OFFICE Traction @ Glance COMMERCIAL COMMERCIAL Knight Research Research Frank

OFFICE traction @ Glance COMMERCIAL COMMERCIAL Knight Research Research Frank

Just three office properties namely Ascendas Research Recent market leading research publications. IT Park in Hinjewadi, EON in Kharadi and The PBD East market has Dr. Samantak Das Magarpatta in Hadapsar accounted for nearly Chief Economist & Director, Research featured prominently in T +91 22 6745 0101 0.47 mn.sq.ft. which made up approximately Q1 FY 2014 claiming a [email protected] 53% of the total area absorbed during Q1 FY Consultancy & Valuations massive 46% of the total 2014. It was also observed that Y-o-Y rental transacted space in Pune appreciation in IT SEZ properties like EON Saurabh Mehrotra Director, Consultancy & Valuations Services and seen an absolute and Magarpatta SEZ was higher compared to T +91 22 6745 0101 The Wealth Report Investment advisory [email protected] 2013 Report 2013 growth of nearly 93% STPI and commercial office properties. Office & Industrial Agency compared to the previous Outlook Knight Frank Research Reports available at Balbir Singh Khalsa www.KnightFrank.com/research reference period. National Director, Office & Industrial The fact that western T +91 22 6745 0101 [email protected] The SBD East saw its transaction volume economies are getting jump multi-fold thanks largely to a 0.04 Regions back on the growth track Naushad Panjwani mn.sq.ft. lease inked by BNY Mellon at Senior Executive Director - West will provide a boost to T +91 22 6745 0101 Commerzone in Yerwada. Commerzone, [email protected] Marvel Edge and Giga Space accounted for market sentiment and Rajeev Bairathi nearly 72% of the total space transacted carry forward the current Executive Director – North during this quarter. momentum over the T +91 124 4075030 [email protected] The CBD & Off CBD market has experienced remainder of the financial Satish BN a significant increase in uptake in recent year. Executive Director – South T +91 80 40732600 quarters. Q1 FY 2014 saw approximately [email protected] 0.06 mn.sq.ft. being absorbed which is a huge improvement from the near negligible The Pune office space market has had a good numbers achieved in Q1 FY 2013 and start to the financial year and we expect 0.02 mn.sq.ft. taken up in the preceding these absorption levels to remain buoyant quarter. The IT/ITeS industry was the largest in the following quarters as well. The fact consumer of office space during the quarter that western economies are getting back and accounted for over half of the space on the growth track will provide a boost transacted followed by the other service to market sentiment and carry forward the sectors. Properties such as Pride House on current momentum over the remainder of the financial year. Nearly 4 mn.sq.ft. of office SB Road, City Mall on Ganeshkhind Road Knight Frank India research provides development and strategic advisory and Suyog Platinum on Tadiwala Road space is expected to come online in the to a wide range of clients worldwide. We regularly produce detailed and informative research reports which provide valuable insights on the real experienced maximum activity in the CBD following three quarters. However, vacancy estate market. Our strength lies in analyzing existing trends and predicting and Off-CBD market during the quarter. levels are not expected to trend higher as future trends in the real estate sector from the data collected through market surveys and interactions with real estate agencies, developers, funds and demand remains strong. other stakeholders.

The SEZ space accounted for bulk of the Table 4: Average transacted rental values in transacted space during the past six quarters Pune (`/sq.ft./month) Q1 FY Q1 FY Q4 FY leaving very limited inventory in this © Knight Frank 2013 Micromarkets 2014 2013 2013 This report is published for general information only and not to be relied category. The trend will continue through the OFFICE Traction CBD & Off-CBD 60 56 57 upon in any way. Although high standards have been used in the preparation remaining part of FY 2014 resulting in further of the information, analysis, views and projections presented in this report, SBD West 42 39 40 no responsibility or liability whatsoever can be accepted by Knight Frank firming up of rentals in the SEZ space. SBD East 44 41 42 for any loss or damage resultant from any use of, reliance on or reference @ Glance to the contents of this document. As a general report, this material does PBD West 36 33 34 not necessarily represent the view of Knight Frank in relation to particular PBD East 40 36 37 properties or projects. Reproduction of this report in whole or in part is Pune not allowed without prior written approval of Knight Frank to the form and Source: Knight Frank Research content within which it appears. August 2013 OFFICE traction @ Glance

