JLL launched an exclusive Pune city report titled ‘Real Estate in Post Pandemic Pune – Opportunities in the making’ which highlights that the city attracted institutional investments of ₹9,600 crore during 2015-20. The report further states that office assets accounted for the highest share of 49 per cent of the total institutional investments due to robust demand, stable rentals, and low office vacancy of 5 per cent whereas the housing segment garnered 25 per cent share of investments.
According to the report investment sentiments picked up during the first quarter of 2021, but the subsequent lockdown has led to brief hiatus in deals. Between 2015-20, foreign institutional investors, mostly private equity funds, dominated the deal volumes in the city with a 77 per cent share of total investments. Leading funds have acquired office space assets to build a portfolio for listing through REITs. Global funds, meanwhile, have mostly transacted outright purchase of office assets.
“Pune’s urban infrastructure is set to receive a major facelift with the planned metro network and the Ring Road. The city’s advantage of talent, technology, industry, and connectivity will propel it towards becoming the next megacity of India. As the real estate sector grows in tandem and quality assets are developed continuously, the city is expected to provide huge opportunities for occupiers, developers and investors, across the globe,” Sanjay Bajaj, Managing Director – Pune, Logistics and Industrial, JLL India said in a press statement.
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“Investors are keen to evaluate Grade A office and industrial assets, as both asset classes have strong fundamentals and will provide stable long-term returns. Office and industrial-focused funds are likely to pursue high-value deals in relevant micro-markets of the city. New investment platforms are expected to be formed in 2021,” he added.
Driven primarily by IT/ITeS, BFSI, Fintech, R&D, and manufacturing occupiers, Pune has grown rapidly as a market and has been witnessing leasing activity on an average of 5 million sq ft per year (except 2020) with peak demand of 6.4 to 6.5 million sq. ft in 2018-2019. The steady demand for Grade A office spaces led to increased occupancy, resulting in vacancy levels steadily dropping from ~15% in 2010 to ~5% in 2020, along with strong growth in rentals during the same time frame, said Samantak Das, Chief Economist and Head of Research and REIS, JLL India.