Pune emerged as the third largest residential market in the country in 2021

Pune, 5th January 2022: In a year marred by pandemic and lockdown, Pune has shown resilience in the performances of both office and residential asset classes during the year 2021. In their latest report, Knight Frank India noted that Pune residential market witnessed remarkable growth by 38% YoY in the CY2021 to be recorded at 37,218 housing units in the year. New launches also saw a marginal rise of 16% YoY with the addition of 40,489 units in 2021.The total office transactions for the calendar year 2021 stood at 3.8 mn sq ft. New completions in 2021 for office space was recorded at 7.2 mn sq ft.

Knight Frank India today launched the 16^th edition of its flagship half-yearly report – India Real Estate: H2 2021 – which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2021 (H2 2021) period. The report highlights that Pune witnessed 2.7 mnsqft of office space transactions in H2 2021 with the highest YoY growth during the period among the top 8 cities. A total volume of 3.8 mnsqft of office spaces were transacted in 2021 out of which 70% were transacted in H2 2021. The average deal size increased by 11% YoY to 58,685sqft in H2 2021 compared to H2 2020.

On the aspect of rentals, the city witnessed a marginal rent increase of 3% QoQ during Q4 2021.BFSI sector emerged as the main driver for the Pune office market with transaction share of 35%, followed by the manufacturing and co-working with transaction share of 19% & 18% respectively in H2 2021

In the residential segment, Pune witnessed sales of 19,744 housing units in H2 2021. The total number of home sales in CY 2021 was seen at 37,218, making Pune the third largest residential market in the country. The average price level was reported to be INR 4,000 per sq ft.

The South and East markets also steered the sale volumes during H2 2021 contributing 38% and 24% respectively to total sales. The West market shrivelled to 22% in H2 2021 though it held a strong position with a market share of 35% in H2 2020.The price levels remain unchanged in H2 2021.

PUNE RESIDENTIAL MARKET SUMMARY

Note: 1 square metre (sq m) = 10.764 square feet (sqft)

Source: Knight Frank Research

• Pune witnessed 17% YoY growth in residential sales, whereas the market witnessed a marginal decline of 7% YoY in new launches during H2 2021.
• The South and East market recorded sale volumes contribution of 38% and 24% respectively during H2 2021. The West market has also shriveled to 22% in H2 2021 while held a strong position with a market share of 35% in H2 2020. Even with the improved sentiments homebuyers are vigilant and continue to prefer reputed developers and ready to move apartments.
• The micro markets in South and East dominate Pune residential launches during H2 2021 having a share of 38% and 25% respectively. The West market has contracted to 21% market share in H2 2021 from 43% in H2 2020. Central Pune has also seen some movement in terms of launches contributing to 7% of the market share in H2 2021. The Northern market has seen a dip in contribution to 9% in H2 2021 from 17%in H2 2020.
• In H2 2020 the focus remained on <5mn category contributing to 49% of the total sale volume. In H2 2021 the share of this price category in total sales increased to 52%.

Source: Knight Frank Research

Paramvir Singh Paul, Branch Director – Pune at Knight Frank Indiasaid, “We observed that flexible schemes offered by developers, low home loan interest rates and consumers need for larger space has contributed to the improved market sentiment in the city. Even with the improved sentiments homebuyers are vigilant and continue to prefer reputed developers and ready to move apartments. As we move towards normalcy, developers may mull over price rise to preserve profit margins and account for the rise in raw material prices.”

OFFICEMARKET UPDATE: H2 2021 (JULY – DECEMBER 2021)

• In H2 2021, Pune office market reported a 58% YoY growth in property leasing. A total volume of 3.8 mnsqft of office spaces were transacted in 2021 out of which 70% were transacted in H2 2021.
•  The average deal size increased by 11% YoY to 58,684 sq ft in H2 2021.
• Pune’s office market expanded by 7.2 mnsqft in new completions in 2021, out of which 60% has been added in H2 2021. A massive 754% YoY growth in new constructions is noted during H2 2021. The growth in new construction also comes from a low base last year, when majorunder-construction activities were stalled.
• Rental values witnessed a decline by 4% YoY during 2021. However, towards the end of 2021, it recorded a marginal rent increase of 3% QoQduring Q4 2021.
• BFSI sector emerged as the main driver for the Pune office market with transaction share of 35%, in H2 2021. This rise can be attributed to 2 sizable deals inked in H2 2021. Share of ‘Other services’ shrunk to 11% in H2 2021 from 23% in H1 2020.
• Despite recording limited transactions in operator deals, Co-working spaces saw a huge seat take up in H2 2021. Co-working operator deals accounted to a share of 18% of the total transacted volume in H2 2021 however 19000 seat take up was noted during CY 2021.
• SBD west has only clocked a share of 7% in H2 2021 while it witnessed the most transaction in H1 2020 clocking a share of 44%. This dip can be attributed to deferred expansion by IT occupiers. On the contrary, CBD &Off-CBD and PBD west which had low contribution in H2 2020, have noted strong transaction volumes accounting for 25% and 21% share respectively.

PUNE OFFICE MARKET SUMMARY

Note: 1. 1 square metre (sq m) = 10.764 square feet (sqft)

Paramvir Singh Paul, Branch Director – Pune at Knight Frank India said, “Despite COVID -19 sting in 2020, Pune commercial office market witnessed a robust growth in the year 2021 on account of the pent-up demand and record IT sector hiring. We have seen recovery in office market with some hindrances in Q2 2021 due to the severity of the second wave of COVID-19. The market has subsequently rebounded with strong leasing and supply infusion in H2 2021. BFSI and Co-working spaces emerged as the main drivers. The city also witnessed a marginal increase in rentals in the last quarter reflecting the positive sentiments in the market.”

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