Pune, July, 31, 2017 – Pune, a technology driven real estate market is witnessing increased traction in the Industrial sector. Reducing average vacancy levels and a supply crunch in all preferred micro markets has led to decrease in leasing in office sector since the past one year. Though the leasing activity remained low for the office sector, manufacturing companies are expanding their facilities in peripheral locations where large land parcels are available to set up manufacturing units.
Pune with ample amount of land available on peripheral areas has become a preferred choice for industrial players. Several global companies are planning to invest in logistics and warehousing facilities. For example, recently Embassy Industrial Parks has set-up an industrial warehousing facility of 52 acres in Chakan. Also in Q2 2017, elevator and escalator manufacturing company- ThyssenKrupp set up a multipurpose elevator production unit in Chakan.
As per Colliers International’s research, investments in warehousing and logistics parks should attract other players in the industry to invest in warehousing sector, and Pune should emerge as a prime centre for this sector in the West. Apart from manufacturing industry, the BFSI sector is occupying large office spaces and setting the foundation in the city with a share of 30% of total absorption in Q2 2017. Colliers Research believes that Pune has a strategic advantage in terms of location for fin-tech industry, as it is near the financial hub of the country- Mumbai, and has ample infrastructure and talent pool to fuel the IT-ITeS industry.
“Passive leasing activity in commercial office segment would continue until adequate supply infusion. Industrial and warehouse leasing has taken the lead as commercial office supply continues to be subdued” says Rishav Vij, Director, Office Services, Colliers International
The quality supply crunch is leading to declining leasing volume and inactivity in the market. As per Colliers, in H1 2017, the city witnessed only 0.3 million sq ft of grade A office supply infusion. The market which used to observe office supply infusion over a million sq ft at one time is now seeing a delay in completion of projects which is affecting average vacancy. The Colliers Research office index indicates that the rental and capital values are likely to remain stable until the completion of under construction projects in H2 2017 and early 2018.
Although we expect, commercial leasing to remain stagnant for a while, the industrial sector is poised to grow. Strategically located areas such as Chakan, Pimpri Chinchwad, Ranjangaon, Talegaon, Moshi, Sanaswadi are likely to see increased traction. The Talegaon-Chakan area that connects with the old Mumbai-Pune highway (NH-4) in the west has already attracted several warehousing companies; we expect to witness more activity at this location in the future. In addition, Moshi to Chakan stretch on the Pune-Nashik Highway (NH-50) has also witnessed the development of a few warehousing companies. Owing to its proximity to Pune city centre and the manufacturing hub of Sanaswadi, Wagholi in North East Pune also evolved as a warehouse destination. However, as Wagholi sees increased number of residential developments, warehousing companies are gradually moving towards the Lonikand-Sanaswadi belt on the Pune-Ahmednagar highway.
On the infrastructure front, road-widening work in Dapodi has picked up the pace, which will reduce traffic congestion on the road and ease connectivity between Pune city and its suburb Pimpri-Chinchwad. A new Bus Rapid Transport Service (BRTS) route is also under construction in Pimpri-Chinchwad. Besides this, the ongoing infrastructure projects such as Pune Metro, new BRTS corridor and road widening work will improve the connectivity within the city and business districts thereby driving city attractiveness for foreign players.
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