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Pune, a prominent industrial and education centre in India, has experienced notable expansion in its commercial real estate sector. This growth is driven by various factors, including flourishing IT and ITES sectors, which is supported by a large and skilled talent pool, creating a substantial demand for commercial property. These factors make Pune an appealing destination for enterprises of all sizes, elevating the demand for premium office spaces.
However, businesses aiming to establish their presence in the city face a critical decision - whether to lease or purchase a commercial property. This decision requires careful consideration of each option, taking into account financial implications and long-term business strategies. With profound market insights, this blog by A Advani Realty will cover the benefits of each option, to help you make an informed decision. Keep reading!
According to BusinessToday, citing Cushman & Wakefield, the gross leasing volume (GLV) in India's commercial leasing market reached a record high in Q4 2023. The total GLV for all of 2023 reached 74.4 million sq.ft., surpassing the previous annual record by 4%. Pune alone recorded a gross leasing activity (GLA) of 1.81 million sq.ft., representing a significant 40% year-on-year increase. Hence, leasing commercial property in Pune offers several advantages. Here’s more to it:
Leasing offers businesses the flexibility to relocate or expand without the long-term commitment associated with property ownership. This flexibility is particularly advantageous for start-ups and growing companies looking to swiftly adapt to changing market conditions.
TLeasing necessitates significantly lower upfront costs than purchasing property. This financial structure allows businesses to allocate their capital to other critical areas such as operations, marketing, and employee development.
In many leasing agreements, the landlord assumes the responsibility for maintenance and repairs. This arrangement reduces the tenant’s operational burden, resulting in cost savings and fewer logistical challenges.
Leasing commercial real estate allows businesses to operate in premium locations that might be expensive to purchase. Establishing a presence by leasing premium office spaces in a prime area, can enhance a business’s visibility and accessibility to clients and customers.
While leasing offers certain advantages, the acquisition of commercial property also comes with substantial benefits. Here’s more to it.
Purchasing property constitutes a long-term investment that has the potential to appreciate over time. According to HonestBroker, recent studies show that annual rental appreciation for commercial properties in Pune ranges from 8-11%, compared to 1.5-3.5% for residential properties. This not only facilitates the accumulation of equity, but also provides a potential source of capital upon the future sale of the property.
Ownership grants businesses the autonomy to modify and customize the property to meet their specific requirements. This can be particularly critical for enterprises requiring specialized facilities or unique branding elements.
Property ownership ensures stability in monthly expenses, reducing the risk associated with fluctuating lease rates. This financial predictability is advantageous for long-term fiscal planning.
Property ownership allows businesses to generate supplementary income through leasing unused space. According to Squareyards, rental rates for commercial properties in India typically increase by 5% to 8% annually, ensuring potential growth in rental income. This additional revenue can help offset ownership costs and provide a steady income stream.
Property owners are eligible for tax benefits on depreciation and mortgage interest, which can result in considerable tax savings.
| Factor | Leasing | Buying |
|---|---|---|
| Financial Position | Suitable for businesses with limited capital as it requires less upfront investment. |
Suitable for financially stable companies seeking long-term investments. |
| Business Goals | Align with short-term business plans that allow flexibility for rapid changes. | Align with long-term business plans and provide stability. |
| Market Conditions | Preferred in a volatile market to avoid long-term commitments. | Favourable in a strong market with potential market appreciation. |
| Growth Potential | Facilitates easier scalability and adaptation to changing space requirements. | Offers stability but may limit flexibility for future growth. |
| Location Importance | Provides access to prime locations without high ownership costs. | Ensures control and permanence in a strategically important location. |
Regardless of whether you opt for leasing or purchasing a commercial property in Pune, partnering with A Advani Realty presents a strategic advantage. A Advani Realty offers both buying and leasing opportunities in prime locations across Pune, ensuring you find the perfect space to enhance your business operations. Our 'Big on Small' approach underscores the significance of incremental steps in the pursuit of substantial achievements, acknowledging that small, deliberate actions can culminate in significant outcomes over time.
By choosing A Advani Realty, you secure a partnership dedicated to your success - whether you seek the permanence of property ownership or the flexibility and reduced initial expenditure associated with leasing. Please feel free to contact us for more information or to schedule a consultation.
Choose A Advani Realty and navigate the commercial real estate market in Pune with confidence!
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