Pune’s commercial real estate market has always been in the limelight for its construction quality and proximity to the country’s financial capital, Mumbai While the IT industry has been the primary driver for growth in the commercial segment, several other industries too are flourishing in this domain now.
A report by Colliers International indicates that the city recorded a 38 per cent rise in the absorption of office spaces in the first half of 2015. It made up almost one tenth of the country’s total office space absorption. While the IT/ITeS sector undertook more than half of the total office space available in the city, the Banking, Financial Services and Insurance (BFSI) sector also added up to the total demand.
Commenting on the growing preference for Pune’s commercial real estate market, Atul Chordia, Managing Director, Solitaire says, “In addition to Pune’s own auto ancillary industry, the growth of IT/ITeS and BFSI sectors has been the major driver for office space demand in the city. Apart from these, Pune-based medium and small-scale enterprises are growing on a national and global level, leading to increased demand for office spaces in Pune.”
Some other concepts which are aggressively growing and enhancing the need for commercial spaces are serviced office spaces and start-up culture.
Due to seamless infrastructure and connectivity to and from the city, Central Business Districts (CBDs) have witnessed maximum occupier demand, especially in locations such as Yerwada, Baner and Wakad.
‘While Delhi-NCR, Mumbai and Bengaluru were the front-runners that witnessed majority of office space demand during H1 2015, regained expansion momentum has slowly begun to percolate to other cities including Pune, apart from Chennai and Hyderabad.’
Sanjay Dutt, Managing Director, India, Cushman & Wakefield.
Towards the eastern side of the city, Yerwada continues to dominate the market with maximum occupancy and high demand for good quality commercial spaces. Commercial developments along the Nagar Road running near Yerwada have witnessed significant upgradation in the recent past. Yerwada boasts of good quality retail, hospitality, and prime residential and commercial hubs in addition to its proximity to the airport, city centre and Pune Railway Station.
“Backed by such thriving factors, Yerwada accounts for over 52 per cent of the office space absorption in Pune, thus consolidating its position in the city with over 90 per cent occupancy in good quality spaces. Being a CBD, Yerwada will continue to demand very high occupancy levels in future,” adds Chordia.
Towards the western side, demand for commercial office spaces has spiked due to the development of IT and manufacturing hub - Hinjewadi and the adjoining areas. Baner has emerged as a prime location for commercial real estate because of major infrastructural development and connectivity with Pune – Bengaluru highway and Pune-Mumbai expressway. Wakad has grown considerably due to its location in PCMC (Pimpri Chinchwad Municipal Corporation) and availability of properties at competitive rates.
Experts highlight that given the growing absorption, investing in commercial properties in Pune could reap healthy return on investment (ROI). In fact, Chordia opines, “The right commercial property investment can yield approximately double returns as compared to a residential one. Commercial properties which have modern infrastructure and shared services within the campus usually fetch higher returns.
India’s start-up culture is mushrooming and with easy availability of venture capitalists, small offices at prime locations are likely to be in high demand. Typically, a commercial property can yield 7-10 per cent ROI as compared to a residential property which yields two to four per cent rental return.