ChennaiGateway of South India
Chennai has been growing fast over the past several years, welcoming its share of manufacturing (especially automobiles) and technology majors. This growth is reflected in the demand for office space. The available stock of office space in Chennai stood at 49.8 mn. sq. ft at the end of 2012, with the average annual absorption over the last 5 years being about 4 mn. sq. ft.
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Culturally rich, tradition is the bedrock on which Chennai, the city of temples and music, is built. A canvas of fascinating colour, celebratory moods, ancient wisdom and long stretches of serene beaches, Chennai is a melting pot of the classical arts and philosophy, boasting of organizations such as the Theosophical Society. Chennai has been growing fast over the past several years, welcoming its share of manufacturing (especially automobiles) and technology majors.
India's GDP growth for the third quarter of FY2015–16 slowed down to 7.3% from 7.7% in the previous quarter. Growth in the construction sector was witnessed at 4.0% during the third quarter, up from the 1.2% growth in the previous quarter. The government, in its Union Budget 2016–17, exempted the Dividend Distribution Tax (DDT) for Special Purpose Vehicles (SPVs) of Real Estate Investment Trusts (REITs), which will make REITs more attractive in the real estate sector. The Parliament recently passed the Real Estate (Regulation and Development) Bill 2015, which is expected to create a uniform regulatory environment and bring transparency to the sector, thereby giving a boost to investments into the sector.
No new supply infusion, dip in vacancy
No new supply was recorded during the first quarter of 2016 as projects scheduled for completion were deferred to the next quarter. Grade A net absorption witnessed a sharp decline over the previous quarter and stood at 544,600 square feet (sf). Peripheral south constituted 93% of the overall Grade A net absorption due to a few large ticket-size transactions in the Information Technology and Information Technology enabled Services (IT-ITeS) and automotive sectors recorded in the submarkets of Sholinganallur, Thoraipakkam, and towards the GST submarket. Pre-commitments of 220,000 sfby corporate from Banking, Financial Services and Insurance (BFSI) and taxation sectors were recorded in Suburban South West during the quarter. Overall vacancy level declined by 1.3 percentage points and stood at 8.8% in the wake of no new supply addition.Weighted average rentals increased across most submarkets due to an increase in quoted rents as a result of limited availability of Grade A space.
Around 1.46 million square feet (msf) of Grade A supply, catering to the IT-ITeSsector is expected to be operational in the next quarter in the micro-markets of Taramaniand Anna Salai. Transaction activity is expected to gather momentum with increase in enquiries and pre-commitments of approximately 312,100 sf is likely to be absorbed.
QUICK FACTS ABOUT
- Current Population8.2 MN
- Metro & AirportsCONNECTIVITY
- Per Captia income$6,469