GCCs Drive Chennai’s Office Leasing as Rents Soar to ₹69.2 per sq. ft in 2024

In 2024, Chennai’s real estate market saw tremendous performance led by the office leasing segment, which saw transactions this year totaling 8.1 million sq ft. Global Capability Centres emerged as the primary contributors, accounting for 39% or 3.2 million sq ft of the total leasing activity. However, it did face an external challenge with a big dip in new office completions at a staggering 69% YoY drop, amounting to only 2.1 million sq ft.

The city also saw its rental rates climb to ₹69.2 per sq ft per month, reflecting a 6% YoY growth. The surge was attributed to robust leasing momentum, heightened occupier demand from GCCs, IT outsourcing firms, and India-focused businesses, coupled with limited availability of office stock. Vacancy rates in Chennai’s office market dropped to 6.8% in 2024, signaling strong demand amidst constrained supply.

According to Srinivas Anikipatti, Executive Director – Tamil Nadu and Kerala, Knight Frank India, “Chennai’s office market witnessed its second-best year in 2024 after 2023’s exceptional growth. While growing interest in GCCs points to a robust year ahead, the lack of quality supply is a significant concern that may push occupiers to explore alternatives in other cities.”

In 2024, the performance of Chennai’s real estate market was vibrant because of the office leasing sector, which clocked 8.1 million sq ft of transaction space. These Global Capability Centres were the leading contributors, accounting for 39% of total leasing activity at 3.2 million sq ft. Nevertheless, there loomed a huge challenge for the market: New office completions in Chennai did hit a sharp year-on-year (YoY) decline of 69%, down to a meager 2.1 million sq ft.

The residential segment in 2024 saw new launches totaling 17,431 units, a 7% YoY increase. Southern and Western micro-markets predominantly contributed 56% and 28% of new launches, respectively.

Chennai’s real estate market is still promising, as it will receive two big stimuli, namely robust leasing momentum and strong demand in the residential sector. Thus, Chennai continues to offer promise. However, concerns over limited office space supply could impact its growth trajectory in the coming years.