Q1 FY 2014 Q1 FY 2013 Q4 FY 2013 Chart 2: Location and quarter wise absorption in Pune Chart 1.0: Business District-wise up offices in the CBD and PBD locations and seen an absolute growth of nearly 93% split of Stock Almost 60% of the space for design centres and sales and service compared to the previous reference period. 0.45 Market Overview transacted by the IT/ITeS offices. However, the upbeat mood of the Nearly 67% of the 0.4 mnsq.ft. taken up in 0.40 market did not extend to the manufacturing this market is concentrated at EON in Kharadi sector was concentrated 0.35 sector in the current quarter as the sector’s and Magarpatta in Hadapsar. Citibank and in Hinjewadi and share fell considerably compared to both Barclays from the BFSI sector alone have 0.30 Hadapsar. Four of the top reference periods. It should be noted that take up approximately 155,000 sq.ft. at EON 0.25 the sector accounted for a massive 40% while manufacturing companies are actively six transactions during Q1 0.20 of the transacted space during Q4 FY 2013 looking to buy office spaces to house their FY 2014 were accounted which speaks for its underlying strength. We back office operations in this market.

Mn.sq.ft. 0.15 Business Districts of Pune believe that the central government’s focus for by this sector and The PBD West market saw the quantum of 0.10 on increasing the share of the manufacturing Legend constituted almost 43% space transacted in Q1 FY 2014 increase sector in India’s GDP will enable this sector’s Major Roads 0.05 by 8% compared to the previous reference P East - 24% Railway Line CBD & Oﬀ-CBD - 13% BD of the total absorption share to recover and stay buoyant. period. A 0.2 mn.sq.ft. lease inked by 0.00 Q1 FY 2014 SBD East - 23% PBD West - 23% Proposed Metro Corridor I Q1 FY 2013 Q4 FY 2013 during the period. SBD West - 17% Synechron at Ascendas IT Park in Hinjewadi Proposed Metro Corridor II CBD & Oﬀ-CBD SBD West SBD East PBD West PBD East The BFSI sector share accounted for almost the entire space taken Wakad Source: Knight Frank Research Source: Knight Frank Research up in the PBD West market. The IT/ITeS major Hinjewadi The IT/ITeS sector which is especially Almost 60% of the space transacted by has grown at a healthy PBD WEST has committed to take up an additional 0.4 Balewadi Business District Classification sensitive to global economic cues, has the IT/ITeS sector was concentrated in pace over the past year. mn.sq.ft. in the following quarters. Business District Micro-markets been treading cautiously and suspending Hinjewadi and Hadapsar. Four of the top Q1 FY 2014 saw the BFSI Central Business District & Off Central Bund Garden Road, S B Road, Camp, Deccan, Pune Station Vishrantwadi SBD EAST The SBD markets have a more diverse Business District (CBD & Off - CBD) Road expansion plans while waiting for the six transactions during Q1 FY 2014 were sector consume almost Baner Yerwada Nagar Road Aundh Kharadi Secondary Business District - East Kalyani Nagar, Airport Road, Yerwada, Nagar Road, business cycle to turn. However, Q1 FY accounted for by this sector and constituted occupier profile compared to the PBD and Wakdewadi Kalyani 0.23 mn.sq.ft., more than SBD WEST (SBD East) Vishrantwadi 2014 has bucked this stagnating trend and constitute close to a third of the office stock Nagar almost 43% of the total absorption during University Peripheral Business District - East Hadapsar, Kharadi, Phursungi, Wanowrie Road (PBD East) seems to have staged a reversal of sorts. doubling the space taken of Pune. The SBD West consumed close to SB Road CBD & OFF-CBD Bund Garden the period. Road SBD West Wakdewadi, Aundh, Baner, Kothrud, Unversity Road Absorption numbers in Q1 FY 2014 have up during Q1 FY 2013. the same quantum of space in Q1 FY 2014 Deccan The BFSI sector share has grown at a healthy PBD West Hinjewadi, Bavdhan, Wakad, Balewadi soared almost 58% from Q1 FY 2013 and compared to the previous reference period. Bavdhan Kothrud Camp pace over the past year. Q1 FY 2014 saw the Source: Knight Frank Research more than doubled the volumes achieved PBD EAST The IT/ITeS sector was the most active here BFSI sector consume almost 0.23 mn.sq. during the preceding quarter. Transaction Geographic Analysis taking up nearly 84% of the space transacted and absorption remained steady. The impact ft., more than doubling the space taken up activity is largely cyclical in nature and during the quarter. Aundh and Baner Hadapsar The PBD markets claim most of the Wanowrie of this was reflected in the rental movement the initial few months of the financial year during Q1 FY 2013. Just two leases inked by The fact that FY 2014 has accounted