Introduction to Commercial Real Estate
In the past decade, commercial real estate in Chennai has seen tremendous growth, going on to earn a major chunk of the market share.
According to the New Indian Express, commercial real estate in Chennai faced an annual decline of 29%. Despite this kind of a dip, the industry has given a steady comeback, with businesses and brands reopening the office
The evolution of commercial real estate in Chennai has the corporate and IT industries to thank. With advancements in the mentioned fields, the demand for commercial spaces, especially office spaces, also shot up. In fact, the pandemic put many expansion plans on hold, with work from home culture taking over the city, country, and the world at large. Had the pandemic not happened, the commercial real estate sector of the country would have seen skyrocketing growth.
To define commercial real estate, it is any real estate used to generate income. Commercial real estate includes office spaces, industrial spaces, warehouses, commercial, retail, wholesale spaces, etc. Commercial real estate is a secure investment, which yields solid returns for the investor.
Being a constant income generator, commercial assets do not deter in value with the market’s volatility. Today, investing in commercial real estate is a far more beneficial form of investment compared to other kinds of real estate.
Commercial real estate in Chennai is a whole new world of possibilities. In the upcoming sections, we will discuss commercial real estate in Chennai, its beginnings, and, most importantly, the evolution of commercial real estate in Chennai.
Commercial real estate in Chennai – A steady work in progress
Chennai holds great scope for commercial real estate to thrive. The evolution of commercial real estate in Chennai has been commendable
According to Asset Monk, the commercial real estate sector saw an absorption of 2.5 million sq. ft. And despite the pandemic, the CRE sector still experienced an absorption of 2 million sq. ft. in the first half
Commercial real estate in Chennai – humble beginnings
Back in the day, the demand for commercial real estate in Chennai was not as developed and forward as it is today. With just a handful of businesses and conventional trade practices, the scope for commercial spaces was at an all-time low. Initially, commercial spaces within the city were restricted only to the Central Business District (CBD).
Since 2012, the evolution of commercial real estate in Chennai has taken a steady turn towards growth. Up until then, commercial spaces, especially Grade A office spaces, were restricted to the Central Business District. Since 2012, the growth of commercial real estate in Chennai has been exceptional.
Laying a steady foundation – Commercial real estate in Chennai
The initial demand for commercial real estate in Chennai was not as much as the demand for residential real estate. Residential real estate was always in good demand as housing needs were greater than that of commercial spaces.
As the city developed, businesses and trade also began expanding. Businesses spread beyond the confines of just the Central Business District. And this gave rise to the modern-day IT and Corporate corridor that is OMR, thereby laying a strong foundation for the growth of commercial real estate in Chennai.
The past decade has been a boon for commercial real estate in Chennai. The increase in setting up start-ups and IT-based businesses has enhanced the demand for office spaces in and around the city, and this no longer restricted the need for office spaces to just the Central Business District.
The growth in the IT and Corporate industries dominated the evolution of commercial real estate in Chennai. Post-2014 and 2015, the demand for commercial real estate was no longer restricted to hot and trending locations within the city. Businesses began setting up offices and workspaces in different places across the city, including the outskirts of Chennai.
This gave birth to the famous IT corridors present in various places in the outskirts of Chennai. Chennai is today one of the major IT and Corporate hubs. The growth in these sectors resulted in a huge demand for office and other commercial spaces, thereby accelerating the growth of commercial real estate in Chennai.
What is noteworthy here is that the development of Information Technology in the city not only increased the demand for commercial realty but also enhanced the demand for housing in these areas.
Today, commercial real estate in Chennai, especially office spaces, hold immense potential for growth and a steady flow of income
According to Forbes, Grade A office stock has grown more than 20 times to approximately 650 million square feet (MSF) as of September 2020, from just 25 MSF in 2000, according to Venture Intelligence and CBRE India data.
Asset Monk suggests that commercial real estate has the potential to dominate the market and is anticipated to contribute 13% to the country’s GDP by 202
The development of IT and Corporate sectors has paved the way for infrastructural development in and around the IT corridors in the city. Areas like OMR, Pallikaranai-Medavakkam stretch, and more are going through rapid development, opening up avenues for office and other commercial spaces.
The OMR and Pallikaranai-Medavakkam stretch holds a huge potential for the growth of commercial real estate in Chennai
With the CRE sector on its way up the ladder in the market, now is the right time to invest in commercial properties. If you are looking to invest in commercial real estate in Chennai, Market of India is the right place!
According to an article by The Hindu, the Pallavaram-Thoraipakkam (PTR) road in South Chennai also shows a great scope for the office market. The micro-market is gaining prominence as an office market with an upcoming 13 million sq. ft. of Grade-A office supply by reputed national and international developers, creating 1,30,000 jobs in the next 3-4 years