SHOULD YOU INVEST IN CHENNAI REAL ESTATE?

As India celebrates 78 years of independence, Chennai’s real estate market is scripting its own transformation story—one shaped by policy reform, infrastructure ambition, and a demographic shift led by tech professionals and global capability centres (GCCs). A new skyline is emerging in Chennai—one shaped by policy shifts, infrastructure upgrades, and the rising influence of tech-driven professionals. The city’s real estate market is entering a defining phase. According to Gnanasehar Devadason, President, NAREDCO Tamil Nadu, “Tamil Nadu continues to be one of the most progressive real estate markets in the country, with Chennai, Coimbatore, and emerging corridors showing strong potential for both residential and commercial development.”

CHENNAI QUICK FACTS 2025

Chennai Office market – Chennai recorded a gross lease volume of 1.97 MSF in Q1, driven by fresh space take-up accounting for 74% of the GLV. The submarkets of Suburban South and Peripheral South-west together accounted for 72% of this total. With muted supply and healthy absorption, the overall Grade A vacancy rate declined by 90bps to 15.91%. Chennai’s GCC Growth - GCCs contributed 47% to the total office leasing volume in Q1, with a 23% y-o-y growth. Demand was largely driven by multinational companies across the IT-BPM and Engineering & Manufacturing sectors. Chennai’s Residential Market - The city witnessed the launch of ~6,200 residential units during the quarter, with a 53% increase on a quarterly basis. Suburban South I and II submarkets together contributed 67% of the total unit launches. High-end and luxury segments accounted for ~30% of the launches - more than double the unit launches recorded in the previous quarter. Chennai’s Retail Market - Mainstreet retail leasing reached 0.16 MSF in Q1, a 31% y-o-y increase. Fashion segment was a key driver, contributing 37% of leasing - nearly four times higher than Q1-24 levels. Meanwhile, mall vacancy declined marginally by 14 bps q-o-q to 14.13%. Chennai’s Logistics Sector - City witnessed healthy demand for industrial and warehousing spaces, mainly from the logistics and manufacturing sectors, with activity largely concentrated in the northern and western industrial corridors.

THE THIRD MASTER PLAN

Third Master Plan is on the horizon and developers are recalibrating their strategies, as the city is poised for vertical growth, inclusive housing, and smarter urban planning. The Chennai Metropolitan Development Authority (CMDA), third Master Plan for the 1,189 sq. km metropolitan area, aims to reshape the city’s skyline through higher FSI, mixed-use zoning, and compact urban nodes. The plan proposes increased FSI along metro corridors, commercial belts, and slum redevelopment zones. It also introduces transit-oriented development (TOD) principles to reduce commute times and encourage walkable neighbourhoods. However, developers are cautiously optimistic. While they welcome the increased FSI and zoning flexibility, many are seeking clarity on implementation timelines, approval processes, and infrastructure readiness.

Julian Francis, Senior Vice President at RMZ Offices (Chennai) & RMZ NXT, believes the plan represents a forward-looking strategy to manage urban growth, prioritize sustainability, and enhance the city’s economic and environmental resilience for the next two decades. The plan’s focus on increasing FSI in strategic corridors, enabling mixed-use zoning, and upgrading civic infrastructure is both timely and necessary, recognising that Chennai’s growth must be vertical, connected, and inclusive. “For developers, this is an opportunity to create differentiated urban assets that combine design excellence, sustainability, and liveability. Chennai is at an inflection point, and with the right execution, the Third Master Plan can position it as a model for future-ready urban India.the plan is a pivotal opportunity”

GCC AND IT CORRIDORS: THE NEW DEMAND DRIVERS

Chennai’s IT corridor—especially OMR and ECR—is powering residential demand. The city already hosts over 250 GCCs, projected to reach 450 by 2030. According to CBRE, GCCs are expected to lease 3.2 million sq ft in 2025, with total office stock crossing 100 million sq ft by 2026. Asalm P. Mohamed, Secretary, CREDAI Chennai, believes the city is on the right track: “Inclusive urban development and infrastructure investments are making homeownership more attainable.” Julian Francis adds, “The robust growth of Global Capability Centers (GCCs) and the expanding IT corridors are undeniably shaping Chennai’s urban landscape and driving a significant demand for modern, integrated living and working spaces. These professionals, often young, globally exposed, and digitally native, seek more than just an apartment or an office; they desire a holistic ecosystem that supports their dynamic lifestyles.”

