by flexible workspace operators garnering a 15% share. In 2020, Pune witnessed 3.49 million square feet of new supply. Vacancy rates for the next three quarters are not expected to increase much due to estimated delay in supply of the new development in the region considering the Novel pandemic condition. City-wide rental values remained consistent during 2020. We do not expect rents to fall going forward, however rental appreciation is likely to be gradual. From 2019 – 2024, we expect city – wide rental values rise marginally at a CAGR of 0.6%.
“Cities are engine of growth, they also go through internal transformation that creates opportunities for investors and occupiers. In this report of Colliers an in-depth analysis has been brought up on the real estate market of Pune – about its past, present and future,” said Subhankar Mitra, Managing Director, Advisory Services (India) at Colliers.
PIMPRI-CHINCHWAD – the emerging node of Pune
In terms of three critical perspectives – location, real estate activity and quality of life, Pimpri-Chinchwad node has managed to come up in top-5 locations amongst current active real estate investment areas of the Pune city. As the office hubs have started saturating due to limited availability of land for development and uplifting infrastructure, locations like Pimpri, Wagholi and its nearby areas with supply of land parcels and low prices are gaining importance.
Like in case of Mumbai, Industrial Hubs are now converting to IT parks and Commercial Parks (MIDC Andheri, Mahape, etc.) due to shortage of supply in the suburban areas of the city. Similar scenario can be expected in the Pimpri-Chinchwad micro market.
Currently, the Pimpri micro-market is dominated by residential developments and overall sale rate CAGR% in the last 5 years is observed to be about 2.43%. The micro-market has out-performed as compared to other nodal areas in the Pune city.
Currently in Pimpri-Chinchwad Node, commercial stock of about 2 million is existing which is majorly rental driven market. The largest commercial development is ICC Devi Gaurav Tech Park, which is about 0.86 million square feet (79,897 sq. m) while rest of the developments are in range of about 0.15 million square feet (13,935 sq. m) in the micro-market. The commercial office market inclination in Pimpri is more towards leasing rather than sale strata, because of the presence of the developing IT ITES and Manufacturing industries in the region, the developers are expecting the continuous appreciation in rental values. However, the small-scale IT ITES commercial offices tend to buy the outright property as there are several modifications in the property is required as per the intended use. Commercial projects currently present in the locality serve as an ancillary support to the IT-BPM sector. Current Rentals at par with “Sub-Dollar Strategy” as preferred by most of the IT companies across the world to locate their office space.
Also, Municipal Corporation of Pimpri-Chinchwad have shifted their head office near Pimpri Railway Station, which should trigger development for boutique offices catering to demands of consultants, lawyers and other sectors in the micro-market. This demand estimated to be more inclined to strata driven office spaces. Thus, the overall market shall offer spaces in balanced leasing and strata basis.
Currently, there is about 1.1 million sq. ft of organized retail development in the micro-market. There are upcoming retail developments in the Hinjewadi/ Wakad areas, prominent one being Phoenix Market city.
Lack of presence of Grade-A office space for the industrial and for the other ancillary support can lead to the demand for the commercial office projects. Also, the affordable rental in the Pimpri region can also help accelerate the commercial development in the region.
Pimpri – Chinchwad as a fast-growing node, and has huge potential to attract investments in the upcoming years because of infrastructural advancements, locational advantage as well as land availability and affordability. The involvement of investors in the coming years is expected to rise, both in medium and long term, considering the development opportunities in Pimpri – Chinchwad.
To download the report, click here: https://www.colliers.com/en-in/research/pimpri-chinchwad .
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