MNCs Prefer Leasing While Domestic Cos Buy Properties

New Delhi, October 20: | Updated: Oct 21 2002, 05:30am hrs
Multinational companies, including ING Vysya, Mobil Exxon, Max New York Life and Citibank, increasingly prefer to acquire properties on lease rather than outright purchase due to the fluid global and domestic environments.

Stating that over 93 per cent property transactions by MNCs in Mumbai during the past six months are on lease basis, property consultancy firm Knight Franks chairman Pranay Vakil says, MNCs are preferring property transactions on lease as it gives them easy exit option, flexibility to change the office location and immunity from the fluctuating property price. As opposed to that, big Indian corporates like Infosys, Birlas and Tatas are buying office properties.

According to an international survey of Knight Frank, over 20 MNCs have leased over 8.5 lakh square feet of office space in Mumbai and Delhi (including Gurgaon) in the last six months. The lease transactions included Accenture and HTA occupying 60,000 square feet and 50,000 square feet of space respectively in Mumbai. In Gurgaon over 2 lakh square feet space is taken by Convergys in DLF ATRIA on lease basis.

Most of our MNC clients are preferring leased property at the entry level. Their worst fear is the change in policies which may force them to shut their facilities or offices, Mr Vakil said.

Stating that preference to lease over the actual purchase is a trend for the last three years, consultancy firm India Property Research head T Chakrabarti said. This trend is quite prominent after events like 9/11, terrorist attack on Parliament, Afghanistan crisis and border tension. Leasing is gaining ground as a preferred option. MNCs are also consolidating their operations to minimise risks on account of fluid global and domestic scenario, he added.

Commercial property prices are likely to to remain sluggish over the next year.