Buy or rent: What do you think companies in Mumbai do for office space?

Office space in Mumbai usually burns a hole in most companies’ pockets. And from the looks of the research, the property dynamics are overwhelmingly in favour of leasing over purchasing.

A recent Jones Lang LaSalle report analysing data for the past three years said more than three-quarters of businesses and companies were leasing office premises across Mumbai, rather than going in for purchases.

From 2010 onwards, over 80 percent of office space was leased, as opposed to around 20 percent that had been bought.

The report states that while some companies are turning to leasing, to avoid having money tied up in ownership, several MNCs are looking at purchasing properties, since new accounting norms have mandated that rents should be shown on balance sheets.

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The fact that the city is experiencing a relatively high vacancy rate means that tenants have the bargaining power for now. JLL also predicts that, in the future, landlords will look to establish long-term contracts “fairer rent reviews.”