Office Real Estate – Stable Demand Since 2010
The availability of skilled manpower supported by availability of cost effective commercial real estate – especially in terms of Grade A projects – continues to drive demand for office properties in Pune. New multinational corporates such as Hitachi, UPS, HCL and Metro have now forayed into the city, while existing IT giants like Cognizant, KPIT Cummins, Mahindra Satyam and L&T Infotech continue to add to their existing operation bases in pursuit of their expansion plans.
The demand for office space gained significant forward momentum in 2010, vastly improving market conditions. Both existing and new occupiers capitalized on the stable rentals to expand their operations, leading to record absorption levels in 2010. A total of 3.23 million sq ft of office space was absorbed across the various asset classes, with a clear shift in demand towards SEZs.
2012 Outlook:
- SEZ: Prices are likely to marginally increase as supply is depleting. Demand is quite healthy and occupiers are expanding operations.
- STPI: Prices are likely to increase marginally in Grade A IT Parks as quality supply is limited.
While rents are likely to marginally increase in the short term, from Q4 -2012 onwards a lot of SEZ supply will be released, thereby creating ample availability and also an opportunity for occupiers.
The good news is that commercial property demand continues to be stable for Pune. Many major occupiers have exponential growth plans and are betting big on Pune.
Pune Retail On The Fast Track
Pune’s organized retail market has witnessed unprecedented growth in 2011, with a host of new retailers – both national and international – gradually spreading their footprints the city. From a mere 0.12 million sq ft of mall space in 2005, the city is expected to witness 5.2 million sq ft of mall space by end-2011
The sustained demand for the office space since 2010 has resulted in increased employment generation, and the improving per capita income has given a necessary thrust to retail activity in the city.
As per the Indian Statistical report of 2011, Pune’s per capita income is the second highest in Maharashtra, and this figure has increased by 170% over the last decade. This clearly indicates the spending capacity of the population in the city. All this augers well for the city’s flourishing retail market. Mall space in Pune is expected to double from 5.2mn sq ft by end-2011 to 10.8 mn sq ft by end-2013. This clearly indicates the confidence Pune City has garnered with national and global retailers.
Eastern Pune leads the pack in terms of built mall space, contributing approximately 90% of the total mall space in the city. Most of the existing and under-construction malls in the Eastern corridor are concentrated along Nagar Road, Koregaon Park and the Hadapsar-Magarpatta belt. However, moving forward, the Western and Northern Pune is poised to catch up fast with the Eastern Corridor, with some quality malls scheduled for completion over the next two years.
This year till date, we have witnessed the completion of a few major malls such as Phoenix Market City (1 million sq ft), K Raheja Corp’s Inorbit (0.35 million sq ft) and Amanora Market City (1.2 million sq ft) offering Puneites a totally new shopping experience. The opening of these malls has brought in international brands such as Zara, Blue O, Spar and Diesel, providing shoppers a totally new line of options.
Many national brands such as PVR, Jack and Jones, Reliance Trendz and Reliance Footprint have set up their stores in these malls for the first time in Pune. Premium retailers like Steve Madden, Timberland, Collective and Helios have a lot to offer to niche customer segments.
In terms of hypermarkets, Pune will be witnessing a whole new array of offerings. While Trent is already operational, Star India Bazaar will add two new hypermarts to their existing operational ones. Big Bazaar is coming up with its new and improved avatar. Hyper city will set up its first store in Pune.
Reliance Digital added seven new stores to the Pune market. Reliance Trends and Reliance Footprints are expected to create considerable interest. Shoppers stop will introduce its Gold class.
2012 Outlook:
The growth of retail in Pune has been enormous. While the Eastern corridor has taken the early lead in terms of organized retail developments, the Western and Northern corridors will see a lot of retail development between 2012 and 2014. Overall, retailers are very bullish on Pune and have robust growth plans.