for a massive 94% of the space transacted space in Pune as the office that witnessed steady appreciation in the experience bulk of the action as location Barclays and BNY Mellon constituted nearly started on a strong note transacted in the SBD West and Westend III Phursungi spaces here are tailor-made to suit the last three years in most of the business planning and budgeting activities tend to 75% of the total area transacted by the BFSI and Amar Paradigm respectively were among is a powerful indicator requirements of the dominant IT/ITeS districts. get executed during this period. The fact sector. Pune city is among the top ten largest has grown, coupled with the growth in the the properties most active during Q1 FY 2014. of improving market that FY 2014 has started on a strong note sector. The PBD East market has featured metropolitan economies in terms of nominal manufacturing sector has sparked off a flurry An uninspiring global economic environment Demand from the manufacturing sector has A 0.08 mn.sq.ft. lease signed by the Centre traction. is a powerful indicator of improving market prominently in Q1 FY 2014 claiming a massive GDP and per capita income in the country. of construction activity in the grade A office has caused expansion activity to stagnate been on the rise providing a fillip to the for Development of Advanced Computing traction. 46% of the total transacted space in Pune over the past two calendar years. It gained prominence as an industrial space market over the past decade. The Currently, the total office space stock in Pune health of the Pune office market as a whole. was the largest transaction in this market. Sectoral Analysis destination, when the automobile and eastern and north-western locations where is occupied resulting in a vacancy level of It has experienced tremendous growth Table 2: Distribution of office space across Traditionally, the IT/ITeS sector that accounts Table 3: Select transactions in the Pune Office Market during Q1 FY 2014: pharmaceutical industries made large the IT/ITeS sector has proliferated have the 20%. The vacancy levels have been declining during the last five years in and around Pune sectors Approx. Area Absorption numbers in for majority of the space transacted has Location Building Company Industry investments in the city and dominated its largest chunk of office space in Pune. consistently since 2009, when they peaked Broad Industry Q1 FY Q1 FY Q4 FY city limits. Prolific expansion by automotive (sq.ft.) Classifications 2014 2013 2013 Q1 FY 2014 have soared economic landscape. The last decade saw dominated the Pune commercial office giants like Volkswagen, Mercedes, Mahindra Hinjewadi Ascendas Synechron IT/ITeS 200,000 Table 1: A summary of Lease transactions: at 28% due to the huge influx of new supply BFSI* 25% 19% 35% market with the Manufacturing and BFSI Kharadi EON Barclays BFSI 125,000 almost 58% from Q1 the emergence of the IT/ITeS sector which Lease Transactions Q1 FY Q1 FY Q4 FY and Hyundai has resulted in their vendor during 2008 and 2009. More than 16 mn.sq. IT/ITeS 66% 73% 25% Aundh Westend III CDAC IT/ITeS 78,000 practically reforged the city’s economy, 2014 2013 2013 sectors vying for second place a long companies setting up factories in Pune. This FY 2013 and more than ft. of incremental office space entered the Manufacturing 4% 8% 40% Hadapsar Magarpatta Crest IT/ITeS 66,000 Total Area Transacted distance behind. Accounting for 66% of catapulting it in to the forefront of India’s 0.89 0.53 0.35 Other Service Sector** 5% - - has generated huge demand for industrial doubled the volumes (mn.sq.ft.) market during these two years. However, Hadapsar Magarpatta Inautix IT/ITeS 44,208 IT/ITeS growth story. Pune today is among Average Rate for IT/ *BFSI sector transactions include back office leases of the market, the IT/ITeS sector took up 0.59 land in locations like Chakan, Ranjangaon, 2010 onwards the vacancy levels started BFSI companies Yerwada Commerzone BNY mellon BFSI 40,000 achieved during the ITeS transactions 41 37 39 mn.sq.ft. in Q1 FY 2014 which is a 52% jump the leading software exporting cities in **Service sector companies besides those included in the Talegaon and in new industrial locations like Baner Amar Paradigm Xoriant IT/ITeS 17,500 (`/sq.ft/month) declining as the quantum of new supply BFSI and IT/ITeS category preceding quarter. compared to the previous reference period. Source: Knight Frank Research India. The pace at which the IT/ITeS industry Source: Knight Frank Research entering the market receded significantly Source: Knight Frank Research Shirval. Most of these companies have taken OFFICE traction @ Glance