CHENNAI: The office space absorption in Chennai witnessed an annual decline of about 29 per cent, according to a report by Savills, a global real estate services provider. Developers are hopeful that things will pick up from July with vaccination drive picking up.
The study said that space absorption was relatively better during the pandemic in Chennai as lockdown and supply chain bottlenecks had caused comparatively lesser impact on the commercial real estate market. S Sridharan, CREDAI chairman, Tamil Nadu Chapter, told Express that the phase of vaccination is improving and things will be normal in the next six months. Ajith Chordia, former president of Confederation of Real Estate Development Authority of India and managing director of Olympia Group says things are firming up but vacancy levels will take time to reach pre-Covid level.
Chordia said he encountered around 20 per cent vacancy levels during lockdown. “We manged to reclaim 10 per cent and hope to cater to the rest 10 per cent by December,” he says. Chordia hopes by July, vacancy levels across Chennai will be reduced to 50 to 60 per cent on the back of big boom in IT market, where in the salary levels have gone up.
Chennai along with Bengaluru, witnessed sub 30 per cent drop in transaction volumes as compared to 2019, while other major cities reported a drop of almost 40-60 per cent, says the report. The report predicts that 2021 is expected to witness approximately 5.6 mn sqft of new completions, which translates to 54 per cent higher supply as compared to 2020. Most of this upcoming supply is concentrated in Guindy and Mount Poonamallee Road.
In terms of new completions, Chennai was the only market among top six cities to register a growth in supply as compared to 2019. In continuation of the intra-city trend of 2019, developers and occupiers preferred micromarkets like OMR pre-toll, Guindy, Mount Poonamallee Road and Pallavaram Thoraipakkam Road (PTR). The overall city-wide rentals witnessed approximately 3% year-on-year decline.