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Pune residential & commercial real estate in 2012 and 2013

RESIDENTIAL REAL ESTATE


- Pune Residential Real Estate In 2012


The prices for homes in Pune city moved up by an average of 12%. Average appreciation in 2013 will be between 12-15% across the city. Hinjewadi, Kondhwa and Undri contributed almost 40% of the total sales in 2012.


There was a reduction in number of new launches in 2012, but supply increased in the mid-budget segment (Rs. 50 lakh to Rs. 1 crore) and the luxury segment (Rs. 1 crore and above) across the city. This trend will continue in 2013. 2012 also saw an increasing supply of units in the super luxury segment (Rs. 4 crore and above), predominantly in the Eastern corridor (Boat Club Road, Koregaon Park, Kalyaninagar and Vimannagar).


A growing number of local entrepreneurs are further fuelling the growth of the super luxury segment. Developers in the super luxury segment are offering lot of value-addition in projects that have international tie ups, such as with reputed global developers (Panchshil – Donald Trump), international architectural firms and international designers. Such tie-ups have increased the emphasis on detail in the projects, and to improve technical parameters.



Outlook For 2013


Generally, residential property buyers in Pune are now concentrating on location, developer reputation, pricing, amenities and specifications as well as completion schedule. The weightage given to each or combinations of these priorities varies. However, the least level of flexibility is evident on the location and pricing fronts.


The demand for residential property in Pune continues to be massive in 2013, but this demand is driven throughout by intelligent decision-making. As a rule, most of Pune's home buyers know that they have options, how the market is currently behaving and how it is likely to behave in the foreseeable future. Pune was one of the best-performing markets in 2012, which was by all standards a challenging year for most cities. Given that the market drivers that made this happen are still very much in place, this trend will continue in 2013, as well.


The available inventory in 2013 is equivalent to almost 9 months’ stock, which indicates a very healthy absorption level in the city. In 2013, Pune will see stronger demand from IT / ITeS and manufacturing sector employees, Mumbai-based investors and NRI clients who are looking to invest in stable markets. Among the developers who will be launching residential projects in Pune during 2013 are ABIL, Kumar Properties, Kalpataru, Tejraj Developers, Urban Lifestyle and Urban Homes.
 


COMMERCIAL REAL ESTATE


Commercial Space Absorption In 2012


In 2012, the total absorption of commercial real estate in Pune clocked at 4.5 million square feet, which was an increase from the absorption of 4 million square feet in 2011. The region-wise absorption break-up was:


- Pune East: 2.2 million square feet (49%)


- Pune West: 2.3 million square feet (51%)


In terms of commercial real estate asset classes, SEZs accounted for an absorption of 1.7 million square feet (38%). Non-IT commercial spaces constituted 0.9 million square feet (20%) and STPI spaces for 1.9 million square feet (42%). Pune's total absorption of IT/ITeS real estate in 2012 was 3.6 million square feet, or 80% of the total absorption in the city. This represented a decline from the 83% noted in 2011.



- Office Rentals Movement In 2012


In 2012, the weighted rental rates in Pune rose by 18-22%, largely as a result of a constraint in the supply pipeline of Grade A office spaces available in the city across all asset classes. Rentals in the Central Business District (CBD) – comprising of Koregaon Park, Camp, Wakdewadi, Shivaji Nagar and Senapati Bapat Marg - rose by 16%, while rentals in the Secondary Business District (SBD) - comprising of Viman Nagar, Yerwada (off Airport Road), Hadapsar, Baner, Aundh and Bavdhan - and the Peripheral Business District (PBD) - comprising of Hinjewadi, Bhosari, Kharadi and Phursungi - rose by about 25%.
 


- Office Space Demand Scenario In 2012


In 2012, demand for commercial real estate in Pune was primarily focused on the SBD, which accounted for 2.4 million square feet of the overall demand within the city. The PBD saw decent action as well, accounting for 1.6 million square feet. In particular, Hinjewadi saw a high level of demand as it catered to the larger requirements of corporate occupiers. Pune saw a large number of occupiers relocating from their existing offices and moving into larger setups in 2012. Most of the absorption in the city was a result of such expansion moves by occupiers.


Thanks to the diversified profile of Pune's commercial real estate market, the city saw traction not only from IT/ITeS firms; there was also a considerable amount of traction from BFSI clients as these firms actively ramped up their presence and manpower headcount in Pune in 2012.


 


Outlook For 2013


Given the diversity of office space demand, which encompasses the IT/ITeS, manufacturing, automobile and BFSI sectors, Pune will continue to account for healthy commercial real estate  absorption in 2013. While office space demand across India saw a 16–18% dip in 2012, demand in Pune surged upward by 6%. This clearly signifies the confidence and intent that clients have shown towards the city.


The massive display of investor confidence seen in the city during 2012 will continue to be a driving force in 2013, as well. Jones Lang LaSalle is actively managing a large number of investment transactions coming from HNIs and institutional investors, who are trading enthusiastically in commercial assets because of the attractive valuations.


Office space rentals in the non-IT commercial property asset class are likely to stabilize after the second quarter of 2013, thanks to the influx of fresh stock - especially in the Eastern corridor. SEZ rentals in Hinjewadi are expected to remain stable, since considerable supply is slated to hit the market there in the second half of the year. On the other hand, rentals for commercial office spaces in STPI projects are expected to increase because of the limited supply of Grade A office spaces throughout the city.

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