In recent years, Baner, Pune has solidified its status as a vibrant business hub, driven by the robust IT, startup, manufacturing, and automobile sectors. This surge in activity has generated substantial demand for commercial properties, a trend that is expected to persist in the foreseeable future. Consequently, global commercial property investors have turned their attention to this thriving city, recognizing its immense potential for both commercial and residential real estate ventures. A significant advantage of investing in Baner, Pune is its close proximity to Mumbai, making it an appealing choice for businesses, investors, and prospective commercial property buyers aiming to establish a presence in major Indian metropolitan areas.
The commercial real estate market in Pune is set to experience rapid growth, with a projected increase of approximately 15 percent. This makes Pune an appealing choice for investors seeking to leverage the city’s economic prosperity.
According to Cushman & Wakefield’s report, the Pune office real estate market saw a substantial surge in new supply during the fourth quarter of 2022. Approximately 1.3 million square feet (msf) of office space became operational during this period, marking a remarkable three-fold increase compared to the previous quarter.
The entire year of 2022 witnessed a record-breaking influx of 6.9 msf of new office space into the market. This notable surge in supply underscores the city’s robust economic growth, especially in the PBD West (38%) and SBD East (32%) regions.
Institutional developers have played a pivotal role in driving this growth, accounting for the majority (approximately 55%) of the new supply that entered the market in 2022. Looking forward, there is a promising pipeline of additional supply on the horizon. An estimated 17 msf of office space is expected to be added to the market between 2023 and 2025.
Let’s now delve into seven crucial pointers to keep in mind when making an investment in a commercial real estate property:
1. Assess the vicinity surrounding the property
Picture yourself as a shrewd investor in search of the ideal commercial property for your investment. Your thorough research has already informed you that the location is paramount in maximizing real estate market returns. Given the current economic challenges impacting various regions in distinct ways, your goal is to secure an investment property that not only promises a consistent rental income but also exhibits the potential for long-term value appreciation.
This is where functional accessibility assumes significance. Your priority is to acquire a property with seamless connectivity, ensuring it can attract both tenants and customers effortlessly. Just envision the advantages of having a retail store or office space situated in close proximity to a major transportation hub, simplifying the commute for employees and clients alike.
2. Annual rental appreciation rate
The annual rental appreciation rate in Pune’s real estate market has shown remarkable trends. According to the Q4 2022 Market Beat report, the residential sector witnessed a substantial 68% increase on a quarter-on-quarter (q-o-q) basis and a remarkable 56% growth on an annual basis. Last year alone, there were 15,328 new property launches. Pune has consistently demonstrated a 56% growth compared to 2021, both on a quarterly and yearly basis. In the second quarter (Q2) of 2022, Pune recorded 3.6 million square feet of industrial lease transactions, marking a 60% rise on a year-on-year (y-o-y) basis and a steady 80% growth compared to 2021.
Investing in commercial properties is becoming increasingly attractive due to their potential for substantial rental appreciation. According to a recent report by Outlook India, the retail sector is expected to experience a significant appreciation of around 20%. Furthermore, it is projected that rental income from retail spaces will surpass the 15% threshold. Additionally, the office real estate market is poised for growth, with an anticipated price appreciation ranging from 18% to 20% in the year 2023.
This promising scenario presents an excellent opportunity for working-class Indians to invest in commercial properties using tools like Real Estate Investment Trusts (REITs). REITs serve as investment vehicles that enable individuals to pool their resources and invest in a diversified portfolio of income-generating real estate assets, including commercial buildings, hotels, malls, and warehouses.
3. Market research
In Baner, Pune, India, the commercial real estate sector has been on an impressive growth trajectory. In 2022, the annual lease volume reached a remarkable 6.70 million square feet (msf), marking a remarkable 40% increase compared to the previous year. Moreover, during the fourth quarter (Q4) of 2022, Pune saw a substantial gross leasing figure of 1.07 msf, signaling the sustained and robust demand for commercial office spaces in the city.
The surge in leasing activity during Q4 2022 was primarily driven by the demand for new office spaces, contributing significantly with a 72% share of the total leasing volume. Furthermore, renewals of existing leases also played a substantial role, accounting for an 18% share of the leasing volume. It’s evident that this is an opportune time to delve into the analysis of business properties in Pune.
When making a decision about a commercial property, it’s crucial to conduct a brief assessment of user-friendly amenities like parking facilities, elevators, and security measures. While amenities such as parking might appear insignificant, they can profoundly influence the overall user experience.
Moreover, if the property enjoys proximity to public transportation options like a bus stop or train station, it can provide convenient commuting choices for employees. Conversely, if the property is located in a remote area, having a parking lot becomes essential, not just for staff but also for clients who visit the premises.
Therefore, it’s highly advisable to carefully consider user-friendly services when going through the process of selecting a commercial property, as they can significantly impact demand and the overall success of a business. If you’re a first-time commercial property buyer and are seeking a property of high quality without compromises, be sure to explore this option!
5. Consult the best builders in the market
When considering commercial property investments, it’s essential to understand that top-tier Grade-A properties developed by reputable builders may come with a higher price tag. Nevertheless, they offer a multitude of advantages, including superior construction quality, ease in attracting tenants, and efficient property upkeep. These elements can significantly influence the long-term profitability of your investment.
Hence, it is imperative to seek guidance from professionals and thoroughly assess all available choices before making a final decision regarding the purchase of commercial real estate. By carefully weighing your options and relying on expert advice, you can effectively navigate the intricate realm of commercial real estate investments and enjoy the rewards of a lucrative long-term venture.
6. Exploring Financing Alternatives for Office or Shop Acquisition
For any investor or developer, a crucial aspect of the real estate investment market is assessment. Additionally, one must consider the property’s location and historical performance to gauge the investment’s associated risk. Furthermore, conducting a thorough financial analysis is imperative, encompassing long-term objectives, affordability of equated monthly installments (EMIs), initial down payments, available savings, and potential debts. It’s crucial to steer clear of taking on excessive long-term debts that might compromise the investment’s future profitability.
Before arriving at a final decision, it’s imperative to meticulously scrutinize every facet of the purchase process, ensuring the completeness and legal validity of all essential documents. This proactive approach helps avert unforeseen legal or financial complications that could surface down the road. By diligently assessing all potential risks and taking requisite measures to mitigate them, investors can establish a solid foundation for sustained success and profitability.
Baner, Pune, is witnessing a booming commercial real estate market driven by IT, startups, and manufacturing. With a surge in supply, strong rental appreciation potential, and growing demand for office spaces, investing in Baner’s commercial properties offers promising returns. However, careful research, location assessment, and financial planning are vital for successful investment.