Research &

Forecast Report
Chennai | Office
April 2015

IT/ITeS remains
the prime driver
with 53% of total
absorption
Chennai 1Q 2015 absorption stood at 0.8 million sq ft as
compared to the previous quarters 1.33 million sq ft. The
IT/ITES sector accounted for 53% of the total absorption
followed by manufacturing at 17% and pharma at 16%.
The BFSI, engineering, FMCG, media & entertainment and
logistics sectors were also represented in the deals closed
during the period. Approximately 50% of total absorption
was in the CBD followed by OMR (16%) and Ambattur
(11%). Notable transactions include the Income Tax
Department taking the entire BSNL Building of 0.19 million
sq ft located in the CBD. Apart from this, Ford took 0.06
million sq ft in SP Infocity at OMR and Bank Bazaar took
0.05 million sq ft in India Bulls located at Ambattur.
Cautious market sentiments restricted the new supply to
only 0.40 million sq ft. Projects contributing this supply
were Lalah Tower (0.28 million sq ft) by Ramaniyam on
Nelson Manickam Road; Sri Balaji Complex (0.06 million
sq ft) by Shanthi Builders at Royapettah; and AGR Platina
(0.05 million sq ft) by an independent developer at
Ekkaduthangal. The total available supply for lease / fitout stood at 10.7 million sq ft. By micro-market, OMR (IT
corridor) accounted for 34% of this total available supply,
followed by Ambattur 28% and the CBD 27%. No new
projects / parts of projects were launched in Chennai during
the quarter. Lack of new completed supply has led to a
decline in vacancy rates especially on the OMR stretch.

City Office Barometer

INDICATORS

2Q 2015 F

Vacancy
Absorption
Construction
Rental Value
Capital Value

Rental Values
MICRO MARKETS

RENTAL
VALUE*

% CHANGE
QoQ
YoY

CBD

60 - 80

0%

0%

Guindy

50 - 60

0%

4%

Ambattur

20 - 30

0%

0%

OMR I**

45 - 60

-1%

1%

OMR II & III***

25 - 45

0%

0%

GST Road

35 - 40

0%

0%

*Indicative Grade A rents in INR per SF per month

**OMR I (Madhya Kailash Perungudi- Toll gate I)
***OMR II (Thoraipakkam Sholinganallur) & OMR III (Semmencherry Siruseri)

Weak absorption continued to keep pressure on rents and

capital values in 1Q 2015, resulting in a marginal decline by
1% in OMR I (Madhya Kailash - Perungudi - Toll Gate I). All

1Q 2015

Research & Forecast Report | April 2015 | Colliers International

2.4
2.0
1.6
1.2
0.8

1Q 2015

4Q 2014

3Q 2014

2Q 2014

1Q 2014

4Q 2013

3Q 2013

Average Rental And Capital Value Trend

10,500

Forecast

30

3,000

15

1,500

1Q 2017F

4,500

1Q 2016F

45

1Q 2015

6,000

1Q 2014

60

1Q 2013

7,500

1Q 2012

75

1Q 2011

9,000

1Q 2010

90

Capital Values INR Per Sq.ft

105

1Q 2008

Rental Values INR Per Sq Ft Per Month

The demand for office space is expected to gain further

momentum in line with the revival in economic growth
projected for the medium term. However, the high
vacancy level, coupled with upcoming supply is likely to
restrain the rent growth particularly in micro-markets
like Thoraipakkam, Sholinganallur and Semmenchery to
Siruseri over the next few quarters.

1Q 2013

Colliers View

2Q 2013

0.4

1Q 2009

During this quarter, the Chennai Government has

allocated INR500 and INR750 crore for the Chennai Mega
City Development Mission and the Integrated Urban
Development Mission, respectively for 2015 - 2016. Apart
from this, the sum of INR420 crore has been allocated for the
Tamil Nadu Urban Road Infrastructure Fund. Civic bodies
are targeting the overall infrastructure development of the
city through these funds.

Quarter Wise Absorption

Million Sq.ft

other micro-markets remained stable; this is also attributed

to the huge vacant stock, especially on the OMR stretch.

Top 5 Transactions of the Quarter

CLIENT

BUILDING NAME

Income Tax Department

BSNL Buidling

Ford

AREA (SF)

LOCATION

LEASE / SALE

197,000

CBD

Lease

SP Infocity

69,000

Old Mahabalipuram
Road

Lease

Bank Bazaar

India Bulls

50,000

Ambattur

Lease

Citi Bank

TRIL

44,000

Old Mahabalipuram
Road

Lease

Vasan Eye care Hospital

Harini Towers

40,000

CBD

Lease

Key Under Construction Projects

BUILDING NAME

DEVELOPER

AREA (SF)

SP InfoCity, OMR Phase 2

Shapoorji Pallonji Group

1,200,000

Chennai One (BPO Park) Phase 2 ETL Developers

1,100,000

Estancia Block B2

469,000

L&T & Arun Excello

LOCATION
Old Mahabalipuram
Road
Old Mahabalipuram
Road
GST Road

POSSESSION
2015
2015
2015

Notes:
1. Office Market: Prime office properties in Chennai are located in four principal sub-markets: the CBD, SBD (Guindy, Manpakkam,Velachery) and the PBD (Old Mahaballipuram
Road (OMR).
2. Rents/Capital Value: Market average of indicative asking price for Grade A office space.
3. Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter.
4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.
5. All the figures in the report is based on market information as on 25th March 2015.

Research & Forecast Report | April 2015 | Colliers International

Primary Authors:

502
67 countries on
6 continents
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199
EMEA: 108

Surabhi Arora
Associate Director | Research
+91 124 456 7500
surabhi.arora@colliers.com
Sachin Sharma
Manager | Research
Amit Oberoi I National Director
Valuation & Advisory Services & Research
For Oce Services:
Mumbai: George Mckay I South Asia Director
george.mckay@colliers.com
Delhi / NCR: Vikas Kalia | National Director
vikas.kalia@colliers.com

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billion in
annual revenue

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billion square feet

under management

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professionals

About Colliers International

colliers.com

2015

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