Pune Real Estate Poised For Sustained Growth Across Asset Classes
The ‘emerging global start-up hub’ is transformed itself into a bustling economic centre with 3200 active start-ups. Pune has?been?the educational epicentre with the highly recognized universities and educational institutions attracting a sizeable proportion of young people aged 18-25 years. It offers a lucrative environment for professionals as well. The state government’s innovation-friendly policies and initiatives promote skill development, start-ups, and innovation. A growing cosmopolitan culture and well-developed physical and social infrastructure have made Pune?the second?‘Easiest City?to Live’ in. Real Estate development plays an important role in ensuring high quality of life with low rentals and availability of affordable housing. The demands for residential as well as commercial are only expected to rise.?
Why will Real Estate enjoy good times in Pune in the future??
Good connection with all major cities:?Pune enjoys strong connectivity to all the major cities in the country through air, rail and road. The growth of urban infrastructure received a boost with India’s Smart Cities Mission. A flow of INR 650 billion is expected to flow into Pune over the next few years to enhance the urban infrastructure.??
Attractive Office Segment:?Pune has grown tremendously from providing total Grade A office stocks to leasing around 5 million on annual basis. The Institutional investors have recognized the growth potentials here and have established their strong presence in the office market. Pune already captured institutional investments of ~INR 9,600 crores during 2015-20 of with 49% accounted for office assets. Post the second wave of the pandemic, a steady rise is seen in Flex Workspace and is estimated to cross 5 million?sq?ft by 2023. Moving ahead, the presence of institutional players is only expected to increase. Recently,?IndiQube?set up 1.5 lakh?sq?ft of coworking in the?Yerwada?locality.?
A mix of demand and supply for residential:?The migrants flock to Pune for excellent educational and service sector opportunities fuelling demands for residential real estate. Pune offers a blend of a good supply of affordable and mid-segment housing by reputed developers.?The affordable segment accounted for 22%, whereas the mid-segment dominated with 65% in the recently launched units.??The demands for integrated smart houses are witnessed in locations like?Wakad,?Bavdhan, VIman Nagar, and Hinjewadi. This unique blend of demand and supply of residential is expected to make an impressive growth in the coming years.?Pune along with Mumbai and Delhi NCR covered for 60% of residential sales of the nation. Pune alone contributed with 17% for YTD 2021.?
Well-managed shared living options:?Pune homes around 3.5 lakh migrant students along with nearly 5.9 lakh millennial professionals, making it a cosmopolitan city with 60% of the population under 30 years of age.?This demand is being tapped with emerging asset classes of student housing, co-living, and senior living. The strong demand and well-designed, built, and operated offerings will significantly push this emerging sector.??
Population with high retail spending:?The increasing millennial and students’ population resulted in demand for more retail outlets in Pune. It enjoys the fourth-highest per capita mall space in India. In Pune’s total retail and leisure spending wallet, 28% was occupied by High organized retail in 2020. The millennial’s high propensity to spend houses the immense potential for organized retail growth in Pune as it is expected to increase to INR 230 bn in 2024 from INR 176 bn in 2020.?
Industrial and Warehousing:?Pune is characterized by its strong manufacturing and industrial base. Over the last decade, the rapid growth of warehousing was observed in Pune like Chakan-Talegaon. Pune is successfully attracting around 20% of industrial investment shares of the country. E-Commerce and Logistics absorbed ~40% in the year 2020, despite the pandemic and lockdowns. The changed consumption pattern and e-commerce are expected to drive demand in the future. The three planned industrial corridors passing via Pune are expected to boost the industrial base. Additionally, the footprints of pharma and engineering are observed to expand across the city.?
The way ahead:?
Enhanced connectivity, presence of retail, F&B, and entertainments, backed by planned development of Grade A office spaces, will act as the major source of attraction for investors and occupiers. The increasing youth and their increased propensity for retail spending throw light on the potentials of the retail sector. Being the hottest market for industrial parks and warehouses, Pune is getting ready to serve domestic as well as international players. E-Commerce and Logistics will continue to be driven by increased reliance on digital shopping, focus on health, safety and sustainability. With an understanding of the demand for shared and alternate living options, growth can be predicted for co-living, student housing, and senior living. Overall, Pune’s real estate is expected to bounce?forward, with newer heights of growth in coming years.?