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Chennai Market Watch Office - Savills
Year-end 2020

S P OT L I G H T   Chennai Market Watch
Savills Research
                          Office
Chennai Market Watch Office - Savills
Chennai Market Watch - Office – Year-end 2020                                                                                                              Chennai Market Watch - Office – Year-end 2020

                                                                                                                                                                                                              GDP growth (annual % change)
                                                                                                                                                                                                               10
                                                                                                                                                                                                                8
                                                                                                                                                                                                                6
                                                                                                                                                                                                                4
                                                                                                                                                                                                                2
                                                                                                                                                                                                                0
                                                                                                                                                                                                                -2
                                                                                                                                                                                                                -4
                                                                                                                                                                                                                -6
                                                                                                                                                                                                                -8
                                                                                                                                                                                                               -10
                                                                                                                                                                                                                     2015            2016             2017             2018             2019             2020             2021
                                                                                                                                                                                                               -12
                                                                                                                                                                                                                            China, People's Republic of                  India                            United Kingdom
                                                                                                                                                                                                                            United States                                Asia Pacific                     World

                                                                                                                                                                                                               Source IMF World Economic Outlook (graph represents IMF WEOs till Oct 2020)

                                                                                                                                                                                                              COVID impact on sectoral GDP (%)

                                                                                                                                                                                                                                         -47.0%                                                                 -50.3%
                                                                                                                                                                                                               Trade, Hotels             -15.6%                                      Construction               -8.6%
                                                                                                                                                                                                                                            -5.3%                                                               -39.3%
INDIAN                                                                                                                                                                                                         Finance,
                                                                                                                                                                                                               Real Estate
                                                                                                                                                                                                                                            -8.1%                                    Manufacturing              0.6%

ECONOMY
                                                                                                                                                                                                                                                                                                        Q1 FY 21
                                                                  The crash                                     Among the numerous features of these
                                                                                                                Atma Nirbhar Bharat Schemes, the
                                                                                                                                                               Projections and hope                                                         3.4%                                                        Q2 FY 21
                                                                  By the middle of the year, global agencies                                                   At its peak, the pandemic-induced
                                                                  like the IMF projected deep fall in growth    infusion of INR 6,000 crores equity by the
                                                                                                                government in National Infrastructure
                                                                                                                                                               compulsions wiped off about one-fourth of       Agriculture                  3.4%
2020
                                                                  across the world, and indeed, in India too.                                                  the GDP, as demand plummeted. While the
                                                                                                                Investment Fund (NIIF) debt platform           slide has been arrested significantly third
                                                                                                                                                                                                               Source Statista (https://www.statista.com/statistics/1107798/india-estimated-economic-impact-of-coronavirus-by-sector/)
                                                                  India’s second quarter GDP growth             deserves special mention, as core              quarter onwards, damage control persists
                                                                  showed a decline of 23.9% (Q-o-Q). The        infrastructure development is a key focus      as 2020 ends.
                                                                  next quarter’s -7.5% meant that India was     area. Similarly, the announcement of
                                                                  in recession. It is important to note that    INR 18,000 crores as additional outlay for     In spite of this adversity, forecasts by
                                                                  the infections peaked in India on             Pradhan Mantri Awas Yojana - Urban             various agencies present hopes of a sharp       In a major achievement, India’s GST collections
                                                                  September 17th 2020*.                         (PMAY – U), is another key feature worth
                                                                                                                noting. This was provided over and above
                                                                                                                                                               and V-shaped recovery for several
                                                                                                                                                               economies, including India. IMF’s October
                                                                                                                                                                                                               recorded a peak of INR 1.15 lakh crores in
Follow through of 2019
                                                                  The four key areas which were deeply
                                                                  dented at the height of COVID were            the INR 8,000 crores already given in the      World Economic Outlook estimates India’s        December 2020.
                                                                                                                year. The estimated benefit is launch of 12    growth rate in 2021 to be in the range of
As 2019 ended, the economic slowdown was being countered          consumption, employment, supply chain
                                                                                                                lakh and completion of 18 lakh houses.         10.5%-11.5%, which is among the highest.
deftly by a strong set of policy measures by the Indian
government. These measures were neatly categorized in nine
                                                                  and government income. The strongest                                                                                                         RBI and most agencies forecast remarkable
                                                                  declines were registered in consumer                                                         Incidentally, 2019 was considered to have
sets, as highlighted in our 2019 Year End Market Watch. The       durables, auto sales and exports. (COVID
                                                                                                                The Reserve Bank of India contributed
                                                                                                                significantly during the crisis by according   delivered the best ever 12-months for office    economic growth in 2021.
initial two months of 2020 did present a glimmer of hope for      Impact on sectoral GDP graphic on p.3)        high priority to keeping the economy           leasing in India for a second successive
recovery, though the task appeared uphill. By the end of
                                                                  Packages & policy support                     afloat. From 5.15% benchmark lending rate      year. 2020 was expected to create a new         Two key events occurred at the height of
March, however, the contours of an unprecedented economic
storm, a true black-swan event of global scale, began revealing   In a proactive fiscal measure, the Central
                                                                                                                at the beginning of the year, the repo rate
                                                                                                                was brought down to 4% by December. It is
                                                                                                                                                               record. However, the socio-biological
                                                                                                                                                               catastrophe broke the flow and left an
                                                                                                                                                                                                               pandemic in July. India’s second REIT got listed,
the enormous problem that lay ahead. The COVID-19                 Government announced three Atma               reported that the transmission to the          indelible scar. TIME magazine chose to          as Mindspace Business Parks REIT was
                                                                  Nirbhar Bharat schemes, between May and
pandemic, which appeared a distant malaise to most Indians
till a month ago, was already at the doorsteps.                   November. We had issued the details of
                                                                                                                consumer also improved during the year as
                                                                                                                compared to earlier times.
                                                                                                                                                               famously cancel 2020 on its iconic cover. It
                                                                                                                                                               is from this rubble that 2021 will rise.
                                                                                                                                                                                                               oversubscribed 12.96 times.
                                                                  these from time to time, in our fortnightly                                                  Armed with vaccinations developed in
In no time thereafter, the follow-through of 2019 became a        Savills Round Ups. Together, these                                                           record time, the human race gets up again.      Around the same time, the government floated
closed chapter, as the virus spread swiftly across the country.
Almost all businesses, some more than others, slipped into
                                                                  amounted to a commendable 15% of the
                                                                  country’s GDP (refer Annexure for specific    * https://indianexpress.com/article/
                                                                                                                                                                                                               Affordable Rental Housing Complexes (ARHC)
survival and cash preservation mode. Staying afloat became        details), though mostly by way of debt and    explained/india-coronavirus-numbers-
                                                                                                                explained-covid-2020-cases-deaths-testing-
                                                                                                                                                                                                               Operational Guidelines to provide a boost to
the theme from then on.                                           loans.                                        recoveries-7128525/
                                                                                                                                                                                                               rental housing.
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Chennai Market Watch Office - Savills
Chennai Market Watch - Office – Year-end 2020                                                                                                                                                   Chennai Market Watch - Office – Year-end 2020

