Chennai realty diverges: Homes and Offices rise, retail slumps in Q1 2026

Chennai’s real estate market showed a mixed performance in the first quarter of 2026, with office and residential segments posting healthy growth, while the retail sector lagged, witnessing a 19% year-on-year (YoY) decline, according to analysis by various real estate firms.

Knight Frank India, in its latest report, India Real Estate: Office and Residential Market (January - March 2026) Q1 2026 noted that Chennai’s office market recorded leasing activity of 1.5 mn sq. ft. in the first quarter of 2026, while new completions stood at 0.5 mn sq. ft. Office rentals also registered an 8% year-on-year increase.

Chennai recorded retail leasing of 0.14 MSF, marking a 19% YoY decline. Main streets continued to dominate demand, accounting for 89% of total leasing, while malls accounted for the remaining 11%. “On a sectoral basis, fashion accounted for the largest share of mainstreet leasing at 40%, followed by department stores and F&B, each contributing 17%. Domestic brands continued to anchor retail leasing activity,” according to Cushman & Wakefield.

Residential market

Data provided by Knight Frank India shows that Chennai’s residential market recorded 4,763 units sold in Q1 2026, compared to 4,357 units in Q1 2025, reflecting a 9% YoY growth. New launches stood at 5,112 units, compared to 4,576 units in Q1 2025, registering a 12% YoY increase.

“Chennai’s residential market exhibited a clear shift in demand across ticket sizes, with traction moving away from the affordable segment toward mid and premium housing. The sub-₹5 million segment saw a 39% decline, indicating a relative moderation in entry-level demand. Chennai also bucked the broader trend in the mid-segment, with ₹5 – ₹10 million sales rising 19% despite muted performance in most other cities, underscoring the city’s resilience in this category,” Knight Frank said.

At the higher end, demand remained robust, with the above ₹10 million segments growing steadily — particularly the ₹20 – ₹50 million bracket, which surged 52% year-on-year — pointing to rising traction in premium housing.

Saurabh Garg, Cofounder and CBO of NoBroker, said that developers are overwhelmingly betting on larger homes, with 69% of new supply in the 3BHK and above category, while 43% of buyers are actually searching for 1 and 2 BHK units creating a widening gap. “If the supply pipeline doesn’t balance the smaller and more affordable configurations, the city risks a peculiar outcome: booming launches on paper, but sluggish absorption on the ground as the units being built simply don’t match what most buyers can afford or want,” he pointed out.

NoBroker also shared some data which showed that TNUHDB (Tamil Nadu Urban Habitat Development Board) contributed about 42% of Q1 supply, including a 1,500-unit affordable scheme in Tondiarpet and a 702-unit project in Mylapore. Private supply was led by L&T Realty (802 units, Manapakkam), Ramaniyam (488 units, Nerkundram), and Brigade (284 units, Velachery).