Chennai’s IT corridor could soon turn home to a few new names. The last three months have seen the city’s preferred realty corridor turn into a hotbed of commercial deals. It began in February when Ford India inked an Rs 800-crore deal to acquire 28 acres of land for a back-end office.
Soon after, Bengaluru-based Brigade Group announced plans to build a World Trade Centre on its newly-acquired 16 acre land bank nearby. A couple of weeks ago, the Embassy Group acquired 26 acres just off the IT corridor, at Thoraipakkam, on which it will build office property spanning 4.5 million square feet.
There is also the Mumbai-based K Raheja Corp, which will construct a 2 million square foot commercial project on a land parcel in the vicinity. CNBC-TV18 also learns that some of these developers are talking to big names in the IT and BFSI space to set up shop in these properties – from Wells Fargo to Scope International, to Accenture and BNY Mellon. Once finalised, experts say these deals should steady absorption numbers, which have slipped to 4.2 million square feet annually.
They should also stop the slide in vacancy levels which have dipped below 10 percent. However, a sharp spike may not be on the cards. Sarita Hunt, MD-Chennai, JLL India said: “We don’t see those numbers spiking because right now, we’re in a market that is touching 3 million square feet in 2017 because of the lack of supply.
By the time the new supply comes in, we’ll be back to 4 million.” This renewed demand for office space is, no doubt, a healthy trend for Chennai’s real estate in general. But what’s got the market worried is the simple fact that while projects will add between 6 and 8 million square feet of fresh commercial inventory by 2019, there will still be a considerable dearth of grade-A commercial space in some of the city’s emerging real estate corridors.
This has industry hunting for newer land parcels. Industry body Credai’s Chennai chapter has also opened dialogues with the Tamil Nadu government to release government-owned land banks for commercial development.
Suresh Krishnan, President, Credai Chennai said: “The government has got a lot of land holding. They should bring it in a JV model with developers, and thus bring quality space. We can market it and bring them into the Chennai market.”
Moreover, fuelling this optimism is Chief Minister J Jayalalithaa’s historic win in the recent elections, and the ensuing promise of stability.
Credits Money Control