The Hindu Business Line : Investor's choice

"Pune is benefiting from the spillover of Mumbai's growth. Experts say Mumbai was so poorly designed that many businesses are looking to Pune for a fresh start."

Pune is arguably second home to IT biggies such as Infosys, Wipro, TCS, Tata Technologies, IBM, HP, and Symantec. Combine this with aggressive growth in the ITES and BPO segments with names like Convergys, Aviva, EXL, HSBC and Msource setting up shop here.

The city now has at least five satellite IT parks, including the pioneering Hinjewadi and Kharadi, Talewadi and Magarpatta City, with the required infrastructure and global connectivity.

After phases I and II comprising 310 ha, work is under way for Phase III of Hinjewadi's expansion, the largest ever at 350 ha. Also coming up is a 136-acre International Biotech Park at Hinjewadi for which the State government is seeking `special economic zone' status.

The last few years have seen several multinationals homing in on Pune either on their own or with Indian partners, to leverage the city's large, highly-skilled talent pool.

LG Electronics' plant at Ranjangaon manufactures optical storage devices and mobile handsets, with the bulk of the former going to export markets in Europe.

Korean major LG Electronics's second plant at Ranjangaon manufactures optical storage devices and mobile handsets, the bulk of the former going to export markets in Europe.

American farm equipment giant John Deere, Italy's Carraro group, Whirlpool and Matsushita are key investors, and the list is growing to include the auto component and other ancillaries industry.

Last month Tata BlueScope Steel, the 50:50 joint venture between Australia's BlueScope Steel and the Tata Group, announced it would invest Rs 300 crore in the city for a roll forming and pre-engineering building facility.

The city will house design and engineering teams to develop new concepts, products and applications for steel buildings for the industrial, commercial and residential segments

Design hub

Emerson Inc, Philips, Cummins, Atlas Copco and the Tata Group have major design operations here. Spanish auto component maker Grupo Antolin recently announced a 1-million investment to make Pune the global design hub of its design engineering — its existing design engineering centres are in Spain, France and Germany.

The design and engineering technology services alone employs 20,000 people and the figure is expected to grow exponentially.

The boom has been a boon to the real estate industry. The market has witnessed unprecedented growth over the last two years with developers quick to cash in on the huge demand for space in the residential, commercial and industrial segments.

While over 10 million sq ft of IT space is being built, the growing professional workforce has also catalysed a big demand for quality residential accommodation.

Construction activity has been hectic on the commercial side too, with developers now catering to the demands of large format retailers seeking premium space for their brands. Last week, Kakade Constructions announced it would set up six additional malls in the city, totalling 18 lakh sq ft, at an investment of Rs 900 crore, with all the properties slated for completion by 2008.

Retail rush

The rush to develop commercial space is not surprising given that nearly every conceivable global brand is now in Pune. While Pantaloon already has multiple large format stores in place, Reliance's retail venture is in the process of acquiring space for its chain stores and Raheja's In Orbit is believed to have acquired space already.

Industry experts estimate that the city already has 8 lakh sq ft built-up space while an additional 30 lakh sq ft would come up in the next two years.

A major driver for the city's virtual explosion of retailing and construction is its fast growing population, with a steady influx from all parts of the country.

The Environmental Status Report of the Pune Municipal Corporation estimates that migration will increase from 43,900 people recorded in 2001 to 88,200 in 2006. The influx is driven by the city's huge employment potential in the IT/ITES, manufacturing and now even the education and research sectors. The city's population has gone up from 25,40,936 in 2001 to 31,87,800 in 2006.

The city has the highest per capita income in India at Rs 46,313. Retailers targeting the city can look forward to raking in the moolah from a population dominated by those in the 25-34 age group, which is seen as the right profile for hi-ticket purchases and retail therapy.

The huge growth in construction activity, complemented by the rise in prices has attracted a clutch of foreign real estate funds/developers looking for builders and developers in the city with large land holdings, proven track records.

Lifestyle buzz

Spending power has evolved into the mall-multiplex mania which has attracted chains like Mainland China, Bombay Brasserie, Not Just By the Bay and All Stir Fry, not to mention pubs and night places like Lush, Fire-n-Ice, which have the city's bold and beautiful rocking the night away.

It also means that retail majors of every hue and size from Pyramids to Shoppers Stop, Trent (Westside) and Pantaloons have set up large operations here and many others including Lifestyle and French retailer Geant are eyeing the potential.

Hospitality majors Hyatt, Marriott, Indian Hotels and Radisson are setting up properties in the city, which is anticipated to have a shortfall of 2,000 rooms once the Rs 360-crore International Convention Centre is operational.

Pune's transformation into a sought-after destination has been fuelled among other things by the Mumbai-Pune expressway, which has shrunk the distance between the two cities to a mere two-hour drive, making commuting and transporting goods to foreign markets easier.

As Forbes magazine pointed out, "Increasingly, Pune is benefiting from the spillover of Mumbai's growth. Experts say Mumbai was so poorly designed that many businesses are looking to Pune for a fresh start." The Punekars aren't complaining.

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