2010 saw increased buoyancy on Pune’s residential market, which has been in steady recovery since 2H09. The confluence of price correction ( 10%-25% in 2009) along with rational mortgage rates offered by banks has increased affordability. Moreover, with the improving economic conditions as evident from the increased absorption of office space, there is improved employment security, creating fresh demand for housing in the year 2010. There has been spate of residential launches in the city, with a 10-12% increase in capital values witnessed across all the residential pockets of the city.
Buyers in the mid-income segment of housing (INR 3-5 million) have returned in force, as have those for premium category housing. In fact, the year 2010 saw a significant number of luxury home projects in Pune. Some of the notable ones are Marvel Aurum at Koregaon Park, Marvel Bounty and Azure on Magarpatta Road, Marvel Ganga Sangria at Undri, the recently launched Yoo Pune by Panchshil at Hadapsar and Windmere by Vascon developers at Koregaon Park.
Commercial Real Estate
The total absorption of office space in Pune, recorded at approximately 2.5 million sq ft during the first three quarters of 2010, clearly indicates the onset of a demand revival. Occupiers strongly believe that this is the right time to execute their expansion plans, since property prices were at their lowest valuations in 2010.
An important feature of the absorption in 2010 has been the revival of demand for SEZ spaces. The impact was clearly visible with a majority of Pune’s office space transactions (around 60%) recorded in SEZs in 2010. In 2011, demand is expected to strengthen across markets, along with an increase in SEZ absorption. The suburban micro-market, comprising primarily of the Hinjewadi region, is likely to benefit as it houses most of the upcoming SEZ supply. The secondary business district (SBD), on the other hand, currently has a significant share of the city’s ready-to-occupy as well as under-construction stock located in SEZs (EON Cluster D, Cluster B and Cluster A and Magarpatta’s Cybercity Towers VIII and IX) and various STPI units. This will also contribute significantly to the overall absorption levels in the city during the coming quarters.
Pune’s office market is expected to see a significant supply to the tune of aprroximately 14.53 million sq ft in the next two years, with most of the supply located in SBD and the suburbs. Some of the major developments in SBD amongst the IT completions would include Commerzone buildings 5, 7 and 8 at Yerwada and Weikfield IT Park’s Block B at Viman Nagar. Completions amongst SEZs would include EON clusters A and B and Magarpatta’s Cybercity buildings 8 and 9 at Hadapsar. The majority of the future supply in the suburbs would comprise of various IT SEZs by DLF, Paranjape (Blue Ridge), Embassy Group (Embassy Tech Zone) and Shapoorji Pallonji Group (SP Infocity).
Rentals are likely to remain stable across all precincts in the coming quarter, but will gradual increase towards mid-2011 and 2012.
Retail Real Estate
Pune’s organized retail landscape will undergo a significant transformation. Rentals and the commercials in retail has stabilized, and retailers are now occupying space more aggressively.
Some quality retail developments lined up for completion in 2011. The notable ones include Phoenix Market City , K Raheja’s Inorbit on Nagar Road, Amanora Market City at Hadapsar and Elbit’s PlazaCentre at Koregaon Park. Also, G Corp will become operational with approximately 0.4 million sq.ft of retail.
As a result, a number of international brands will set up shop in Pune for the first time. The notable ones will include Zara, Blue O and Spar, which will open their doors to a new line of fashion and entertainment.
Moreover, some well-known national brands will launch for the first time in Pune in 2011. Reliance Trendz, PVR, Reliance Footprint, Jack and Jones, etc. will cater to the young and the vibrant Punekar for the first time.
Future Group has added approximately 0.5 million sq.ft to their Pune portfolio. The group has recently launched their mega Pantaloon store at Senapati Bapat Road. Trent has also jumped onto the Pune retail bandwagon. The Tata Group already has one hypermarket under the name Star India Bazaar operational at Pune, and is going in for three more.
Mohammed Aslam, Head – Pune, Jones Lang LaSalle India