                                                                                                                                                                                                                                                                                                     Supply addition: 2020 vs 2019
                                                                                                                                                                                                                                                 COMPLETIONS & VACANCY
                                                                                                                                                                                                                                                                                                        2020                      2019                   YoY Change
                                                                                                                                                                                                                                                 HIGHLIGHTS

INDIA
                                                                                                                                                                                                                                                                                                                 16                                                                    10%
                                                                                                                                                                                                                                                 New completions also declined by 35% YOY to
                                                                                                                                                                                                                                                 about 30.6 mn sq.ft, with major fall of about                   14                                                                    0%
                                                                                                                                                                                                                                                 60% YOY noted in cities namely Delhi-NCR,                       12                                                                    -10%
                                                                                                                                                                                                                                                 Pune and Mumbai. While Bengaluru and

OFFICE
                                                                                                                                                                                                                                                 Hyderabad saw relatively lesser YOY decline of                  10                                                                    -20%

                                                                                                                                                                                                                                                                                                     mn sq.ft.
                                                                                                                                                                                                                                                 14% and 21%. Interestingly, Chennai                             8                                                                     -30%
                                                                                                                                                                                                                                                 maintained similar levels of new completions at
                                                                                                                                                                                                                                                 about 3.6 mn sq.ft. during 2020. Bengaluru,                     6                                                                     -40%

                                                                                                                                                                                                                                                 Hyderabad and Delhi-NCR together comprised                      4                                                                     -50%

MARKET
                                                                                                                                                                                                                                                 of 80% of the new completions this year as
                                                                                                                                                                                                                                                                                                                 2                                                                     -60%
                                                                                                                                                                                                                                                 most supply that had come was committed in
                                                                                                                                                                                                                                                 previous years.                                                 0                                                                     -70%

                                                                                                                                                                                                                                                                                                                                                                   Delhi-NCR
                                                                                                                                                                                                                                                                                                                      Bengaluru

