Real-estate Impact (growth 📈 in chennai real estate)

Tamil Nadu, contributing a substantial 8.8% to India’s GDP, stands as a powerhouse in the nation’s economic landscape, with a Gross State Domestic Product (GSDP) of $314 billion in 2023 positioning itself as India’s second-largest State economy. Looking ahead to India’s centenary of independence in 2047, projections suggest that Tamil Nadu’s GSDP could soar to $2.5 trillion, underscoring the State’s pivotal role in driving national economic growth.

The residential market of Chennai, the vibrant capital of Tamil Nadu, saw a 5% YoY increase in sales, reaching 14,920 units in 2023. In the first half of 2024, residential real estate experienced a notable 12% YoY growth, driven by the IT and manufacturing sectors. The mid-segment market, priced at ₹5-10 million, led sales, while high-value homes saw a 48% surge in demand, reflecting growing affluence. In the commercial sector, Chennai achieved a record high in office leasing activities in 2023, with transaction volumes soaring by 92%YoY. This was driven by strong demand from multinational corporations. Despite a slight dip in absorption during H1 2024, the market showed resilience, with a decrease in office vacancy to 9.3% and a 9% increase in rents. The Tamil Nadu R&D Policy 2022 has also spurred significant GCC investments, enhancing the State’s appeal with its skilled workforce and supportive incentives.

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The construction sector, encompassing real estate and infrastructure development, is set to be a cornerstone of Tamil Nadu’s economic expansion. In the fiscal year 2022-23, the State’s construction sector reached a volume of $32 billion, contributing 11% to the overall economy. With the current growth momentum, this sector is expected to expand to $176 billion by the fiscal year 2047-48. Already the most urbanised State in India, with 48% of its population living in urban areas, Tamil Nadu is projected to see this figure rise to 68% by 2047, translating to an estimated 35 million urban households. This rapid urbanisation will drive substantial demand for housing across income segments, particularly in the lower-income bracket. Between the fiscal years 2024-25 and 2047-48, Tamil Nadu is expected to require an additional 20 million urban residences, necessitating thoughtful urban planning that prioritises sustainable growth.

Demand

The surge in economic activities will also ignite demand for office spaces. Tamil Nadu, boasting the highest number of operational Special Economic Zones (SEZs) in India, stands out as an appealing destination for IT/ITeS, manufacturing, and Global Capability Centres. With formal employment, as indicated by 1.4 million EPFO registrations in the fiscal year 2022-23, anticipated to rise to 19 million by 2047, the State is set to see demand for 1.2 billion sq.ft. of office space by the fiscal year 2047-48. Similarly, the manufacturing sector, which currently contributes 19% to the State’s economy, is expected to generate an additional output of $318 billion by FY 2047-48. This growth will necessitate a significant expansion of industrial land, from the current 19,520 hectares to an estimated 225,728 hectares by 2047.

Tamil Nadu’s bold economic aspirations are deeply intertwined with the development of a robust and expansive infrastructure. The State’s well-established road networks, ports, and airports already provide a solid foundation for connectivity, and the ongoing infrastructure projects are poised to further energise growth. Real estate, spanning residential, commercial, and industrial sectors, will be at the heart of Tamil Nadu’s journey towards achieving a $2.5 trillion economy by 2047.