Pune Office market Update-2018


Pune office market was marked by severe supply crunch of office space as compared to demand, although there were large projects that were completed and leasing activity was at a decent level in 2018.

The city saw some large pre-commitment deals in 2018. Pune’s nearness to Mumbai but relatively low rentals have made a good choice for corporates for office spaces and they continued to expand in the city and making significant lease transactions. The overall leasing volumes reached 6.6 million square feet in 2018, according to a research report prepared by real estate consultancy Knight Frank.

Like in many other cities, the IT and ITeS sectors constituted the highest number of leasing deals in 2018, followed by BFSI (Banking, Financial Services and Insurance) and manufacturing industries.

Leasing Volumes

The year 2018 saw total leasing volume of around 6.6 million square feet, up from about 4.5 million square feet in 2017, registering an increase of 46 percent.

The IT companies continued to hire employees and expand in 2018 in the city and accounted for lion’s share in the overall office space absorption.

Rentals

The rentals in this Maharashtrian city have been going up in the past but are still affordable as compared to some of the other large cities having quality infrastructure. The average rentals in the city stood at Rs 71 per square feet per month in 2018, up from Rs 63 per square feet per month in 2017. This translates into a jump of 13 percent in 2018 over the previous year, according to the report.

There was decent increase in the stock of commercial real estate in the city in 2018. The stock stood at 69 million square feet in 2018, up from 62.1 million square feet in 2017.

20182017Change Year-On-Year
Average Rent (Rs/sq ft/month)716313%
Transactions (In million sq ft)6.64.546%
Stock (In million sq ft)6962.111%

The vacancy level for commercial real estate market continued to remain in single digit at 7.5 percent 2018.

Hot Micro Markets

The secondary business district east comprising of Kalyani Nagar, Yerwada and Hadapsar and peripheral business district east comprising of Kharadi and Wanowrie saw hectic leasing activity in 2018. These are also the areas that saw the highest jumps in rentals.

The micro market of eastern and western business districts will see massive additions to the existing stock in the next 2-3 years which will ease the supply side pressure. However, that may also hit the sizeable rentals hikes that the city has been witnessing over the last few years, according to the report.

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