                                                                                                                                                                                                                                                                                                                                   Chennai

                                                                                                                                                                                                                                                                                                                                             Hyderabad

                                                                                                                                                                                                                                                                                                                                                          Mumbai

                                                                                                                                                                                                                                                                                                                                                                                Pune
                                                                                                                                                                                                                                                 The overall India vacancy levels have

SUMMARY
                                                                                                                                                                                                                                                 marginally increased to 11.7% in 2020 as new
                                                                                                                                                                                                                                                 supply exceeded the pace of leasing activity this
                                                                                                                                                                                                                                                 year. Most cities have witnessed rise in vacancy
                                                                                                                                                                                                                                                 levels as the demand remained subdued.              Rental trends
                                                                                                                                                                                                                                                                                                     The rental value change across micromarkets varied
The year 2020 saw a temporary                                                                                                                                                                                                                                                                        within a city compared to last year, with an average
slowdown in office markets with both                                                                                                                                                                                                                                                                 decline of about 7% YOY noted in a few micromarkets in
leasing activity and new completions                                                                                                                                                      Deal size categories
                                                                                                                                                                                                                                                     New completions in Chennai
                                                                                                                                                                                                                                                                                                     NCR and Bengaluru, while Chennai and Hyderabad saw
                                                                                                                                                                                                                                                                                                     a 3% YOY decline. However, Mumbai and Pune markets
declining from the previous year, as the                                                                                                                                                  50,000-99,999 sq.ft.                                       were at similar levels as 2019                  sustained similar rental ranges as last year.
pandemic impacted business activities                                                                                                                                                     13%                                                                                                        Interestingly, Mumbai sustained rental values similar as
                                                                                                                                                                                                                                                      unlike other cities that saw
across sectors. However, the confidence                                                                                                                                                                                                                                                              2019 despite its low leasing volumes as vacancy levels
                                                                                                                                                                                                                                                       decline and deferment of                      witnessed a marginal declined of 1% in 2020 compared
is expected to return soon as there are
                                                                                                                                                                                                                                                            planned supply.                          to the previous year.
announcements of vaccinations to                                                                                                                                                          less than
                                                                                                                                                                                                                                      25,000-
                                                                                                                                                                                          25,000 sq.ft.
contain infections and return to                                                                                                                                                          12%
                                                                                                                                                                                                                                 49,999 sq.ft.
                                                                                                                                                                                                                                                                                                           Overall the markets saw stable rents with
normalcy.                                                                                                                                                                                                                             15%
                                                                                                                                                                                                                                                                                                           certain pockets dragging overall decline
                                                                                                                                                                                                                                                                                                                     in favor of occupiers.
                                                                                                                                                                                                                                                 Vacancy levels
ABSORPTION HIGHLIGHTS                                           Absorption: 2020 vs 2019                                      2020           2019            Fall (2019-2020)                                    100,000 sq.ft. or more
                                                                                                                                                                                                                                  60%             Cities                                             2019                                                          2020
The office space absorption across India’s six major cities1                18.00                                                                                  0%
stood at 31.9 mn sq.ft. in 2020, driven by Bengaluru that                   16.00                                                                                                                                                                 Bengaluru                                          7.0%                                                          10.0%
                                                                                                                              -29.00%
                                                                                        -26.92%

                                                                                                                                                                   -10%
continued to lead the pack. While absorption fell by 43%                    14.00                                                                                                         Demand split by sectors
                                                                                                    -42.53%

                                                                                                                                                                   -20%                                                                           Chennai                                            12.4%                                                         13.0%
                                                                                                                                         -46.32%

YOY, it is important to note that the year 2019 saw a record

                                                                                                                                                                          YoY Decline %
                                                                            12.00
                                                                mn sq.ft.

high of leasing in 2019 at about 55.7 mn sq.ft. in the last                 10.00                                                                                  -30%
                                                                                                                                                                                                                                                  Hyderabad                                          4.5%                                                          10.8%
                                                                                                                                                    -58.70%
                                                                                                                -60.18%

decade.                                                                     8.00                                                                                   -40%
                                                                                                                                                                                                                          Engineering &
                                                                            6.00                                                                                                                    IT                                            Mumbai                                             13.9%                                                         13.4%
Bengaluru recorded the highest office absorption of 11.4 mn                                                                                                                                                               Manufacturing
                                                                            4.00
                                                                                                                                                                   -50%
                                                                                                                                                                                                    48.7%                 12.7%
sq.ft. in 2020, despite a drop of 27% compared to the                                                                                                              -60%                                                                           NCR                                                18.0%                                                         21.4%
                                                                            2.00
previous year. Following Bengaluru closely, Hyderabad
                                                                            0.00                                                                                   -70%
registered leasing of 5.4 mn sq.ft. in 2020. Hyderabad took                                                                                                                                                                                       Pune                                               4.2%                                                          6.5%
                                                                                                                Delhi-NCR

