Pune (Voice news service):- Knight Frank India in its latest report, India Real Estate 2023 cited that Pune’s residential market witnessed substantial growth in the sales volume by 13.5% YoY in 2023, recording 49,266 housing units in the year. The weighted average price of residential units in Pune increased by 5% YoY to INR 4,507 per sq ft.
In terms of office market performance, the period from January to December 2023 witnessed growth in transaction volumes. 2023 recorded YoY growth of 9% with 6.7 mn sq ft, highest in terms of total area transacted till date. The heightened transactions led to an upturn of over 5% in rentals during 2023. New office completions saw a decline of -46% YoY to 3.6 mn sq ft during the same period. Completions are expected to improve in the coming months with new projects nearing completion. Of the total transactions in 2023, GCC transactions registered 49% of share in the city’s office space transactions.
Residential Market Highlights of Pune
In 2023, Pune’s real estate market displayed continued growth recording the best residential sales since 2013. A considerable segment of homebuyers in Pune consists mainly of migrant workers, particularly salaried individuals seeking housing mortgages. Despite the elevated home loan rates, their outlook on the market remains optimistic. The residential market in Pune experienced a strong influx of new project launches in 2023, with a total of 42,437 units introduced, indicating a 10% YoY increase.
The share of property sales in the INR 5-10 million ticket size range increased from 43% in 2022 to 46% in 2023. Concurrently, properties below INR 5 million experienced a decrease in sales from 48% to 38% YoY in 2023. Moreover, there was a notable increase in the share of properties exceeding INR 10 million, rising from 9% in 2022 to 15% in of 2023, indicating a growing demand for high-value properties.
During 2023, Pune accounted for the highest YoY percentage growth in luxury housing across the leading eight metros in the country. The city witnessed a growth of 93% YoY in the INR >10 mn segment. The ticket size of below INR 5mn saw a drop of -10% while that of between INR 5mn-10mn was 23%. The QTS metric in Pune exhibited a decline from 4.6 quarters in 2022 to 3.4 quarters in 2023, showcasing robust market demand and swift property transactions. Vilas P Menon, National Director, Occupier Services, Capital Markets & Branch Head, Pune, Knight Frank India said, “Pune’s real estate market witnessed continuous growth in 2023, fuelled by improved market sentiment. The city’s evolution as a thriving IT hub, bolstered by the government’s continued infrastructure development, has firmly established Pune as a pivotal housing destination. The notable uptick in property sales above INR 10 million reflects rising buyer’s confidence. The city’s emergence as a thriving IT and ITeS hub, coupled with the government’s emphasis on infrastructure development, positions Pune as an emerging housing destination.”
In terms of office market performance, Pune witnessed a substantial increase in transactions, leasing approximately 6.7 mn sq ft of office space. The IT-ITeS sector remained the primary driver of demand, leveraging Pune’s status as a significant hub for IT and engineering talent. Anticipated enhancement in connectivity through ongoing infrastructure projects such as the expansion of the metro rail, are expected to bolster real estate growth, particularly in areas along these new metro lines. From the sector-wise transaction split in 2023, Pune’s office market remains robust, drawing Global Capability Centres (GCCs) because of its strong workforce and improving infrastructure. The market is adjusting to evolving dynamics, particularly by embracing trends such as flexible workspaces and sustainability.
Pune market witnessed major leasing activity by GCCs capturing 49% of the area transacted followed by India facing business at 26% of the area transacted, respectively.
From the aspect of office rents, in 2023, rents in Pune’s office market experienced modest growth, nearly returning to pre-pandemic levels, with a growth rate of 2% YoY. Rents reached INR 73.9 per sq ft, per month in 2023 from INR 72.0 per sq ft, per month in 2022. The upturn in rental rates can be attributed predominantly to heightened transactions, given the limited office supply in the city.
Vilas P Menon, National Director – Occupier Services, Capital Markets & Branch Head – Pune at Knight Frank India said, “Pune’s status as a prominent hub for IT and engineering talent continues to drive demand in the IT-ITeS sector, making it the preferred choice for companies seeking a skilled workforce. The city’s resilient office market, attracting GCCs due to its robust workforce and improving infrastructure, reflects an evolving landscape. Embracing flexible workspaces and sustainability as pivotal emerging trends underscores Pune’s adaptability in meeting evolving market dynamics in the office space.”
