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1 Research & Forecast Report | January 2015 | Colliers International
Another Silicon Valley in the makingThe Pune market remained robust in 2014, with office take-up rising by 41%, to 4.91 million sq ft. The strength of demand from the IT/ITeS sector (85%), together with BFSI and Engineering, contributed to this increase. The city has continually increased its share in overall absorption in the last three years by seizing Mumbai IT/ITeS demand. The availability of Grade A office space, especially in special economic zones with affordable rentals and proximity to the financial capital, has attracted many IT/ITeS companies to consider this location as an alternative to Mumbai. Locations in the west, such as Viman Nagar, Yerwada, Station Road and Hinjewadi, witnessed the maximum number of transactions with 45% share of total market absorption, followed by CBD with 14% and Hadapsar/ Phursungi with 12%. Among the renowned deals this year, HSBC took 0.50 million sq ft in Panchshil Business Bay at Yerwada, BMC took 0.25 million sq ft in Yerwada. While, Accenture India leased 0.2 million sq ft and pre-committed another 0.8 million sq ft in SP Infocity SEZ. A side from the foregoing, this city also garnered interest from large private equity players such as Black Stone, which bought Blue Ridge SEZ in Pune from fund manager IDFC.
Accompanying the demand, approximately 2.8 million sq ft of new supply was added to the Pune office market. However, this is less than last year’s new supply of around 3.5 million sq ft Most of this supply was concentrated in SBD micromarkets, such as Viman Nagar, Yerwada and Hadapsar.
Overall vacancy rate decline marginally during the year at approximately 21.5%. The total vacant stock as of December 2014 was about 4.9 million sq ft. Approximately 9 million sq ft is expected to hit the market in the next three years,
City Office Barometer
Research & Forecast Report
Pune | OfficeJanuary 2015
Rental Values
*Indicative Grade A rents in INR per sq ft per month
MICRO MARKETS RENTALVALUE*
% CHANGEQoQ YoY
Baner 45 - 55 0% 0%
Bund Garden 50 - 65 0% 0%
Airport road/pune station 45 - 75 0% 13%
Aundh 45 - 60 0% 0%
Senapati Bapat Road 55 - 85 0% 0%
Bavdhan 35 - 45 0% 0%
Kalyani Nagar 45 - 60 0% 0%
Nagar Road 40 - 60 0% 0%
Hinjewadi 32 - 45 0% 3%
Hadapsar/Fursungi 38 - 65 0% 17%
Kharadi 32 - 65 0% 0%
INDICATORS 2014 2015
Vacancy
Absorption
Construction
Rental Value
Capital Value
2 Research & Forecast Report | January 2015 | Colliers International
CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALE
BMC Business Bay 252,000 Yerwada Lease
HSBC Business Bay 505,000 Yerwada Lease
Cognizant Wadhawa IT Park 150,000 Hinjewadi Lease
Flextronics Embassy Tech Zone 138,000 Hinjewadi Lease
HDFC Bank MIT Marathon 124,217 Bund Garden Road Lease
Source: Colliers International
Top 5 Transactions of 2014
Key Under Construction Projects
BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSION
SP Infocity Building 5 Shapoorji Pallonji Group 800,000 Phursungi 2015
Commerzone Building 8 K Raheja Corp 420,000 Yerwada 2015
Acendas Phase II Acendas 615,000 Hinjewadi 2015
Notes:
1. Office Market: The prime office sub-markets of Pune include CBD (Deccan Gymkhana, Bund Garden Road, Senapati Bapat Road & Camp), Off CBD (Aundh, Airport Road and
Kalyani Nagar) and the eastern corridor, along with Nagar Road and Kharadi, which have emerged as a preferred location for financial and IT/ITES companies.
2. Rents/Capital Value: Market average of indicative asking price for Grade A office space.
3. Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter.
4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.
5. All the figures in the report is based on market information as on 25th December 2014.
Average Rental And Capital Value Trend
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New Supply (In Mln sqft) Absorption(In Mln sqft) Vacancy(In %)
which seems to be in tandem with the expected absorption. Most of this supply will be located in suburban and peripheral micromarkets. East and west Pune micromarkets will continue to interest occupiers due to availability of large floor plates, better infrastructure and proximity to residential pockets of the city.
During the year, average rental values registered an increase of 3% YoY, which was contributed by micromarkets like Airport Road/Pune station, Hinjewadi, Hadpsar and Phursungi. Other micromarkets witnessed a stable rent scenario during the year. Capital values this year remained stable YoY across all micromarkets.
Trends to watch for in 2015:
The office market outlook for 2015 looks promising for Pune. IT/ITeS will continue to play an important role in the city’s overall commercial office space absorption, primarily attributed to projects that have already seen pre-commitments or long-established interest from various IT/ITeS companies.
Overall rents and vacancy levels are unlikely to change in view of the supply in tandem with absorption. However, rents in SEZ are expected to increase due to the very limited space available and the thin supply pipeline.
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