Chennai, India
 

Chennai and its Commercial Real Estate Market are unique in many respects. Did You Know...

•   Chennai is the capital of Tamil Nadu, a state in the southern tip of India, on the Coromandel Coast of the Bay of Bengal. It has a city population of 4.35 million and a metropolitan population of 7.06 million, which makes it the 4^th largest metropolitan area in India and the 34^th in the world.

•   Chennai is the capital of Tamil Nadu, a state in the southern tip of India, on the Coromandel Coast of the Bay of Bengal.  It has a city population of 4.35 million and a metropolitan population of 7.06 million, which makes it the 4th largest metropolitan area in India and the 34th in the world.

•   With a high population in such a small area, population density in the city is very high, at 24,418 people per 0.3861 square mile. This makes it one of the densest cities in the world, causing 18% of the population to be living in slum conditions.  

•   Chennai is the automobile industry center of India, and its economy is mainly based around the automobile industry, software development, and business process outsourcing. Other key industries in Chennai include hardware manufacturing, financial services, banking, petrochemicals, and textiles. Currently, the IT industry has seeing the biggest growth due to the continuation of foreign direct investment.

•   Demand for Class A office space in Chennai has stayed strong and is projected to continue its strong trend over the rest of the year. About 355,000 square feet in the CBD and 583,000 square feet in the SBD exchanged hands the first quarter of the year.

•   Vacancy rates in the CBD and SBD have decreased since the beginning of the year because the increasing demand was not met through any new complexes being released to the market.

•   Due to the supply shortage, business centers are increasing in popularity. Most of the business centers have between 80% and 85% of their space occupied, with clients signing normally for 6 to 9 months at a time. 

•   While over six million square feet in office projects are currently under development, over 90% of this space will be located in the SBD, continuing the shortage of supply to meet increasing demand in the CBD. This is expected to cause a continued uptick in CBD rental rates as vacancy levels continue to strain against the lack of new space. With the large influx of space going to the SBD market, rates there should remain stable over the next few months. 

•   The retail market is in a similar position as the CBD office market. High demand in Chennai's three malls is unmet by the limited supply available; therefore, transaction volume in the first quarter of the year was low. Currently 3.4 million square feet of retail space are under construction and are expected to be completed by the end of 2008. Due to the lack of supply, rental values in the retail market will continue to increase.