Two different reports – One done by Knight Frank India and the other by CBRE South Asia - have indicated that Chennai has retained its momentum when it comes to office space absorption. According to Knight Frank India’s latest report – India Real Estate: Residential and Office January - March 2024 (Q1 2024), Chennai observed office space transactions of 1.2 million sq ft during Q1 2024 witnessing a year-on-year (YoY) growth of 45%. Chennai recorded the highest rental value appreciation of 9% during the first quarter of 2024 to Rs. 67.0 sq ft/month. During Q1 2024, the major occupancy and leasing activity was driven by Global Capability Centres attributing 52% of office transactions in the city. India-Facing business and Flex office areas accounted for 28% and 19% respectively of the office transactions in the city.
CBRE South Asia in its report tilted ‘CBRE India Office Figures Q1 2024’ said that Chennai office space recorded 1.8mn. sq. ft. absorption during January to March 2024, while supply stood at 0.7 million. sq. ft. “Key sectors that drove absorption included flexible space operators (37%), BFSI (21%), technology (15%),” the report said. CBRE’s report mentioned that there were three key transactions during the quarter - Smartworks leased 177,000sq. ft. in Olympia Pinnacle, a leading flexible space operator leased 130,000sq. ft. in Olympia Cyberspace and Fiserv leased 50,000sq. ft. in Embassy Splendid Techzone - block 2. The report also highlighted that Chennai office space take-up was driven by small-sized (less than 50,000 sq. ft.) deals during January-March 2024.
RESIDENTIAL SALES
Knight Frank’s report also looked into the residential market.It mentioned that the residential market of Chennai witnessed a total of residential sales volume of 3,950 units with a YoY growth of 8%, whereas 4,350 units were launched in the period with an annual growth of 10% YoY in Q1 2024. The average weighted residential price witnessed an increase of 5% YoY during Q1 2024 with a value of Rs. 4,550 sq ft.
During Q1 2024, 46% of the residential sales were in the ticket size of 5 million to 10 million category witnessing a YoY growth of 21%. The ticket size of below 5 million segment was 28% while that in the category of 10 million and above was 26%.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said “The residential segment particularly witnessed a significant surge, propelled by continued growth in sales in the higher price category of Rs.1 crore and above. This not only demonstrates a strong demand trajectory but also reflects buyers’ confidence in making long-term commitments.” He further said, “Concurrently, the office sector maintained its upward trajectory. The country’s economic stability has spurred businesses operating in India to expand their operations, consequently driving demand for office spaces.”
“Additionally, many companies are now reverting to conventional office setups, either reducing or discontinuing their work-from-home policies, further boosting demand. We anticipate these activities to continue at a robust pace in the foreseeable future backed by the stable economic policies and favourable domestic conditions,” he added.
