In a recent study conducted by Knight Frank India, it has been revealed that Chennai, the capital city of Tamil Nadu, is witnessing a remarkable surge in Global Capacity Centre (GCC) focused transactions in the commercial real estate market. The city has experienced a staggering 176% year-on-year increase in GCC-oriented office transactions in 2023, totaling 6.02 million square feet across 71 deals. This significant growth signifies Chennai’s growing prominence as a preferred destination for GCC operations.
Chennai Solidifies its Position in the GCC Landscape
Out of all the GCC deals observed in eight major commercial markets in India in 2023, Chennai accounted for an impressive 29% share. This further solidifies the city’s position in the GCC landscape. The number of deals recorded rose from 57 in 2022, amounting to 2.18 million square feet, to the current figure of 71 deals totaling 6.02 million square feet in 2023.
BFSI Sector Leads GCC-oriented Office Space Transactions
The study also highlights the major sectors contributing to GCC-oriented office space transactions in Chennai. The Banking, Financial Services, and Insurance (BFSI) segment emerged as the frontrunner with six deals throughout the year. Despite its relatively small number of transactions, the BFSI sector contributed over 30% of the GCC transactions in Chennai, leasing a substantial 1.89 million square feet in 2023. The manufacturing sector closely followed as the second-largest occupier of GCC business-oriented office space, with transactions totaling 1.78 million square feet. Additionally, the Other Service Sectors recorded 26 GCC-oriented deals, representing the highest number of transactions during the same period. These findings emphasize Chennai’s growing appeal as a hub for GCC operations, with various sectors actively participating in the city’s dynamic commercial real estate landscape.
Surge in Q4 2023 Transactions
The fourth quarter of 2023 witnessed a significant surge in office transaction volume in Chennai. During this period, a total of 3.3 million square feet across 29 deals were recorded. This surge is particularly noteworthy as more than half of the GCC business-oriented transactions for the entire year took place in this quarter. The spike in numbers can be attributed to the substantial leasing activities by three major occupiers, accounting for 55% of the overall GCC-oriented transactions in Q4 2023, totaling an area of 1.83 million square feet.
The Impact of the Tamil Nadu R&D Policy 2022
Mr. Viral Desai, Senior Executive Director at Knight Frank India, highlighted the importance of the Tamil Nadu R&D Policy 2022 in accentuating GCC investments in the state, especially in Chennai. He stated, “GCCs dominated as an end-user occupier profile, accounting for more than half of the office volume transactions in Chennai during the year 2023.” The policy has successfully attracted GCC deals across various industries, with IT, Manufacturing, and other service sectors creating a vibrant tapestry of transactions. The BFSI sector emerged as the leader, commanding the highest GCC transacted volumes in the city. Chennai’s relative economic strength and relatively low occupancy costs position the city’s commercial assets favorably among global occupiers looking to expand operations in the Asia-Pacific region.
In conclusion, Chennai is experiencing significant growth in GCC-focused transactions in its commercial real estate market. With a surge in office space transactions and the BFSI and manufacturing sectors leading the way, the city solidifies its position as a preferred destination for GCC operations. The impressive numbers recorded in Q4 2023 highlight Chennai’s growing appeal, further boosted by the Tamil Nadu R&D Policy 2022. As Chennai continues to attract global occupiers, its economic strength and favorable commercial assets ensure a bright future for the city in the ever-evolving GCC landscape.
