M A R K E T B E AT PUNE Office Q4 2019 Continued leasing momentum pushes vacancy to an all-time low Gross leasing activity was 1.5 msf in Q4, a 120% q-o-q increase, with the traction in quarterly leasing driven largely by significant pre- commitments by captive centres and flex operators. The low vacancy levels are continuing to stifle leasing activity in existing stock, even as occupier momentum remains strong. The SBD East (mainly Kharadi & Hadapsar) submarket contributed nearly 44% of the leasing followed by 1.80 msf NET ABSORPTION (Q4 2019) the CBD submarket with a 39% (mainly Koregaon Park) share. Panchshil Business Park at Balewadi (leasable area of about 1.5 msf) was completed during the quarter with 100% occupancy levels, thereby giving a push to the quarterly net absorption in Q4. The 2019 net absorption for Pune stood at 5.06 msf (+29% y-o-y), with pre-commitments becoming operational during the year, aiding the healthy performance. The net 1.50 msf NEW COMPLETIONS (Q4 2019) absorption recorded during the year is the highest since 2015. The vacancy levels in Pune fell to 3.6%, the lowest ever; though this excludes a yet-to-be exercised hard option by an IT major in the PBD East submarket. The overall rentals were largely range-bound across all submarkets during the quarter. 21.5 msf UPCOMING SUPPLY (2020F – 2022F) Demand from Flex Space Operators remains buoyant The leasing activity during the quarter was led by flex space operators with a 36% share, followed by captive and IT-BPM occupiers with respective shares of 34% and 27%. Flex operators leased 0.6 msf in Q4, taking their year's total to approx. 1.16 msf (+93% y-o-y). Major transactions recorded include Smartworks preleasing 0.47 msf in an upcoming project Amar Pristine Eighty-Three (AP83) at Koregaon Park. MARKET INDICATORS OVERALL Demand from flex operators remains buoyant as established operators like Smartworks, Awfis, Table Space etc. continue to scout for space in Q4 2019 the major office corridors. For entire 2019, IT-BPM occupier segment remained the most active with a 34% share of leasing activity, followed by a 19% share held by flex operators and 18% by captive centres. 12 month Q4 2018 Q4 2019 Forecast Year 2020 to have a larger share of pre-commitments Overall Though, around 6.5 msf of supply is expected in 2020, we expect vacancy to remain tight in the CBD and SBD submarkets driven by high 6.8% 3.6% Vacancy occupier demand in these corridors. Upcoming Grade A developments in these submarkets which are anticipated till 2021 are witnessing multiple enquiries for large spaces from large IT-BPM players, BFSI Captives and by flex space operators. While we saw 1.2 msf in pre-commitments in Weighted Average 2019, we anticipate that in 2020, pre-commitments are likely to have an even larger share of the leasing activity with closure of several Net Asking Rents 67.2 69.9 (INR/sf/month) transactions of 0.5 to 1 msf across key submarkets having been pushed to the next year. Rental values are expected to remain stable except for the SBD West submarket, where growth is anticipated on the back of strong leasing YTD Net 3,931,000 5,063,300 momentum amid limited upcoming supply. Absorption (sf) NET ABSORPTION & NEW SUPPLY OVERALL VACANCY & WEIGHTED AVERAGE ASKING RENT 7 80.0 14.0% 6 12.0% 60.0 10.0% 5 8.0% 4 40.0 6.0% 3 20.0 4.0% 2 2.0% 1 0.0 0.0% 0 2016 2017 2018 2019 2020F NET ABSORPTION (MSF) NEW SUPPLY (MSF) WEIGHTED AVERAGE RENTS (INR/SF/MONTH) OVERALL VACANCY(%) M A R K E T B E AT PUNE Office Q4 2019 MARKET STATISTICS YTD GROSS