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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

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Chennai Office Report

Chennai office market recorded a gross leasing volume of 1.97 MSF, a 19% y-o-y growth, driven by the Suburban South (38%), followed by the Peripheral South-west (34%). Net absorption stood at 0.62 MSF. IT-BPM comprised 47% of Q1 leasing, while flexible workspaces and engineering & manufacturing, contributed 28% and 16% share, respectively. GCCs recorded a significant share of 47% in Q1 leasing volume. Grade A vacancy stood at 15.91% while city-wide rentals grew 6% on y-o-y.

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Shopping Retail
Chennai Retail Report

Chennai’s retail sector recorded leasing of 0.17 MSF in Q1-25, with mainstreets, accounting for over 90% of the activity. North-west submarket led mainstreets leasing, with 38% share, followed closely by the Off-CBD submarket (37% share). Fashion segment led with 37% share, followed by accessories and lifestyle (32%). Overall mall vacancy stood at 14.13% in Q1. Superior malls maintained tight vacancies between 1-2%. Grade A malls witnessed slight rental appreciation whereas mainstreet rentals grew 3-4% q-o-q.

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Warehouse Internal Rack
Chennai Residential Report

Chennai residential market saw ~6,200 unit launches. The Suburban South I submarket dominated with 40% share, followed by Suburban South II submarket (27% share). The high-end and luxury segment comprised 30% share while mid-segment remained dominant with 65% share. Rental values for mid-segment rose by 4-7% y-o-y across most submarkets, while capital values in Suburban South I & II, Suburban North and Suburban West recorded a 4-6% y-o-y growth.

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Warehouse Internal Rack
Chennai Industrial Report

Chennai saw warehouse leasing volumes of ~ 5 MSF, a significant 72% growth compared to H1-24. Oragadam submarket led with 20% share, followed by Madhavaram (19% share). Sector-wise, demand was driven by the 3PL players (45% share) and the Automotive sector (14% share). Industrial leasing surged to 2.4 MSF, 2.3X the volume recorded in H1-24. Oragadam submarket dominated, accounting for 56% of this volume. Key industrial submarkets, including Oragadam, Gummidipoondi and GST Road, saw 4-7% y-o-y rental growth.

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Cushman & Wakefield India Capital MarketBeat reports analyze quarterly economic and commercial real estate activity including supply, demand and pricing trends at the market and submarket levels.

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