                                                                                                                                         Pune
                                                                                        Bengaluru

                                                                                                                                                    Mumbai
                                                                                                    Hyderabad

                                                                                                                              Chennai

over Delhi-NCR while the latter stood at the third place with
                                                                                                                                                                                             BFSI                Co           Healthcare
approximately 4.4 mn sq.ft. absorption in 2020. Like the                                                                                                                                                         working
                                                                                                                                                                                             12.3%                            4.5%               Rental range in 2020
previous year, the top three cities of Bengaluru, Hyderabad                                                                                                                                                      8.4%
and Delhi-NCR constitute around 66% of the total leasing                                                                                                                                                                                          In INR psf pm                         Low                                       High                        Average YOY Change*
activity in 2020. Mumbai, India’s financial capital, recorded   Markets continue to witness                                 Technology occupiers continue to                                                                                      Bengaluru                              40                                       156                                          -7%
approximately 2.9 mn sq.ft. leasing through 2020, the least     large deals                                                 drive demand
                                                                                                                                                                                            Consumer Goods                 Transport &            Chennai                                36                                       110                                          -3%
absorption witnessed among the six cities, while Chennai        As demand continued to be driven by the                     Banking, Financial Services and Insurance                                                      Logistics
                                                                                                                                                                                            & Services
witnessed an annual decline of about 29%.                       technology sector constituting 48.7% of                     (BFSI) occupiers’ share in 2020 increased                                                      2.6%
                                                                                                                                                                                            2.8%                                                  Hyderabad                              40                                       90                                           -3%
                                                                total leasing in 2020 compared to 46.3% in                  too and was recorded at 12.3% compared to
                                                                2019, there were some large consolidation                   10.6% in 2019. Engineering and                                                                                        Mumbai                                 50                                       370                                          0%
                                                                and expansion deals noted. Of the total                     manufacturing, as well as transport and
         The trio – Bengaluru, Delhi-NCR and                                                                                                                                               Consulting            Real
                                                                                                                                                                                                                                                  NCR-Delhi                             100                                       290                                          -3%
                                                                office leases in 2020, around 60%                           logistics, two of India’s growing sectors                                                           Others
        Hyderabad continued to lead the leasing                 comprised of large deals that were more                     accounted for 12.7% and 2.6% respectively,                     & Research            Estate
                                                                                                                                                                                                                                5.7%              NCR-Gurugram                           45                                       145                                          -7%
                                                                                                                                                                                           1.8%                  0.3%
                    activity in 2020.                           than 100,000 sq.ft. each. Bengaluru noted                   which was more than double of their
                                                                the highest share of large deals at 67%                     respective shares in 2019. On the other                                                                               NCR-Noida                              50                                       93                                           -8%

                                                                followed by Hyderabad and Chennai.                          hand, co-working segment’s share declined                     Demand from coworking segment                           Pune                                   50                                       107                                          0%
                                                                                                                            to 8.4% in 2020 from 14% in 2019 as a
                                                                                                                            result of occupiers widely adopting work
                                                                                                                                                                                          declined in 2020, while technology                      *Averages do not reflect YOY changes within micromarkets or select premium buildings in certain
 1. B
     engaluru, Chennai, Delhi-NCR, Hyderabad,
    Mumbai and Pune                                                                                                         from home policy.                                                occupiers continued to lead.                         localities

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Chennai Market Watch Office - Savills
Chennai Market Watch - Office – Year-end 2020                                                                                                                Chennai Market Watch - Office – Year-end 2020

                                                                                                                                                                                                     Office absorption (mn sq.ft.) in Chennai                                                     CHENNAI MARKET OUTLOOK

                                                                                                                                                                                                     4.5                                                                                            DEMAND
                                                                                                                                                                                                     2021F                                                                                          We expect a YoY growth of 5-10%
                                                                                                                                                                                                                                                                                                    in leasing activity in 2021. The expected

                                                                                                                                                                                                     4.3
                                                                                                                                                                                                                                                                                                    absorption is therefore pegged at
                                                                                                                                                                                                                                                                                                    approximately 4.5 mn sq.ft. for the year
                                                                                                                                                                                                                                                                                                    2021. Pre-commitments of 2020 are likely to
                                                                                                                                                                                                     2020                                                                                           be adhered to, as businesses have gained

CHENNAI
                                                                                                                                                                                                                                                                                                    confidence in the second half of 2020. The
                                                                                                                                                                                                                                                                                                    momentum in economic activity, and
                                                                                                                                                                                                                                                                                                    consequently in office space leasing, is
                                                                                                                                                                                                                                                                                                    expected to continue in 2021 as well.

