By Soniya Gaonkar on Feb 25, 2022 7:04:46 PM
Buying a commercial space in Pune or nearby regions is undoubtedly a promising investment, considering the city’s growth as a commercial hub since the recent past. This holds true, especially in the case of retail spaces, for which the city has become a massive business arena. Lately, many global and domestic retail brands have entered Pune’s business space and helped broaden the shopping options of the city’s residents.
But what confronts many business owners is whether to lease or buy a commercial property in Pune for a retail business. Let’s quickly highlight what’s involved in leasing and buying a commercial space in Pune.
Advantages and Disadvantages of Buying a Commercial Space
Buying a commercial space in Pune has its unique pros and cons. However, business owners must carefully assess this alternative, with their business objectives, financial health, long-term plans, etc., in mind.
Pros of Buying a Commercial Space for Retail Store in Pune
- You have complete control over the property and don’t have to worry about arranging the mutually decided rent or lease fee to pay every month.
- Buying a commercial space can help lower your tax liability, as the deal attracts tax deductions. If you’ve bought the property on loan and have been paying an EMI for it, you can get tax relaxation.
- If the property isn’t suitable for lease or the lease agreement terms are excessively stringent and aren’t conducive to your business, you may look at owning the property, provided the latter is feasible.
- Buying a property in a growing vicinity, where land prices are yet to pick up, can prove an advantageous decision. You can enjoy considerable real estate appreciation in the future.
Cons of Buying a Commercial Space for Retail Store in Pune
- Buying the property can consume your running capital. This is a significant consideration for smaller retail stores, the routine operations and survival of which are yet dependent on the initial investment.
- The property may become a liability, should you incur losses in your business, as you may have EMIs to pay for the property bought on loan.
- Selling a commercial property isn’t as straightforward, especially if you’ve incurred losses due to the inappropriate location of the property. As a result, the retail commercial space may become a liability.
- The capital appreciation may not be as high in some places. Further, a property and its vicinity may turn redundant earlier than expected. Your investment math may go wrong in situations like these.
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Advantages and Disadvantages of Leasing a Commercial Space
Often, smaller businesses or those in their initial phases prefer leasing a commercial space. They focus on growing the business rather than draining their capital in buying the property. Accordingly, let’s look at a few pros and cons of leasing a commercial space for a retail store in Pune.
Pros of Leasing a Commercial Space for Retail Store in Pune
- You retain your capital for growing business, paying salaries, and scaling it up in terms of vendors, brand options, infrastructure, etc.
- In many cases, crucial aspects such as maintenance remain the owner’s onus. However, you must go through the lease agreement carefully and thoroughly. Additionally, you must get it validated in the context of your business through a lawyer and a real estate consultant.
- Leasing offers you more mobility and flexibility than purchasing the property. Besides, property hikes do not remain your concern, as you’ve leased the space on a set amount for a particular period.
- Furthermore, leasing proves a better option if the property rates are declining rapidly at a particular location. Here, buying the property can force you into severe losses.
Cons of Leasing a Commercial Space for Retail Store in Pune
- Depending on the agreement, leasing commercial space may be subject to annual rent increments and higher costs at the time of the lease expiration.
- You are required to arrange the lease fee before everything else, thus making it your responsibility every month. Besides, practically, you fund someone else’s retirement by paying the monthly lease amount. Buying the property straight away, in a way, welcomes you in the property business!
Whether to Lease or Buy a Commercial Property in Pune?
The answer is highly case-specific. You cannot generalize or prescribe buying or leasing a commercial space in Pune for the retail business without assessing the situation. For instance, small businesses or starters in the retail business prefer leasing. On the other hand, the more prominent and already established businesses try to enter the real estate space by buying the property and making a long-term investment.
So, as mentioned earlier, the answer pretty much depends on your short-term business goals, long-term business objectives, the money you have on hand, your business projections, the presence of competitors (from the viewpoint of business growth), etc. You can consult Kohinoor’s experts to know which is the most suited option from your perspective and make an informed decision favorable for your business.
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Lease or Buy a Commercial Retail Space Near Pune in KWT
With Tower 3 already being sold out and Tower 2 already underway to be full-house, KWT (Kohinoor World Towers) is proving itself to be a prominent business hub in PCMC, Pune. Strategically and conveniently located between Pimpri and Chinchwad, on the old Mumbai Pune highway, KWT offers a range of multi-sized retail spaces and High Street shopping avenues to help retailers leverage the city’s growth potential to the fullest.
To know more or to consult KWT’s sales experts, as to whether to lease or buy a commercial retail space in KWT, call +91-020-6764 1818.