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Footprint of Chennai’s Future Business Districts and Resurgence of Integrated Townships

Shweta k • 20/01/2022

Rajiv Gandhi Salai evolved as one of the most sought-after destinations in Chennai to work and live with the amalgamation of lucrative investments; experiences of Walk-to-Work culture combined with the imminent infrastructure that connects south with the rest of Chennai.

With the shift in workplace preferences, Chennai witnessed a pivotal shift in business districts traversing south to the – IT Corridor. Rajiv Gandhi Salai is dotted as the self-sustaining growth corridor which offers copious options for integrated townships with city-like high-end infrastructure and amenities - assuring high rental yield and capital appreciation over the years.

The impending infrastructure fuelling connectivity with the shift in business districts and preferences towards communal living are expected to drive burgeoning residential demand over the next few years.

In this report, we delve into how the unprecedented times of the pandemic brought about a newfound interest in integrated townships. The rationale behind the shift in business districts and how Rajiv Gandhi Salai conceived as the IT metropolis with its testament to high-end integrated townships, now caters to a diverse community.

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CURRENT MARKETBEAT

Office Buildings CBD
Chennai Office Report

Chennai recorded a gross leasing volume of 1.74 MSF, a 5% and 10% rise on q-o-q and y-o-y basis respectively. Quarterly activity was driven by prime submarkets of south-west (34%) and suburban south (33%). GCCs remained dominant with 32% share followed by IT-BPM sector, comprising 28% share. Net absorption stood at 0.52 MSF. The city witnessed no supply addition this quarter, however, it is expected to receive a healthy supply of 5.28 MSF over the next two quarters. The city-level rentals saw a marginal q-o-q rise of 0.7%.

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Shopping Retail
Chennai Retail Report

Chennai's total retail leasing activity for Q2 2024 stood at 0.1 MSF, primarily driven by main street leasing. Accessories and Lifestyle segment dominated main streets with a 37% share followed by automobile and CDIT sectors capturing 20% and 17% share respectively. Domestic brands comprised 77% of the leasing volume. Chennai's mall vacancy rate surged to 14.7% given supply addition. While overall mall rental rates remained stable compared to Q1 24, certain malls witnessed up to 4% increase y-o-y. Prime retail locations experienced a rental increase of up to 6% y-o-y.

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Warehouse Internal Rack
Chennai Residential Report

Chennai residential market saw 5,088 unit launches. The Suburban South I submarket dominated with a 48% share, followed by Suburban South II with a 36% share. The mid-segment captured 69% market share, a significant increase from 64% in Q1 2024. High-end and luxury segments comprised 22% of the quarter's unit launches. The luxury segment witnessed a jump from 2% in H1 2023 to 8% in H1 2024. The affordable segment contributed 9%. Average rental values grew 6% y-o-y. Within the mid-segment, a 2-6% y-o-y capital value appreciation was witnessed.

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Warehouse Internal Rack
Chennai Industrial Report

Leasing activity increased threefold in 2023 in comparison to 2022 with Oragadam leading the leasing activity at 30% market share. A 22-25% rental appreciation witnessed in submarkets like Periyapalayam and Gummidipoondi. Leasing for industrial sheds also increased 2x in the second half with Automobile sector marking 33% of the share. Significant rental growth of 8-13% on a y-o-y basis was observed across industrial clusters of Oragadam, Sriperumbudur & more. Demand in this sector is likely to increase with The Tamil Nadu Global Investors Meet 2024 likely to garner significant investments.

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Warehouse Internal Rack
India Investment Report

The investment activity recorded in Q2 was INR 158.5 bn (USD 1.92 Bn) which was 63% higher than the previous quarter’s activity and 60% higher than the activity recorded in Q2-22.

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