Pune Residential Sales Soar to 11-Year High in First Half of 2024: Knight Frank Report

Pune, 4th July 2024: Knight Frank India in its latest report, India Real Estate H1 2024 cited that Pune’s residential market witnessed substantial growth in the sales volume by 13% YoY in H1 2024 recording 24,525 housing units in the first half of the year. This is the highest half-yearly figure since H1 2013. The weighted average price of residential units in Pune increased by 4% YoY to INR 4,580 per sq ft.

In terms of office market performance, the period from January to June 2024 witnessed a significant growth of 88% YoY from 2.3 mn sq ft in H1 2023 to 4.4 mn sq ft in H1 2024 which is the second highest growth in terms of YoY amongst the leading 8 Indian markets. The heightened transactions led to an upturn of over 4% in rentals during H1 2024. New office completions saw a decline of 5% YoY to 2.4 mn sq ft during the same period. The outlook remains positive with new projects nearing completion, signalling a potential increase in office supply in the coming months. Of the total transactions in H1 2024, Flex office space transactions registered 43% of share in the city’s office space transactions.

Office Market Highlights 0f Pune

PUNE OFFICE MARKET SUMMARY

In terms of office market performance, Pune’s office leasing increased by 88% YoY to 4.4 mn sq ft, witnessing its second highest second-highest half-yearly leasing activity in the past decade nearly matching the record set in the second half of 2023. The primary drivers of this demand surge were the flex sector, followed by India-facing businesses. The rise in flex transactions in Pune is driven by the growing startup ecosystem and the increasing adoption of hybrid work models. Meanwhile, India-facing businesses are fuelling demand for traditional office spaces as they expand operations in the city. Ongoing infrastructure development projects, such as the metro rail expansion, are further boosting real estate activity by improving connectivity and accessibility.

Pune market witnessed major leasing activity by Flex office spaces capturing 43% of the area transacted followed by India facing business at 30% of the area transacted, respective

From the aspect of office rents, in H1 2024, Pune’s office market experienced significant growth, surpassing pre-pandemic levels and reaching its highest point in the last decade witnessing a growth of 4%. Rents reached INR 75 per sq ft, per month in H1 2024 from INR 72.4 per sq ft, per month in H1 2023. This upward trend is primarily driven by a surge in demand combined with a relatively limited supply of office space in the city.

Vilas P Menon, National Director – Occupier Services, Capital Markets & Branch Head – Pune at Knight Frank India said, “The city’s dynamic technology and startup ecosystem has driven a rise in office demand. Flex operators continue to account for a large share of the leasing activity in Pune. The outlook for Pune’s market remains positive, with new projects nearing completion, signalling a potential increase in office supply in the coming months. Pune’s office market is flourishing, fuelled by a surge in demand, and is adapting to evolving dynamics, with flexible workspaces and sustainability emerging as key trends”.

Residential Market Highlights of Pune

In H1 2024, Pune’s real estate market displayed continued growth recording the best half yearly residential sales since H1 2013. The market witnessed a significant 13% YoY increase from 21,670 units to 24,525 units which highlights a strong demand for housing in the city, fuelled by the growth of the IT sector, ongoing infrastructure development, and more attractive pricing compared to other metropolitan areas. The residential market in Pune experienced a strong influx of new project launches in H1 2024, with a total of 28,07 units introduced, indicating a 32% YoY increase.

PUNE RESIDENTIAL MARKET SUMMARY

The share of property sales in the INR 5-10 mn category remained steady YoY at 46% in H1 2024, while the share of sales of properties in the below INR 5 mn category decreased from 42% to 34% YoY during the same period. Additionally, the share of properties priced above INR 10 mn saw a significant increase, rising from 12% in H1 2023 to 20% in H1 2024, reflecting a growing demand for high-value properties.

During H1 2024, Pune accounted for the third highest YoY percentage growth in luxury housing across the leading eight metros in the country. The city witnessed a growth of 97% YoY in the INR >10 mn segment. The ticket size of below INR 5mn saw a drop of -8% while that of between INR 5mn-10mn was 11%.

The QTS metric in Pune exhibited a decline from 4.3 quarters in H1 2023 to 3.6 quarters in H1 2024, 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 saw remarkable growth in H1 2024, indicating strong demand for housing in the city. This demand is driven by the expanding IT sector, ongoing infrastructure development, and more attractive pricing compared to other metropolitan areas. The surge in new projects reflects high developer confidence in Pune’s market potential. There is a clear preference among residents for larger homes and apartments with dedicated workspaces, mirroring their evolving needs and lifestyles. Additionally, gated communities with various amenities and green spaces remain popular, highlighting buyers’ desire for a balanced and comfortable living environment.”