APPD Market Report Article


February 28, 2023

Dr Samantak Das, Executive Director and Head of Research & REIS, India & Sri Lanka


INR 136


Higher demand for prominent high streets

  • The revival in traction was aided by the expansion plans of global retail chains, improved purchasing power, and shopping emerging as a social leisure activity in cities. Prominent malls witnessed improved footfall and continued to operate with low vacancy rates. F&B was the major demand driver in the quarter.
  • The overall vacancy level in the city stands at 11.2%, with prominent mall vacancy rates in the single digits. The secondary submarket has the lowest vacancy rate at 4.3%. Other than quality malls, retailers are looking at key high streets for expansion as well, and traction remains high for such spaces.

Moderate supply pipeline in the near term

  • The city lacked new completions in the quarter, and stock remained at 6.5 million sq ft. The Airport Ozone mall and TNHB mall are nearing completion and will add an additional 0.35 million sq ft to stock.
  • Basera Mall by Khivraj Group and Forum Mall OMR by Prestige Group are the upcoming prominent projects lined up for completion in the long term.

Capital values and rents continue to remain stagnant

  • Rents remained stable in the city, though quality completions are likely to support rent growth in their respective submarkets going forward.
  • Mall rents are likely to stay stable, with high streets offering attractive rents and retailers negotiating with mall owners. Many consumer brands, both global and domestic, have expansion plans in the city, and this is likely to support demand momentum for the retail market.

Outlook: Market traction to be driven by new supply infusion

  • Retailers continue to prefer both good malls and high streets over average malls. The footfall in malls is improving, as malls evolve into holistic family recreational spaces. Stable economic and job parameters have supported higher consumption demand, and this is aiding retailer expansion in the city.
  • Investor sentiment for retail assets is likely to remain subdued, though quality assets may garner some interest going forward.

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

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