APPD Market Report Article


May 26, 2024

Dr Samantak Das, Head of Research, India


INR 98.5


Net absorption at 0.12 million sq ft in 1Q

  • The Suburbs recorded the highest net absorption in the quarter, as some notable transactions were successfully closed here. Fashion and apparel had the highest share of leasing activity, with brands such as French Connection, Van Heusen, Louis Phillipe, Allen Solly and Peter England leasing space in the city.
  • With new leasing in malls, vacancy dropped 100 bps q-o-q to 10.7% in 1Q24. Apart from shopping malls, Chennai also saw traction on high streets from local as well as national retailers.

Solitary mall completion in the quarter

  • VRM Mall in the Suburbs submarket was completed in 1Q24. Consequently, retail mall stock in Chennai stood at 6.8 million sq ft. 
  • Two retail developments with a total area of 350,000 sq ft are likely to go operational in the upcoming quarters of 2024. These malls include Esthell Paragon Mall at Velachary and TNHB Mall at Ashok Nagar in the Secondary submarket.

Rents remain stable in 1Q24

  • Rents increased q-o-q in the Secondary and Suburbs submarkets in selected malls. Some average mall developments in Prime City saw a rent correction driven by low demand and rising vacancy.
  • Yields were largely unchanged q-o-q.

Outlook: Retailer activity to remain steady

  • Leasing is expected to remain healthy as both regional and national retail chains are expanding their footprints in the city. Supply of around 6.0–6.1 million sq ft is expected in the next five years, primarily in the Suburbs submarket.
  • Both shopping malls and high streets are expected to drive the leasing activity in the future. Retailers from the Fashion and Apparel, F&B, Entertainment and Accessories categories are likely to lead in terms of leasing demand.

Note: Chennai Retail refers to Chennai's overall prime retail market.

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