INFRASTRUCTURE GAPS

While the Third Master Plan promotes vertical growth, developers say infrastructure lags behind ambition. Chennai’s civic systems—water supply, sewage, stormwater drains, and road capacity—are under pressure, especially in high-density zones like Velachery, Pallikaranai, and Perungudi. Ajith Chordia, MD, Olympia Group, emphasized the need for synchronized planning: “You can’t build 40-storey towers without upgrading underground systems. We need better coordination between CMDA, metro rail, and civic bodies.” The Chennai Metro Phase II, Peripheral Ring Road, and Smart City upgrades are underway, but civic foresight must match the pace of construction. Residents cite frequent flooding, traffic congestion, and inconsistent power supply as signs that infrastructure must evolve before density increases. Experts also point to the importance of carrying capacity studies and phased infrastructure rollouts. Without these, vertical growth could lead to urban stress rather than urban renewal.

STAMP DUTY REFORMS: CLARITY OR COMPLEXITY?

In June 2025, Tamil Nadu amended its stamp duty framework to introduce “composite value” for apartments— factoring in built-up area and undivided land share. The valuation committee can now revise guideline values anytime during the year, making the system more dynamic and market-aligned. While the reform brings transparency, developers warn that frequent guideline value revisions could impact buyer sentiment. The total transaction cost now includes 7% stamp duty and 4% registration charges, making budgeting critical for homebuyers.

BUYERS SENTIMENT: OPTIMISM WITH CAUTION

CREDAI Chennai’s Q1 2025 report shows 8,042 residential registrations—an 11% YoY increase. Ready-to-occupy homes and near-completion projects are preferred, reflecting a more discerning buyer base. According to Julian Francis, the affordable housing gap presents both challenge and opportunity for real estate developers. “Private developers can bridge this by combining innovative, space-optimised design with modular, tech-enabled construction to lower costs, and by partnering with housing finance institutions to extend flexible credit to middle-income buyers. Embedding affordable units within mixed-use, transit-connected developments enhances liveability while keeping prices within reach.” Policy support like revised income tax slabs, repo rate cuts, and GST rationalization have buoyed sentiment, especially among first-time buyers. NRIs are also showing renewed interest, driven by Chennai’s stability, education hubs, and healthcare infrastructure. A. Mohamed Ali, President, CREDAI Chennai, summed up the mood: “Buyers want quality, timely delivery, and regulatory compliance.” However, developers are adopting a calibrated launch strategy to avoid oversupply. The focus is on mid-income housing, gated communities, and projects aligned with metro connectivity.

WHY INVEST IN CHENNAI

Investing in Chennai real estate is a great option as it is developing at a fast pace. Some of the localities in Chennai offer excellent geographical advantages, easy accessibility and developed infrastructure and connectivity. The city offers good returns on investments in commercial, residential real estate, though limited by choice of type of property. Another limitation is that the older suburban area may not be able to yield the investors much in terms of return on their high investment value.

Potential Property Investment Hubs

Perungalathur: Emerging as a prime residential area for its strategic connectivity and relatively affordable prices.
Perumbakkam: Being recognized as an attractive locale for new residential projects for its proximity to IT corridors and ongoing urban development projects.
Siruseri: A balanced choice for both commercial and residential investments due to the presence of numerous IT parks, educational institutions & improved transportation links.
Thoraipakkam: Seeing growth in both residential and commercial properties, appealing to a broad spectrum of investors.