                                                                                                                                                                                                                                                                                                    SECTORS

OFFICE                                                                                                                                                                                                Source Savills India Research
                                                                                                                                                                                                                                                                     6.0
                                                                                                                                                                                                                                                                     2019
                                                                                                                                                                                                                                                                                                    In near to medium term, sectors such
                                                                                                                                                                                                                                                                                                    as IT, financial services, engineering and
                                                                                                                                                                                                                                                                                                    manufacturing are expected to constitute
                                                                                                                                                                                                                                                                                                    bulk of office space demand in the city.

MARKET
                                                                                                                                                                                                                                                                                                    Office space demand from warehousing ,
                                                                                                                                                                                                                                                                                                    logistics and ecommerce players is
                                                                                                                                                                                                     Average rents (INR/sq.ft./month)
                                                                                                                                                                                                                                                                                                    expected to increase in future as well.
                                                                                                                                                                                                                                                                                                    Coworking segment is likely to brush aside a
                                                                                                                                                                                                     100                                                                                            disappointing year and move ahead with

UPDATE
                                                                                                                                                                                                                                                                                                    new models and offerings in 2021.
                                                                                                                                                                                                     80
                                                                                                                                                                                                                                                                                                    RENT
                                                                                                                                                                                                     60
                                                                                                                                                                                                                                                                                                    Rents in 2021 are likely to match or
                                                                                                                                                                                                     40                                                                                             inch past the pre-COVID levels. Along with
                                                                                                                                                                                                                                                                                                    stability in rentals, terminations and space
                                                                                                                                                                                                     20                                                                                             surrenders are likely to be significantly less
                                                                                                                                                      CHENNAI’S KEY                                                                                                                                 in 2021, resulting in slight improvement in
                                                                                                                                                      HIGHLIGHTS                                      -                                                                                             overall occupancy levels in the city.

                                                                                                                                                                                                                                             CBD
                                                                                                                                                                                                             Ambattur

                                                                                                                                                                                                                                  Pre-toll

                                                                                                                                                                                                                                                               GST

                                                                                                                                                                                                                                                                     OMR post-toll

                                                                                                                                                                                                                                                                                     SBD Others
                                                                                                                                                                                                                         Guindy

                                                                                                                                                                                                                                                         PTR
                                                                                                                                                                                                                                                   MPR
                                                                                                                                                      Strong resilience through the turmoil:                                                                                                        SUPPLY
                                                                                                                                                      Although the city witnessed a 29% YoY
                                                                                                                                                      decline in absorption, Chennai witnessed                                                                                                      2021 is expected to witness
                                                                                                                                                      the least decline amongst top 6 office                                                                                                        approximately 5.6 mn sq.ft. of new
                                                                                                                                                      markets of India. Space absorption was                                                                                                        completions, which translates to 54% higher
                                                     LEASING AND                                       country. Flexible spaces had a share of 5%
                                                                                                                                                      relatively better during the pandemic in                                                                                                      supply as compared to 2020. Most of this
                                                                                                       in the overall absorption in the city.                                                                              2018                 2019           2020
                                                     COMPLETIONS                                                                                      Chennai, as lockdowns and supply chain
                                                                                                                                                                                                                        2018                   2019            2020                                 upcoming supply is concentrated in Guindy
                                                                                                                                                                                                                                                                                                    and MPR.
                                                     Absorption: Chennai witnessed 4.3 mn              Supply: The city saw new completions to        bottlenecks had comparatively caused            Source Savills India Research

                                                     sq.ft. of leasing activity in 2020. In addition   the tune of 3.6 mn sq.ft. with close to 52%    lesser impact on the commercial real estate
                                                     to fresh leasing activity, pre-commitment         of additional supply on the OMR pre-toll       market of the city. Chennai along with          MAJOR TRANSACTIONS IN 2020
                                                     levels remained buoyant. Organisations            stretch. MPR also witnessed significant        Bengaluru, witnessed sub 30% drop in
                                                     across sectors have already pledged 1.1 mn        incremental supply.                            transaction volumes as compared to 2019,
                                                                                                                                                                                                                                                                                                                                  Transacted area
                                                     sq.ft. of space in advance, which is second                                                      while other major cities reported a drop of         Tenant                                     Micromarket                                  Building
                                                                                                       Vacancy rate                                                                                                                                                                                                                       (sq.ft.)*
Grade – A office stock & vacancy                     only to Bengaluru in terms of volume.                                                            almost 40-60%.
                                                                                                       Although the city recorded significantly                                                           Amazon                                     Pre-toll OMR                                 Brigade WTC                             840,000

