Office spaces in Pune report exponential transaction growth; Kharadi, Hadapsar top the chart
Pune: Knight Frank India today launched the 14th edition of its flagship half-yearly report - India Real Estate: H2 2020 - which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2020 (H2 2020) period.
In terms of micro-market, while PBD East (Kharadi, Phursungi, Wanawadi) witnessed exponential office transaction growth of 375 per cent YoY to 0.86 mn sqft, SBD West (Wakdewadi, Aundh, Baner, Kothrud, Balewadi) was hit hard by -91 per cent YoY to 0.14 mn sq ft in H2 2020.
The report showed that while gross office leasing in Pune recorded at 1.7 mn sq ft during H2 2020, new office completions were at 0.5 mn sq ft during the same period. In Q3 2020 office transactions dropped to 10 per cent of 2019 quarterly average due to restrictions on office workforce capacity.
The office transactions witnessed a rapid recovery in Q4 2020; the transactions jumped 919 per cent QoQ to 1.5 mn sq ft over 0.15 mn sq ft recorded in Q3 2020 and reached 99 per cent of 2019 quarterly average.
During H2 2020, only two micro-market, PBD East (Kharadi, Phursungi, Wanowrie) and SBD East (Kalyani Nagar, Yerawada, Nagar Road, Hadapsar) witnessed exponential transaction growth of 375 per cent YoY to 0.86 mn sq ft and 50 per cent YoY to 0.62 mn sq ft in H2 2020 respectively.
The city's office leasing activity was down by 30 per cent YoY to 0.16 mn sq m (1.7 mn sq ft) in H2 2020, and new office completion was down by 80 per cent to 0.05 mn sq m (0.5 mn sq ft) during the period.
The shortage of construction labour impacted office completions for most parts of 2020
Transactions jumped 919 per cent QoQ over Q3 2020 and reached 99 per cent of 2019 quarterly average led by demand from the co-working segments
In 2020, the weighted average rent at the city level declined by 5.4 per cent YoY. The rents have corrected between 3 per cent -7 per cent YoY across business districts in Pune during 2020. SBD East micro-market was the lowest hit with -3 cent YoY whereas, PBD West rental value declined by -7 per cent YoY in 2020.
During H2 2020, the city witnessed 32 deals with an aggregated average deal size of 4,918 sq m (52,937 sq ft)
Paramvir Singh Paul, Branch Director-Pune, Knight Frank India said, "After a strong start to the year, the office transactions took a severe hit in Pune due to the lockdown. Occupiers were forced to keep their employees on WFH mode as offices were not allowed to run at full capacity and went slow on expansion plans. However, things recovered in the last quarter and the leasing came back to normal pre-COVID levels led by demand from co-working segment reaching 99 per cent of 2019 quarterly average."
"The overall demand from IT sector in H2 was low on account of the limitations office workforce capacity which have been in place for over 9 months. Other cities with lower restrictions office utilisation compared to Pune have witnessed demand recover faster. We believe a similar trend to play out in Pune as well and the demand for office spaces would recuperate once these restrictions are lifted," he added.