Pune office market snapshot 2013 report
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Pune Office Market Snapshot 2013
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HIGHLIGHTS • Demand for office space in the Pune office market proved to be resilient, with increased commercial leasing recorded at around 3.5 MN SF, 11% up from 2012. • The office leasing activities in 2013 were dominated by the IT/ITeS sector with approximately 70% of the total absorption from this sector, followed by BFSI. • Average rental values registered an increase of 5% Year-on-Year (YoY) • The outlook for 2014 is promising in terms of the office market. IT/ITeS will continue to play an important role in the city’s overall commercial office space absorption.
Transcript of Pune office market snapshot 2013 report
Pune O�ce MarketSnapshot 2013
1 Pune O�ce Market Snapshot 2013 | Colliers International
Pune Office Market Snapshot 2013
Highlights
In 2013, despite an uncertain global economic environment, demand for o�ce space in the Pune o�ce market proved to be resilient, with increased commercial leasing recorded at around 3.5 MN SF, 11% up from 2012. �e o�ce leasing activities in 2013 were dominated by the IT/ITeS sector with approximately 70% of the total absorption from this sector, followed by BFSI. Amidst the weak economic scenario, the year saw a number of compa-nies such as AXA, Barclays, Cummins, Deutsche Bank, NVIDIA, Symantec, Symphony Teleca, Synechron and others, lease and purchase signi�cant o�ce space (100,000 SF to 700,000 SF) across Pune, either for o�ce expansion or consolidation.
Demand
Large IT/ITeS occupiers were focusing on consolidation or expansion with the objective of keeping costs under control. Occupiers preferred locations such as Kharadi, Yerwada, Hadapsar and Phursungi in the east and Hinjewadi in the west due to the availability of premium o�ce space.
�e market has also witnessed increased traction from retail investors. Individual investors as well as small and medium enterprises were aggressively looking for investments in small Grade A o�ces.
Quarter-on-Quarter Absorption
Top 10 Transactions of the Year
Industry Wise Absorption
Client Building Name Area (In SF)Developer / Landlord Location Transaction Quarter
Cummins
Synechron
Deutsche Bank
Symantec
Symphony Teleca Corp. India
Axa
Praj Industries
Barclays
Siemens
Nvidia
Panchshil Tech Park
Block 1
Business Bay
EON Free Zone
Indo Global IT Park
Marvel Edge
Praj Tower
EON Free Zone
Embassy Tech Park
Commerzone
Panchshil Realty
Ascendas
Panchshil Realty
Panchshil Realty
Wadhwa Developer
Marvel Group
Vascon Engineers Ltd
Panchshil Realty
Embassy Group
K Raheja Corp.
4Q
4Q
1Q
3Q
4Q
1Q
1Q
3Q
1Q
1Q
Balewadi
Hinjewadi
Yerwada
Kharadi
Hinjewadi
Viman Nagar
Hinjewadi
Kharadi
Hinjewadi
Yerwada
1,184,000
600,000
300,000
178,000
148,000
120,000
111,000
100,000
84,000
250,000
IN M
N SF
AVERAGE ABSORPTION
IT/ITeS 69%
1BFSI15%
Pharmaceutical4%
Others 12%
1.40
0.40
0.830.84
2
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
4Q3Q2Q1Q
2 Pune O�ce Market Snapshot 2013 | Colliers International
Supply & Vacancy
Complementing the demand, approximately 3.75 MN SF of new supply was added to the Pune o�ce market. Most of this supply was concentrated in SBD micro-markets such as Yerwada, Baner and Viman Nagar and in PBD micro-markets like Kharadi and Hinjewadi. �e overall vacancy rates remained unaltered during the year at approximately 23% However, there is very limited space available in Special Economic Zones (SEZs). Due to high vacancy levels in the market, developers continued to refrain from launching new projects this year. However, due to high demand in SEZs, developers such as Paranjape and Panchshil have launched the second phase of their existing SEZ, Blue Ridge located at Hinjewadi and EON in Kharadi, respectively.
Rental & Capital Values
During the year, average rental values registered an increase of 5% Year-on-Year (YoY). �e in�ux of new supply with rents relatively higher than the market average led to an increase in weighted average rents. Capital values this year increased 8% YoY across all micro-markets due to increased investor interest.
2014 Prognosis
�e outlook for 2014 is promising in terms of the o�ce market. Corporates will continue to remain cost cautious in their expansion decisions. Demand will remain upbeat in SEZs. Meanwhile, IT/ITeS will continue to play an important role in the city’s overall commercial o�ce space absorption, primarily attributed to the projects that have already seen pre-commit-ments or long-established interest from various IT/ITeS compa-nies. On the supply front, including deferred projects, the new stock expected in 2014 will be approximately 4 MN SF Most of this supply will be located in suburban and peripheral micro- markets. Controlled supply in tandem with absorption will keep vacancy levels unaltered. East and west Pune micro-markets will continue to interest occupiers due to availability of large �oor plates, better infrastructure and proximity to residential pockets of the city.
New Supply, Absorption & Vacancy
Average Rental Trends & Forecast
New Supply (In MN SF) Absorption (In MN SF) Vacancy (In %)
Average Rental Trends (INR Per SF Per Month)
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2015 F2014 F201320122011201020092008
FORECAST
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2015 F2014 F20132012201120100
5%
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20%
25%
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FORECAST
Copyright © 2014 Colliers International.
ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
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