Pune office market absorption down nearly 24% from a year ago: Knight Frank report

MUMBAI: Absorption levels in Pune office property market has declined nearly 24% from a year ago and 15% over previous quarter owing to sluggish business environment, property consultant Knight Frank India said a report.

Pune office market's vacancy level is expected to trend higher as nearly 4 million sq ft space is scheduled to come online in next two quarters. The vacancy levels that will remain under pressure and would vary between 23%-25%, Knight Frank said.

Although rentals have held steady in Pune office market so far but they will be under pressure as fresh supply hits the market and if take up does not improve in coming quarters, the report said.

Knight Frank expects Pune office market lull to continue in short term as IT/ITeS sector that dominates the market here continues to tread cautiously in the face of an uninspiring global economic environment.

Demand from manufacturing sector has been steady owing to the expansion of auto giants such as Volkswagen, Mercedes resulting in their vendor companies setting up factories in Pune.

The banking financial services and insurance (BFSI) sector made a come-back during the quarter as its market share jumped to 15% from mere 3% a year ago; this was majorly due to a 1 lakh sq ft lease transaction inked by Citibank at Kharadi, the report said.