Real Estate Witnesses Stable Office Space Demand in Pune

Office Space Demand Shows Stability in Pune

office space demand Stable office space demand.

According to real estate specialists in India, the demand for office space in Pune has remained relatively constant. The real estate professionals also mentioned that IT and ITES companies account for a sizable portion of the need for office space.

Maintaining stability in the demand for office space helps keep office rents stable. However, some areas even saw rent increases. According to real estate experts, office space absorption is expected to reach 4 million square feet by the end of 2012. The existing vacancy rate is cited by real estate consultancy C B Richard Ellis (CBRE) as the cause of the slowdown in demand across the nation.

In the third quarter of 2012, almost 5 million square feet of office space was finished. In comparison to the previous quarter's 9 million square feet, this is lower. This represents a roughly 47% decline quarter over quarter.

Mr. Anshuman Magazine, Chairman and Managing Director of CBRE South Asia Pvt. Ltd., added that the first half of 2012 saw an increase in office space absorption. The statistics for the third quarter of 2012 (of supply) support the idea that a decline in office space demand was anticipated.

Areas including M G Road, Bund Garden, Koregaon Park, Kalyani Nagar, F C Road, Dhole Patil, and J M Road in Pune's Central Business District (CBD) saw an increase in office space absorption.

The lack of high-quality supply combined with rising demand has stabilized rents. Meanwhile, it generated a minor rental appreciation of 2 to 3% in the IT sector compared to the prior quarter (April–June). At the same time, the value remained steady in the non–IT sector.

According to Mr. Sanjay Bajaj, Managing Director of Jones Lang LaSalle in Pune, the availability of Grade-A office space has decreased due to rising rents. Prime location rents have increased by more than 10 to 12 per square foot. In 2010, the original rent was between 28 and 30 per square foot, but it has since increased to 40 within two years. According to Mr. Bajaj, rents in some of the best locations have reached 60 per square foot. This represents a two-fold increase.

The CBRE report went on to say that Pune's real estate market will be driven by the banking, financial services, and insurance (BFSI) sector in the upcoming quarters. They will probably be the main drivers of office space demand in the Off CBD and PBD (peripheral business district) areas.

Mr. Bajaj believes that good quality Grade A space is available in SEZs in the western parts of the city like Hinjewadi.

Pune appears to be profiting from this decline in demand for office space. The main cause of this is the unacceptably high rental rates. Moreover, the situation is well supported by other high-end works like engineering R&D which move towards the city. According to Mr. Bajaj, this movement towards the city will guarantee higher demand and rentals.