BFSI dominate GCC oriented transactions in Chennai 2023: Knight Frank India

March 26, 2024

The burgeoning trend of Global Capacity Centres (GCC) focused transactions in Chennai’s commercial real estate market has taken centre stage. Chennai has recorded a remarkable surge in GCC-oriented office transactions during 2023, totalling 6.02 million sq ft across 71 deals, said a study by Knight Frank India, an independent, global property consultancy.

This represents a substantial 176 per cent year-on-year (YoY) increase, signifying the city’s growing prominence as a preferred destination for GCC operations. Of all the GCC deals observed across eight major commercial markets in India during 2023, Chennai accounted for a significant 29 per cent, further solidifying its position in the GCC landscape. This momentum marks a significant leap from the 57 deals recorded in 2022, totalling 2.18 mn sq ft, according to the study.

The report highlights the BFSI (Banking, Financial Services, and Insurance) segment as the frontrunner in GCC-oriented office space transactions. Despite only six deals throughout the year, the BFSI sector contributed over 30 per cent of GCC transactions in Chennai, leasing a substantial 1.89 million square feet in 2023. Following closely, the manufacturing sector emerged as the second-largest occupier of GCC business-oriented office space in Chennai’s commercial market, with transactions totalling 1.78 mn sq ft in 2023. Additionally, Other Service Sectors recorded 26 GCC-oriented deals, representing the highest number of transactions during the same period.

These findings underscore Chennai’s growing appeal as a hub for GCC operations, with diverse sectors actively participating in the city’s dynamic commercial real estate landscape, the study said.

In Q423, Chennai experienced a significant surge in office transaction volume, with a total of 3.3 mn sq ft from 29 deals. This surge was particularly noteworthy, as more than half of the GCC business-oriented transactions for the entire year were recorded during this quarter. The spike in numbers can be attributed to the substantial leasing activities by three major occupiers. These transactions have accounted for a remarkable 55 per cent of the overall GCC-oriented transactions during Q4 2023, totalling an area of 1.83 mn sq ft.

“GCCs dominated as an end user occupier profile accounting for more than half of the office volume transactions in Chennai during the year 2023,” said Viral Desai, Senior Executive Director, Senior Executive Director Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Retail Agency, Knight Frank India.

Tamil Nadu R&D Policy 2022 has meaningfully aided in accentuating GCC investments in the state, especially Chennai. The market saw a remarkable surge in the number of GCC deals across various industries, with IT, Manufacturing, and other service sectors creating a vibrant tapestry of transactions. Notably, BFSI emerged as the leader of the market, commanding the highest GCC transacted volumes in the city. Chennai’s relative economic strength and relatively low occupancy cost positions commercial assets of the city favourably amongst the global occupiers looking to expand operations in the APAC region, said Desai.

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