Workplace house demand in Chennai is predicted to develop amid provide overhang

Chennai market is prone to witness an addition of about 14 million sq ft (msf) in workplace house within the subsequent two years amid sluggish progress in demand, say business analysts. The availability within the workplace house section has been outstripping absorption throughout the nation over the previous few years. 2023 witnessed some moderation. Nonetheless, incremental provide is prone to be increased. “In Chennai market, provide of about 14 msf is anticipated over the following two years (2024 and 2025), half of which might come up within the peripheral South and suburban South micro-markets,” stated Parvez Qazi and Vasudev Ganatra, analysts of Nuvama Institutional Equities, stated in a report. The December 2023 quarter witnessed the highest-ever demand for workplace areas in India, with all three southern cities of Bengaluru, Chennai, and Hyderabad registering one of the best efficiency because the pandemic. Leasing demand is predicted to extend in Chennai supported by strong enquiries from the IT-BPM sector and a rise within the provide of Grade A workplace house. The absorption of workplace house is prone to be increased in 2023 and 2024 than the annual common demand over CY15–19. Cushman & Wakefield has projected a complete new provide of 17.5 msf throughout 2023-2025. “A bit over one-fourth of the upcoming house is pre-committed primarily by BFSI and IT-BPM sectors,” it stated. Internet absorption for 2023 and 2024 are estimated at 2.45 msf and a couple of.5 msf respectively, largely pushed by IT-BPM sectors.

Emptiness ranges

Emptiness ranges in India had reached 18.1 per cent within the September 2023 quarter because of provide eclipsing demand post-CY19. Hyderabad is prone to witness the best progress in vacant workplace house, adopted by Chennai. With the rise in vacancies, annual rental progress in Chennai is prone to be constrained (1–2 per cent). “Amid a rise in emptiness ranges from 18 per cent in 2023 to 24 per cent in 2025, the Chennai workplace market is predicted to expertise strong demand, significantly from the IT-BPM, engineering, manufacturing, BFSI and versatile workspace operator segments,” stated Cushman &Wakefield.

Most cities want a major uptick in demand for absorption of upcoming provide. Chennai, significantly, might battle given about 14 msf of upcoming provide by CY25 in opposition to about 2 msf demand. Bengaluru and Hyderabad are additionally in the identical boat, whereby 32–36 msf of provide is predicted to come back on stream by CY25 in every metropolis.