CHENNAI: Institutional investors pulled back sharply from Chennai’s real estate market in the first half of 2025 amid global uncertainty, slower deal closures and cautious capital deployment. But on the ground, demand across key asset classes remains steady, and many believe the current lull is more of a pause than a pullout.
Data from Colliers shows Chennai attracted just $48.3 million in institutional investments during first half of 2025 — a 69% drop from $154.1 million in the same period last year. More strikingly, the second quarter saw no recorded inflows at all, compared to $33 million in second quarter of 2024. The sharp fall stands in contrast to the momentum built last year, when overall capital inflows into the city nearly tripled to $500 million. Still, industry insiders say the drop reflects delays and recalibration, not declining interest. “Despite the dip in deal closures, Chennai’s fundamentals remain solid, particularly in the office and industrial segments,” said Vimal Nadar, head of research at Colliers India.
Some of the slowdown is due to pending approvals and a tougher macro environment. “The money is there, but investors are being more cautious,” said Ranjeeth Rathod, Managing Director of DRA Homes.
While capital inflows may be on hold, Chennai’s operating real estate market is anything but quiet. The city clocked 5.5 million sq ft of Grade A office leasing in first half of 2025, up 57% from a year ago. Vacancy rates dropped to 13.4%, and rents have climbed. In the industrial and logistics segment, demand held strong at 2 million sq ft in first quarter, even though a jump in supply nudged vacancy rates up to 10%. “Our rental yields are improving and vacancy is below 5%. Tenants are staying longer. That tells you demand is intact,” said Rathod.
Diptakirti Chaudhuri, Chief Marketing Officer at Casagrand, sees steady growth in mid-income homes, especially in emerging areas like Siruseri, Kundrathur, and Perambur.
“People are buying because they want to live there, not flip properties. That’s what gives the market resilience,” he said. One factor increasingly shaping investment decisions is sustainability. Green-certified buildings are no longer a nice-to-have, they are becoming essential. Colliers estimates that 63% of Chennai’s Grade A office stock is already green-certified.