PLANNED & UNDER GRADE A WTD. AVG. RENT*** INVENTORY YTD CONSTRUCTION YTD NET ABSORPTION SUBMARKET VACANCY LEASING CONSTRUCTION (SF) COMPLETIONS (SF) (SF) ACTIVITY# (SF) (SF)^ INR/SF/MO US$/SF/YR EUR/SF/YR CBD 3,954,500 0.9% 894,600 2,311,300 0 263,500 125.2 21.1 19.0 SBD East 28,098,200 2.4% 2,204,400 12,549,000 2,231,400 2,479,400 88.2 14.9 13.4 SBD West 5,898,900 1.1% 713,500 2,915,000 17,07,000 1,707,900 89.5 15.1 13.6 PBD East 1,950,200 0%* 271,000 0 0 257,500 64.1 10.8 9.7 PBD West 12,201,000 9.1% 872,300 3,742,700 0 355,000 54.0 9.1 8.2 TOTAL 52,102,800 3.6%** 4,955,800 21,518,000 3,938,400 5,063,300 69.9 $11.8 €10.6 The report highlights Grade A details only. Certain indicators are historically corrected by addition / deletion of older / refurbished projects as per grade A classification and accounting for changes in built-up / leasable area besides adjusting tenant leases to reflect accurate market conditions. Net absorption refers to the incremental new space take-up #YTD gross leasing activity includes pre commitments and term renewals ^ Includes planned & under construction projects until 2022 *The vacancy excludes hard option exercised by an IT major **Excludes a yet-to-be exercised hard option by an IT major in the PBD East submarket. On an overall basis, vacancy stands at 4.1%. ***Weighted average asking rental rates for vacant spaces that provide core facility, high-side air conditioning and 100% power back up Rohan Sharma IT-BPM – Information Technology – Business Process Management Director, Research Services Key to submarkets: +91 124 4695555 /[email protected] CBD: Laxmi Road, Camp, Bund Garden, Boat Club, Koregaon Park, Dhole Patil Road, Pune Station, Shivaji Nagar, FC Road, JM Road, Wakdewadi, SB Road, Model Colony, Ganeshkhind Road; SBD East: Kalyani Nagar, Kharadi, Mundhwa, Yerwada, Nagar Road, Viman Nagar, Hadapsar, Kondhwa; SBD West: Aundh, Baner, Pashan, Kothrud, Karve Nagar, Khadki, Paud Kapil Kanala Road; PBD East: Phursungi, Wagholi, Charoli, Solapur Road, Saswad Road, Katraj; PBD West: Hinjewadi, Wakad, Pimpri, Bhosari, Chinchwad, Bavdhan, Mulshi, Talawade, Tathawade, Associate Director, Research Services Nanded, Pimple Saudagar +91 40 40405555 /[email protected] US$ 1 = INR 71.26; € 1 = INR 78.92. KEY LEASE TRANSACTIONS Q4 2019 cushmanwakefield.com PROPERTY SUBMARKET TENANT SF TYPE A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION AP83 CBD Smartworks 470,000 Pre-lease Cushman & Wakefield (NYSE: CWK) is a leading global Gera Commerzone SBD East Allstate 300,000 Pre-lease real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is Panchshil Business Park SBD West Siemens India 81,771 Pre-lease among the largest real estate services firms with Eon Phase - II Tower B SBD East Citco 71,000 Expansion approximately 51,000 employees in 400 offices and 70 Eon Phase - II Tower B SBD East Mphasis 71,000 Expansion countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other SIGNIFICANT PROJECTS PLANNED AND UNDER CONSTRUCTION services. PROPERTY SUBMARKET SELLER / BUYER SF COMPLETION Agile M SBD West Malpani Estates 770,000 Q2 2020 ©2020 Cushman & Wakefield. All rights reserved. The information Sky One Corporate Park (Building A) SBD East Lunkad Realty 750,000 Q2 2020 contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is Ascendas (ITPP) Angsana PBD West Ascendas Singbridge 390,000 Q1 2020 presented without any warranty or representations as to its accuracy. Ascendas (ITPP) - Tower 1 SBD East Ascendas Singbridge 1,150,000 Q4 2021 AP83 CBD Amar Builders 800,000 Q4 2021.