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Emerging markets continue to dominate the rental growth in Asia Pacific with Pune ranked as the fourth city witnessing highest growth in commercial rentals among 33 cities in Asia.
Jakarta (Indonesia) witnessed the highest office rental growth (year-on-year) among 33 cities in Asia, followed by Manila (Philippines) at second position and Shenzhen (China) at third while National Capital Region (India) ranked at 10, said a report from Cushman & Wakefield.
According to its Asia Office Q1 2014 report, Pune recorded a surge of nearly 19 per cent within a year, primarily due to significant growth in the demand of Grade A buildings. Limited supply of stock and sizeable pre-commitments has resulted in these buildings commanding higher rentals, thereby contributing to increase in overall Pune rentals. Pune’s total office space absorption in 2013 stood around 2 million sq ft.
The growth in Pune real estate was also evident in the increased investment activity from private equity players. One of the most significant deals Pune saw last year was Blackstone investing approximately Rs 450 crore for a 50 per cent stake in Panchshil Realty’s SEZ project, Eon Free Zone (leased asset) at Kharadi. The year gone by also saw IDFC’s real estate investments arm buying out a constructed and leased phase (Phase I) of Pune-based developer, Paranjape Schemes’ SEZ at Hinjewadi, Pune, for Rs 460 crore.
Sanjay Dutt, executive managing director, Cushman & Wakefield South Asia said, “The business sentiment is likely to strengthen with the new elected Government. We believe the new government would aggressively pursue much delayed policy reforms that will help to boost investor confidence, both domestically and internationally. Consequently, we expect demand for office spaces to start improving from the second half of this year and show positive momentum next year.”
However, rentals are expected to remain stable with the exceptions of few micro markets such as Cybercity, Gurgaon, Lower Parel & Goregaon, in Mumbai and Outer Ring Road, Bangalore.
