~Office market grows from strength to strength~
Knight Frank India today launched the ninth edition of its flagship half yearly report - India Real Estate. It presents a comprehensive analysis of the residential and office market performance of Pune for the period January -June 2018 (H1 2018).
· New office supply was higher by 54% YoY, but could not keep pace with the demand
· The Pune office market was strong in terms of office leasing registered a whopping 118% YoY growth in H1 2018
· Occupiers navigate space shortage viapre-commitments in under-construction projects
· Strong growth in demand from BFSI
· While vacancy levels hoveredat 5.7%, weighted average rentals across Pune increased 8% YoY
· The share of the BFSI sectors more than tripled even as the demand from the traditional market leader - IT sector tapered from 60% in H1 2017 to 30% in H1 2018
· Residential launches grow by 78% YoY in H1 2018on a low base of H1 2017
· Smaller ticket sizes driving sales, witness launches in that segment
· 23% reduction in average unit size in Pune City from 2013 to 2018
· Prices continue to decline, weighted average prices down 5% YoY
· In addition to price cuts, host of other indirect discounts on offer- flexi financing, subvention, GST/stamp duty/floor rise waiver, gifts, free appliances, etc.
· Sales decline by 6% YoY in H1 2018. Regulatory sops and incentives by developers could not improve sales. Most sales happening in OC ready projects
· Unsold inventory down by 32% YoY. QTS declines to 3.3 as launches have constantly lagged sales from H2 2014 till H1 2018
Speaking about the findings, Paramvir Singh Paul, Branch Director – Punesaid, “The Pune office market presents a bright picture. Transactions grew by 118% YoY in H1 2018 even as rentals strengthened further. The Pune office market has been reeling under the pressure of acute shortage of office space as the supply has not kept pace with the demand for several years. In latest trends, we have seen occupiers navigating the supply shortage by entering into pre-commitments.
The Pune residential market witnessed significant jump in launches at 78% YoY in H1 2018. However, this growth in new launches coupled with - reduction in prices, indirect discounts, government incentives and policy reforms could not translate to growth in sales. Buyers are confining their purchases mostly in ready to move in projects or incentive propped under-construction projects.”