71.2                            74.8
                                                     As far as micromarket specific demand is          higher transactions as compared to supply      Also, in terms of new completions, Chennai
                                                     concerned, Old Mahabalipuram Road                 infusions, especially in the second half of    was the only market among top 6 cities* in
                                                     (OMR) pre-toll, Pallavaram–Thoraipakkam                                                                                                              Cognizant                                  MPR                                          DLF Cybercity                           472,000
                                                                                                       the year, the overall vacancy of the city      India to register a growth in supply in 2020

12.4%                           13.0%                Road (PTR) and Mount Poonamallee Road
                                                     (MPR) continued to drive the demand of
                                                     office space and contributed to
                                                                                                       increased marginally and stood at 13% at
                                                                                                       the end of the year. The increase in vacancy
                                                                                                       can be attributed to lease terminations and
                                                                                                                                                      as compared to 2019. In continuation of the
                                                                                                                                                      intra-city trend of 2019, developers and
                                                                                                                                                      occupiers preferred micromarkets like
                                                                                                                                                                                                          BNY Mellon                                 PTR                                          Embassy Splendid                        375,000

2019                            2020                 approximately 74% of the total leasing            forfeiting of office space by occupiers. The   OMR pre-toll, Guindy, MPR and PTR.                  CAT                                        Pre-toll OMR                                 Brigade WTC                             350,000
                                                     activity in the city.                             ongoing pandemic forced many an
                                                                                                       occupier to reconsider and re-evaluate         Demand driven by large deal sizes: Large            Walmart Labs                               Pre-toll OMR                                 RMZ Millenia-1C                         254,000
                                                     Sector split: As expected, space take up in

80.5                                                                                                   their real estate requirements.                size deals of more than 100,000 sq.ft.
                                                     the city was driven by companies from IT
                                                                                                                                                      dominated the leasing activity,
                                                     and allied industries. The segment
                                   Stock                                                               Rents                                          contributing to over 60% of the total office
                                                                                                                                                                                                       CHENNAI MICROMARKETS
                                                     generated around 56% of the demand.                                                                                                               CBD - Anna Salai, Nungambakkam, R K Salai, Egmore, T Nagar, Greames Road
                                   in mn sq.ft.
14.0%                                                                                                  The overall city-wide rentals witnessed        space demand in the city. Interestingly,
                                                     Engineering, manufacturing and financial                                                                                                          PTR – PBD - Pallavaram Link Road
                                                                                                       approximately 3% YoY decline. While            while micromarkets such as OMR pre-toll
                                                     services were other significant sectors                                                                                                           SBD - Guindy & MPR- Guindy Estate, Little Mount, Ekatuthangal, Mount Poonamallee Road, Manapakkam
                                   Vacancy           which shaped the overall demand in the            rentals across the Central and Secondary       and PTR primarily consisted of large sized
                                                                                                                                                                                                       SBD - pre-toll OMR- Tharamani, Perungudi, MGR Salai
2021F                                                city. The top three sectors together              Business Districts remained steady, other      transactions, smaller transactions of less
                                                                                                                                                                                                       PBD - post-toll OMR- Thoraipakkam, Shollinganallur, Navalur, Siruseri
                                                                                                       prominent micromarkets like Ambattur,          than 50,000 sq.ft. were quite significant in
                                                     constituted around 85% of total leasing                                                                                                           Ambattur – PBD- Ambattur
                                                                                                       Guindy, OMR, PTR and MPR witnessed a           the Central Business District (CBD),
                                                     activity in 2020. Demand arising from the                                                                                                         SBD Others - Velachery, Arcot Road, Arumbakkam, Anna Nagar
Source Savills India Research
                                                                                                       range bound decline of 2-7%.                   Guindy and MPR.
                                                     coworking segment has taken a hit in 2020,                                                                                                        GST Road – PBD- Perungalathur, Maraimalai Nagar
                                                     expectedly, like the trend across the                                                            * Bengaluru, Chennai, Delhi-NCR, Hyderabad,     *Approximate and indicative areas only
                                                                                                                                                      Mumbai & Pune

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Chennai Market Watch Office - Savills
Chennai Market Watch - Office – Year-end 2020                                                                                                        Chennai Market Watch - Office – Year-end 2020

