Large pre-commitment deal by a co-working operator prevents a further fall in leasing activity
PUNE: Knight Frank India today launched the 13th edition of its flagship half-yearly report – India Real Estate: H1 2020 – which presents a comprehensive analysis of the office and residential market performance across eight major cities for the January-June 2020 (H1 2020) period. The report highlights that the new office completion in Pune saw a significant decline of 87% YoY to 200,000 sq ft in H1 2020 due to lockdown related disruptions. The office leasing transaction volumes in the city saw a decline of 47% YoY to 2.1 mn sq ft. In overall office transaction, CBD and off CBD reported the highest growth of 79%, followed by PBD East with 50%. The city also experienced significant tapering of rent growth compared to double digit growth recorded in recent years. The weighted average rentals recorded a marginal growth of 2% Y-o-Y in H1 2020.
As per the report, the lockdown has impacted the residential sector adversely with the home sales in Pune declining by 42% YoY to 10,049 units in H1 2020. The home launches in the city also recorded a 37% YoY decline to mere 13,435 units. Further, the city also reported a decline in the weighted average prices by approximately 5.4% YoY in H1 2020. Due to slow home sales in Pune, the QTS for increased from 4.8 at the end of 2019 to 5.7 in H1 2020.
OFFICE MARKET HIGHLIGHTS OFPUNE
Paramvir Singh Paul, Branch Director – Pune, Knight Frank India said, “The office market in Pune has been impacted by the on-going pandemic and lockdown.. Due to the current economic conditions, many companies are adopting a wait and watch policy in terms of their expansion plans. The market may see further difficulty if occupiers start to give up their existing spaces in the short term as measure of saving cost or indeed downsizing their businesses. These have started to exert a downwards pressure on rent, however, the low vacancy levels in Pune and delay in upcoming supply due to lockdown related disruptions will help prevent a greater correction. Developers are also likely delay supply by extending timelines matching the occupier demand.”
RESIDENTIALMARKET HIGHLIGHTS OF PUNE
Paramvir Singh Paul, Branch Director – Pune, Knight Frank India said, “Manufacturing and Auto sectors which had been important drivers of the Pune economy, are witnessing the impact of lockdown, impacting the purchase capabilities of end users associated with these segments. Though the IT sector is reportedly stable for now, there too, a loss of confidence is visible with end users postponing their purchase decisions. To revive sales in the residential market, homebuyers who had been active in the market in the pre-COVID months or had registered for Expression of interests (EOI) during the lockdown are being allured for negotiation with attractive offers and discounts to convert to sales. However, banks have started to go slow on home loan disbursals which will delay closing of deals.”
Paramvir further added, “Pune market has been extremely sensitive to price as well as economic confidence being highly ended user-driven. Thus, until the growth of the economy stabilizes, sales velocity will remain subdued keeping prices under pressure.”
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