Outlook 2023 India

CHENNAI

KEY MESSAGES

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 Chennai is expected to

 Due to improved demand, net absorption is forecast at 2.15 msf as of end-2022, a three fold increase compared to 2021.  Vacancy is expected to increase to around 20.7% in 2023 due to large supply infusions anticipated during the year, despite a ~14% y-o-y increase in net absorption.  With sustained supply during

 Rents are forecast to grow at an annual rate of 0.5-0.7% between 2022-2025, from INR 83/sft/yr by end 2022 to INR 850/sft/yr by 2025.

 South West, Suburban South and Peripheral South markets are likely to remain as prime office locations with enhanced connectivity to the CBD, on completion of Phase 2 of the Chennai metro project.

witness new supply of 12.3 msf during 2023-2024, with the majority of this supply (65%) concentrated in the active submarkets of South West and Peripheral South West.  Nearly 23% of the upcoming space (2.77 msf) over the next

.

two years is pre-committed, mainly by BFSI and IT-BPM majors.

2024, a 2% y-o-y rise in net absorption is projected for 2024 from over 2.45 msf in

2023, largely driven by demand from IT-BPM occupiers.