                                              ANNEXURE
  The COVID-19 pandemic stifled both
  the demand and supply side of                                                                                                                                                                                             INR 18,000 Cr. additional outlay for PMAY (U) – An
  various sectors of the economy                                                                                                                                                                                            additional outlay of INR 18,000 Cr was announced for
  including real estate for majority of
                                              KEY STIMULUS
                                                                                                                                                                                                                            the urban housing scheme in November 2020, to help
  the first half of 2020. A sudden                                                                                                                                                                                          complete real estate projects that would eventually
                                                                                                                                                                                                                            create jobs and boost the economy. The additional
  nationwide lockdown brought the                                                                                                                                                                                           outlay was over and above the INR 8,000 Cr spent
  production machinery to almost a
  sudden and abrupt standstill. Despite       PACKAGES TIMELINE                                                                                                                                                             earlier in the year. The allocation was expected to
                                                                                                                                                                                                                            benefit grounding and completion of 12 lakh and 18
                                                                                                                                                                                                                            lakh houses respectively.
  the initial bruises to the economy, the
  government put up a brave fight to
  reduce the overall economic fallout of
                                              2020                                                                                                                                                                          Income tax relief measure for developers and home
                                                                                                                                                                                                                            buyers for houses up to INR 2 Cr. – As part of ANB
                                                                                                                                                                                                                            3.0 stimulus measures to push economic growth,
  the pandemic. Various stimulus                                                                                                                                                                                            first-time buyers of houses costing up to INR 2 Cr.
  packages and reform measures were                                                                                                                                                                                         were entitled to get income tax relief of up to 20% till
  announced by the government from                                                                                                                                                                                          June 2021. The move was expected to incentivize
  time to time in 2020. The Reserve                                                                                                                                                                                         people to buy homes and bring down the excess
                                                                                                                                                                                                                            inventory in the residential segment. The maximum
  Bank also played a significant part,                                                                                                                                                                                      difference allowed between circle rate and agreement
                                                                   Special Refinancing facilities of INR 50,000 Cr. of NHB, SIDBI &
  orchestrating a downward revision in                             NABARD - (Including INR 10,000 Cr. to NHB) –In April 2020, the                    Karnataka’s new industrial policy of INR 5 Lakh Cr. - The              value for primary sale of residential units of up to
  lending rates and injection of liquidity                         Reserve Bank of India announced a special refinance facility for a                new state industrial policy aims to facilitate greater invest-         INR 2 crore was increased from 10% to 20% as well.
  into the system.                                                 total amount of INR 50,000 Cr to National Bank for Agriculture and                ments in advanced manufacturing, research and develop-                 INR 6,000 Cr. infusion in the NIIF debt platform –
                                                                   Rural Development (NABARD), Small Industries Development Bank                     ment (R&D), and innovation. The main objective of the policy           The government in November 2020 also approved
                                                                   of India (SIDBI) and National Housing Bank (NHB) to help them                     is to attract INR 5 lakh Cr. of investment in the state and to         equity infusion of INR 6,000 Cr. in a debt platform
                                                                                                                                                     create at least 2 million employment opportunities. The new
 Pain points                                                       meet financing needs of housing finance companies, regional rural
                                                                                                                                                     industrial policy intends to promote the development of
                                                                                                                                                                                                                            sponsored by National Investment and Infrastructure
                                                                   banks, cooperative banks and microfinance companies, which had                                                                                           Fund (NIIF). The debt platform was announced as an
                                                                   been hit hard due to the stringent nationwide lockdown. The overall               tier-2 and tier-3 cities in Karnataka, increase merchandise            extension of the ANB 3.0 package and aims at
     • Decline in consumption                                      allocation of INR 50,000 Cr. included a special carve out of INR                  exports in the next five years, and maintain a yearly industrial       funding infrastructure projects under the National
     • Loss of employment                                          10,000 Cr. for the housing segment.                                               growth rate of 10%.                                                    Infrastructure Pipeline of INR 1.10 lakh Cr.
     • Stress on supply chain
                                                                                      Apr 2020                                                                       Jul 2020                                                                  Nov 2020
     • Steep fall in government revenue

 Calibrated counter-measures

     • Atma Nirbahar Bharat Packages
       - 15% of overall GDP
     • Reserve Bank of India- 115 bps
       rate cuts throughout 2020 with
       an accommodative stance

