Pune sees highest office space addition in Q4 2013
Feb 14, 2014
Source : The Times of India


PUNE: Close to 7.3 million sq ft of office space supply entered the market in Q4 2013, as compared to less than 3 million sq ft in Q3 2013, in the city of Pune. This was led largely, by a number of commercial realty and SEZ developments that had been delayed over the previous two quarters, and were finally completed in Q4 2013. Pune led these project completions, followed by Bengaluru and Hyderabad, together, contributing to about 71 per cent of the total new supply in India’s top office markets, in the last quarter of the year 2013.

The fourth quarter of 2013 accounted for around 7.3 million sq ft of new office space addition, across India’s major cities, with the supply distribution led by Pune (30 per cent), Bengaluru (26 per cent) and Hyderabad (15 per cent). During the fourth quarter, prime office space supply in Pune, grew significantly, quarter-on-quarter, registering above 2 million sq ft of fresh space, as compared to less than 50,000 sq ft of supply addition in Q3 2013. The city’s total commercial office space supply addition for 2013, stood at approximately 4.4 million sq ft, registering the third largest supply addition in 2013, following Mumbai (8.4 million sq ft) and Bengaluru (8 million sq ft).

High vacancies and lower demand levels had resulted in quite a few project delays over the previous quarters of 2013, leading to a significant supply addition by the yearend in the city. Pune’s central business district (CBD), micro-markets of Viman Nagar, Magarpatta, Aundh, Baner, Shanker Seth road, SB road and Nagar road, saw the maximum supply addition to the tune of 62 per cent in the review quarter, over the Peripheral Business District (PBD; 30 per cent) and the central business district (CBD; 8 per cent).

Around 1 million sq ft of IT SEZ space was added to the city’s existing stock in the PBD; while the CBD did not witness any significant project completions in Q4 2013.

Pune’s total office space absorption in 2013, stood at around 2 million sq ft, with the fourth quarter contributing to about 5,20,000 sq ft of space take-up, a quarter-on-quarter growth of around 23 per cent over absorption in Q3 2013.

With supply numbers over-riding absorption levels, rental values remained under pressure and continued to maintain stability across most micro-markets during the review period. While CBD rental values in the IT/IT SEZ segments remained stable, the commercial segment saw a negligible appreciation of about 1-2 per cent in rental values, owing to persistent demand from corporates preferring to set up their offices in the region.

Pune witnessed an increase in leasing activity during the quarter and this trend is likely to continue in the coming few months too. A large number of transactions, which are in advanced stages of discussions, are likely to be closed within the next quarter. The IT/ITeS, banking and financial services segments, will continue to drive the demand for office space in the Off CBD and PBD locations of Pune.

Owing to a steady addition of supply and persistent demand levels, rental values are likely to remain stable across most of the city’s micro-markets, in the short- to-medium term.






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