PuneQueen of Deccan
Pune is the 9th most populous city in India and the second largest in the state of Maharashtra after the state capital Mumbai. It is considered the cultural capital of Maharashtra. Pune is also one of the fastest growing cities in the Asia-Pacific region.
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Once known as the cantonment city with its several military organizations such as the National Defence Academy and the Armed Forces Medical College dotting the landscape, today Pune is attracting several corporations due to its good climate and verdant surroundings. Its proximity to the mega metropolis Mumbai is an added advantage.
India's GDP growth for the third quarter of FY2015–16 slowed down to 7.3% from 7.7% in the previous quarter. Growth in the construction sector was witnessed at 4.0% during the third quarter, up from the 1.2% growth in the previous quarter. The government, in its Union Budget 2016–17, exempted the Dividend Distribution Tax (DDT) for Special Purpose Vehicles (SPVs) of Real Estate Investment Trusts (REITs), which will make REITs more attractive in the real estate sector. The Parliament recently passed the Real Estate (Regulation and Development) Bill 2015, which is expected to create a uniform regulatory environment and bring transparency to the sector, thereby giving a boost to investments into the sector.
Significant decline in net absorption, vacancy levels showed slight upward movement
The city witnessed new supply of 893,600 square feet (sf), where a majority (54%) constituted of IT-SEZ developments in MagarpattaCybercity(SBD East). Almost 90% of the new supply are Grade A developments.
During the first quarter of 2016, net absorption is recorded at approximately 574,100 sf, registering a quarterly decline of 83%. Almost 89% of the total net absorption was noted in Grade A developments. Consulting, Banking, Financial Services and Insurance (BFSI) and the Information Technology and Information Technology enabled Services (IT-ITeS) together constituted 56% of the leasing activity, which was concentrated in the suburban locations of SBD East (62%). No pre-commitments were noted during the quarter.
Grade A weighted average rentals appreciated by 18% quarter-on-quarter in SBD West mainly due to incremental supply quoting higher than existing market average rentals. Due to moderate net absorption activity amidst infusion of supply at a higher level, overall Grade A vacancy levels moved upwards by 0.5 percentage point and were noted at 11.1% at the end of March 2016.
Amidst an anticipated influx of approximately 695,300 sf of Grade A supply in the upcoming quarter, none of which is pre-committed, net absorption is expected to be moderate. Hence, vacancy levels in the city may go up in the short term. As a result, select submarkets like PBD West and SBD East may witness softening in rentals in the upcoming quarter.
QUICK FACTS ABOUT
- Current Population5.7 MN
- Metro & AirportsCONNECTIVITY
- Per Captia income$7,005