                                                                                  February – 2020                                                                    May 2020                                                                   Aug 2020
                                                      INR 13,750 Cr. for Smart City & AMRUT – Smart city                          INR 3 Lakh Cr. collateral free automatic loans for MSME – The government                  Affordable Rental Housing Complexes (ARHCs)
                                                      mission is a mission to develop smart cities across the                     announced a slew of liquidity measures, which included collateral-free automatic          operational guidelines - Taking cognizance of
                                                      country, making them citizen friendly and sustainable.                      loan worth INR 3 lakh Cr. The scope of the credit guarantee scheme was also               various bottlenecks and realising that the full
                                                      While 100 cities have been identified in the Smart City                     widened by doubling the upper ceiling of outstanding loans from INR 25 Cr. to INR         potential of rental housing in the country is yet to be
                                                      programme, the Atal Mission for Rejuvenation and                            50 Cr. and including certain individual loans given to professionals like doctors,        tapped, the government in August 2020 came up
                                                      Urban Transformation (AMRUT) scheme is targeted at                          lawyers and chartered accountants for business purposes under its ambit.                  with specific guidelines under the ARHC scheme.
                                                      upgrading urban infrastructure across 500 towns and                                                                                                                   Under the scheme, existing vacant government-fund-
                                                                                                                                  INR 45,000 Cr. Partial Credit Guarantee Scheme 2.0 for NBFC – The government
                                                      cities. The government in its budgetary presentation of                                                                                                               ed housing complexes across major cities will be
                                                                                                                                  extended the scope of the Partial Credit Guarantee Scheme (PCGS) to provide
                                                      2020 had allocated INR 13,750 Cr. for the Smart Cities                                                                                                                converted into ARHCs and offered to concessionaires
                                                                                                                                  greater flexibility to state-owned banks in purchasing bonds and commercial papers
                                                      Mission and AMRUT, which was around 40% more than                                                                                                                     for 25 years to rent out the units to urban poor and
                                                                                                                                  of Non-Banking Financial Companies (NBFCs). As a part of the Atma Nirbhar Bharat
                                                      the amount set aside in 2019. The increased allocation                                                                                                                migrant workers. The government will incentivise
                                                                                                                                  (ANB) initiative, the scheme now covered primary market issuances with lower
                                                      was in a way a soft signal showcasing the govern-                                                                                                                     private and public entities to develop such housing
                                                                                                                                  credit ratings as well. The centre provided 20% first loss sovereign guarantee to
                                                      ment’s commitment towards expedition of real estate                                                                                                                   complexes on their own available vacant land also.
                                                                                                                                  public sector banks for purchase of these lower rated instruments, resulting in
                                                      and infrastructure development in the urban areas of                                                                                                                  Incentives include viability gap funding, technology
                                                                                                                                  liquidity infusion of INR 45,000 Cr. into the system.
                                                      the country.                                                                                                                                                          innovation grant, additional floor space, lending at
                                                                                                                                  INR 70,000 Cr. boost to housing sector and middle - income group through                  concessional rates and tax reliefs.
                                                      INR 27,000 Cr. for PMAY – The Pradhan Mantri Awas
                                                                                                                                  extension of CLSS – For the middle-income class (INR 6 – 18 lakh income per year) a
                                                      Yojana (PMAY) is a flagship initiative of the Govern-                                                                                                                 Stamp duty reduction in Maharashtra & Karnataka
                                                                                                                                  credit linked subsidy scheme (CLSS) was introduced by the Government of India in
                                                      ment of India which aims at providing affordable                                                                                                                      –To revive housing sales and address the demand
                                                                                                                                  May 2017. It was subsequently extended up to 31st March 2020. In the second
                                                      housing to economically challenged sections of the                                                                                                                    side, various state governments slashed stamp duties
                                                                                                                                  tranche of economic package under the ANB programme, the CLSS for affordable
                                                      society. The programme aims to meet a steep but                                                                                                                       across housing segments. Maharashtra was one of
                                                                                                                                  housing was extended again till March 2021 with a liquidity boost of INR 70,000 Cr.
                                                      noble target of “Housing for All” by 2022. In 2020, the                                                                                                               the first states to do so, reducing stamp duty from
                                                                                                                                  Around 2.5 lakh middle income families were expected to benefit from the extension
                                                      PMAY received grants of INR 27,500 Cr. as against INR                                                                                                                 5% to 2% from September- December 2020 and 3%
                                                                                                                                  of the scheme.
                                                      25,328 Cr. in 2019, an 8.5 % YoY increase.                                                                                                                            from Jan- March 2021. Later, Karnataka also followed
                                                                                                                                  INR 30,000 Cr. liquidity facility for NBFC/HFCs/MFIs – The Union Cabinet in May           suit, lowering the rates by 2-3% depending upon the
                                                      INR 50,040 Cr. for Ministry of Housing & Urban
                                                                                                                                  2020 also gave its nod to launch a special liquidity scheme worth INR 30,000 Cr. for      housing segment.
                                                      Affairs – The ministry was allocated INR 50,040 Cr., a
                                                                                                                                  stressed non-banking financial companies and housing finance companies, whose
                                                      18.4 % increase from the earlier allocation.
                                                                                                                                  financials had deteriorated further due to COVID-19 crisis.

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