Start-Ups Driving Real Estate Investments In Pune

Arvind Jain

By Accommodation Times News Service

By Arvind Jain, MD, Pride Group

The massive spurt of launches in start-ups that India has been seeing has significantly boosted overall investments as well as job creation in the country. While the start-up phenomenon has received prominence only in the last 2-3 years, it has in fact been active for almost a decade now. Pune has seen a large share of successful start-ups especially in the IT/ITeS space, thanks to its well-entrenched Information Technology culture. E-commerce has been a particularly vibrant start-up market segment. Pune currently has over 330 start-ups in various stages of growth, and e-commerce has been a primary driver in many cases.

Start-ups are freshly-launched firms which are in their early stages of development, are usually small in size to begin with and get their launching financial boost from their founders. If a start-up has a service or business concept which is perceived to have good future market potential, it will invariably attract investments from other parties. In fact, the start-up business model itself is based on a line of products or services which are either unique or are currently being under-serviced.

Pune has had the good fortune of seeing a good saturation of successful start-ups which have been attracting increasing investments. As these companies grow, they create increasing employment, concurrently leading to greater demand for office and retail spaces and, as a result, residential properties, as well. On a national basis, e-commerce now accounts for between 2-3% of the total annual demand and absorption of office real estate, and this take-up is expected to grow significantly over the mid-to-long term.

Because of the countless success stories evinced by such firms in the country, the start-up phenomenon has correctly been identified as a rich and potential-laden one by the Modi government. Various schemes and incentives have been deployed to assist such firms, which is very necessary since the expenses incurred by start-ups are invariably much higher than the revenues they generate. They require adequate financial assistance to see them through their ‘incubation’ period and are not always successful in attracting sufficient help from venture capital investors in the initial stages.

Apart from retail including e-commerce, the government is already providing assistance to start-ups in Information Technology, manufacturing, biotechnology and life sciences. Pune is an established destination for most of these market segments, which has resulted in the city becoming a preferred start-up destination in the country. In fact, we have seen that a large number of Pune’s start-ups – a large number of them focused on e-commerce – which were launched a few years ago have now become medium-sized or large organizations.

Pune had already established itself as one of the country’s leading destinations for IT/ITeS and manufacturing companies over the years. With the start-up revolution now also in full swing in the city, this erstwhile sleepy, laid-back neighbour to the financial capital of Mumbai has become an important focus point for investors from all over the country and beyond. Demand for properties of all types is steady and growing, accounting for the fact that Pune’s property market has maintained its viability throughout the national slowdown in this sector.

The city’s start-up culture is evident in the emerging commercial clusters, which still have good availability of cost-effective office properties from which such companies can launch operations. Areas around Nagar Road have been among the leading recipients of demand from start-ups, leading to increased residential demand in areas like Dhanori and Charoli. The Nagar Road area is already an established hotbed for IT companies and retail, with sub-markets like Dhanori and Charoli seeing additional demand from budget home seekers from Kharadi, Hinjewadi and the manufacturing belt in PCMC’s MIDC.

 





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