2016 was a year of many big announcements. From the Smart Cities mission to demonetization, there were several headline-making events that would change the face of Indian real estate in the times to come. Chennai embraced these changes and lived up to its reputation of being a city that bounces back, regardless of the odds.
Keeping this spirit of Chennai in mind, CREDAI in association with JLL organized a thought leadership session aptly titled “Progressive Chennai: Advancing Success in an Evolving Market”. The event witnessed participation from government officials like Mr. VikramKapur, I.A.S Principal Secretary Industries, Dr. Rajendra Kumar I.A.S and Mr. DharmendraPratap Yadav, I.A.S. Industry stalwarts like Mr. Prem, Executive Vice Chairman- HCL, Mr. Velan Managing Director -TRIL, Mr. Santhanam, Managing Director- Saint Gobain, Mr. Datta, Finance Controller-Hyundai, Mr. Shriram Sheshadri, Sr. Partner- PWC and Mr. Purushottaman, Regional Head- NASSCOM also participated in this discussion spread over three sessions.
The first session revolved around the inherent strengths of Chennai as a primary manufacturing hub and the present investment climate. On the manufacturing front, the Government has signed 8 MOUs with various industries from the auto, auto-ancillary, light engineering and telecom sectors. The warehousing sector has also seen new launches of Grade A space supply. Consequent to these favourable developments, there has been keen interest from private equity players who are looking for ideal properties in and around Chennai for investment. The Central Government’s move to implement GST has added momentum to the growth of this sector.
The second session discussed the role of IT/ITES in fueling the demand for urban townships. Being one of India’s IT hotspots, Chennai has witnessed a steady influx of talent and skilled workforce. In 2016, over 70% of the office space absorption in the city was from the IT/ITES sector. The city also witnessed a record gross absorption of 6 million sq. ft. This is a 20% increase over the previous year. With limited availability of ready-to-move-in office spaces, occupier demand is only expected to rise. The steadily-improving office market scenario will have an obvious positive impact on residential demand, as well. This means that locations in Chennai where office space market activity is higher – such as the Southern suburbs – will see significantly increased traction.
The final session of the discussion delved into Affordable Housing- which has become the buzz-word of the residential sector. Having been granted infrastructure status, this segment is expected to receive cheaper sources of financing, including external commercial borrowings. Chennai’s developers, who have always been highly attuned to the budget housing segment, will continue to stay invested in affordable housing projects in anticipation of vastly increasing demand.
The Government’s recent demonetization move has resulted in more money being pumped into the banking system, and this will make substantial funds available to banks for lending to businesses, construction, infrastructure development, and home buyer financing. Chennai, with its massive development and growth potential, will be certainly among the chief beneficiary cities.
With the economy now firmly on a growth path post multiple changes through 2016 – RERA, GST, FDI reforms and demonetization – there will be increased inclination to invest in real estate, which still remains the preferred investment asset class in India. The discussion ended on a high, with occupiers and developers alike concluding that for Chennai’s property market, the prospects for the future have never been better.
