The eastern corridor of Pune has witnessed rapid growth in commercial sector as Grade A developers have ample stock to lease in the area which enjoys an advantage in terms of social infrastructure, connectivity to other parts of the city, abundant residential options, proximity to airport and railway station among host of other advantages. There is now increased demand for office spaces at Airport Road, Nagar Road, Kharadi in north eastern region and Hadapsar in the eastern region. In fact, most of the corporate space transactions deals in 2009 took place in Pune’s Eastern corridor (38) as against 19 transactions that took place in the Western corridor. However, unlike 2009, in 2010 almost equal number of deals are taking place in either corridors of Pune.
Companies who are seeking to expand in the Eastern corridor are demonstrating a strong preference for scalability option within the project and efficient workplaces. Some clients have also evaluated the option of the developers carrying out the fit out works as per their specifications. Developers are addressing this demand from IT/ITEs companies by providing them large floor plates with better carpet to built-up ratio. Most clients in 2010 are also exploring the SEZ options for tax benefits.
Hadapsar, Kharadi and Airport Road have significant market drivers to boost their long-term commercial real estate investment potential. Cases in example are Magarpatta SEZ + STPI and Eon IT Park that have ready space available for prospective clients. Other IT SEZs as well as commercial ventures are also on the anvil at Kharadi and Hadapsar, which additionally benefits from its proximity to the airport, improved connectivity, 5-star hotels and reasonably low entry costs.
IT Parks around Kalyani Nagar continue to be more prominent and promising commercial real estate locations in Pune as Kalyani Nagar and Vimanagar offer excellent social infrastructure, residential and retail options. Most of the expats tend to prefer living in Kalyaninagar and Koregaon Park.
The Eastern Corridor also benefits from its proximity to the airport, which attracts the cream of upcoming five star hotels. The IT/ ITES component of this area’s landscape is extremely prominent, practically defining everything that exists or is coming up there. Some of the prominent projects include – Kumar Builders’ Cerebrum IT Park, K Raheja Corp, Commerzone and Weikfield IT Citi Park by Vascon.
Hinjewadi, the IT hotbed to Pune’s northeast, is driven by the Government. This in itself will ensure that this area will continue to have everything it needs to sustain its potential as an office real estate destination par excellence. With companies such as Infosys, Wipro, TCS and Cognizant featuring on its masthead, it needs no further credentials. Major developers such as DLF, Embassy Group and Paranjepe have already set the tone, and it is certain that Hinjewadi will attain a critical mass of good tenants in times to come.
Most corporates continue to prefer leasing rather than purchasing space in these projects. Nevertheless, the purchase option continues to be attractive at the current valuations. Considering the growth prospects of Pune’s Eastern corridor, investing in self-owned real estate assets is likely to yield capital appreciation sooner than later, and market valuations continue to be very attractive at this point in time.
The short-term price outlook for Pune’s eastern corridor and other potential-rich locations is pretty steady for all three business models – SEZ, STPI and commercial offices. However, we do see indications that prices for SEZ and STPI units may move upwards over the mid-term. Government policies will play an integral part in this price movement.
Corporate clients have been quite aggressive in securing space from Q1 2010, and approximately 600,000 sq.ft. of STPI space has been leased within the first 2 quarters. (The absorption for 2009 was a total of 1.8 million sq ft.)
The absorption for SEZ is approximately 10,00,000 sq.ft. within the first 2 quarters. The total absorption for 2010 thus far is 1.7 million sq ft. Most of the Pune-based BPOs have leased space within the Eastern corridor, and most technology-related companies have leased space in both corridors. This is a significant increase in demand and reflects the positive sentiments now prevalent on the market.
The author Sanjay Bajaj, MRICS is the Vice President, Markets, Jones Lang LaSalle India
