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Business

Pune records highest growth in office transactions in this decade in 2018: Knight Frank India

January 08, 2019 03:35 PM

Knight Frank India today launched the 10thedition of its flagship half-yearly report - India Real Estate. The report presents a comprehensive analysis of the residential (across eight cities) and office (across seven cities) market performance for the period July – December 2018 (H2 2018).

 

A comprehensive analysis of the office market shows that Pune recorded highest growth in transactions in this decade in 2018. With a total leasing volume of 0.6 mnsq mt. (6.6 msf). In the residential segment, affordable housing and compact home segments dominated the launches in the city. The total units of sales recorded in the whole year of 2018 was at 32,684 units.

 

Residential market highlights

 

  • Launches in the city grew on a low base of 2017. A major spurt was witnessed in the 'Pradhan Mantri Awas Yojana (PMAY) led affordable housing segment and in the compact homes segments
  • Total launches recorded rise of 157% YoY in 2018 and was recorded at 32,684 unit
  • Affordable housing continued to dominate launches with 71% of the launches being priced less than INR 50 lakhs or INR 5 million and 90% of the launches priced below INR 75 lakh or INR 7.5 million
  • After Mumbai, trend of compact homes has caught up in Pune as well. Apartment sizes in new launches in Pune city shrank by 26% between 2014 and 2018. In some markets the shrinkage is as high as 35%
  • Sales in the residential segment grew marginally by 4% YoY in H2 2018. Sales were driven by ready-to-move in and affordable housing segments
  • Annual sales were down marginally in 2018
  • Goods and Service Tax (GST) on under-construction continues to act as a deterrent, pushing buyers towards OC ready projects
  • Prices werelower in H2 2018 and freebies/offers continueto remain in the market
  • QTS declined from 3.4 in H2 2017 to 3.3 in H2 2018. This fall in QTS in account of launches being lower than sales from H2 2014 to H1 2018

 

 

 

Office market highlights

 

  • In 2018, Pune registered the highest growth in office transactions in this decade of 46% YoY on the back of robust demand from occupiers and the presence of large pre-commitment transactions
  • 2018 was a record year for Pune office market in terms of area transacted as well. The city witnessed office space transactions of 6.6 mnsq ft or 0.61 mnsq m
  • Pune witnessed the largest quantum of new supply added in the current decade. Significant proportion of the new supply added in 2018 came in from few projects. As a result, supple crunch continues
  • The problem of supply crunch is forcing occupiers to actively scout for/enter into pre-commitments. Around 2 mnsq ft or 0.18 mnsq m of the transactions in 2018 were pre-commitments
  • Strong double-digit growth of 13% YoY in weighted average transacted rentals. Robust demand from occupiers, supply crunch and demand for pre-commitments contributed to this
  • Double-digit rental growth across most business districts
  • Huge addition in new completions caused the city level vacancy to inch up from 5.8% to 7.5%

Paramvir Singh Paul, Branch Director, Pune, Knight Frank,said,“The robust growth story in Pune’s office market continued as in 2018, the city witnessed the highest growth in this decade. This was largely on account of a healthy demand from occupiers and the presence of large pre-commitment transactions. The year also marked a record year in terms of area transacted. In the residential segment, growth was seen in the 'Pradhan Mantri Awas Yojana (PMAY) led affordable housing segment and in the compact homes segments. Sales grew marginally and GST on under-construction continued to act as a deterrent for buyers.”

 
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