While buying a good property ensures safe future for you, renting at the other side brings regular cash inflows to your corpus.

Fantastic gains can be reaped if you prudently choose to invest in projects which have potential to generate high returns from the mode of property leasing. This involves taking a leap higher from investment in a property which offers appreciation in the capital.

The concept of rent that is planned monthly returns on real estate investment is working across all channels, be it residential, commercial office space or commercial retail space. It also helps building assets and increased capital appreciation plus assured returns.

Commercial retail space has the highest rental projections compared to other channels. Leasing retail space in shopping malls is widely accepted in the international scene. It makes for a better tenant mix.

There is common interest for both the developer and the retailer. The retailers need to make money during the full duration of the lease. Leasing is here to stay and with the inflow of real estate funds.

However, there are chances that the mall rentals will fall due to their rapid proliferation, leading to a correction of high rentals and high property prices in the process. A prime example of this phenomenon is Gurgaon, where rentals have fallen visibly for quality retailers.

However, the key tendency among the investors is to rent a commercial space instead of buying. It makes for low risk and less worry on maintenance

The scenario in different cities can give a better idea of the reasons to stay on rent.

Mumbai

The economics of buy vs. rent suit those opting for rental apartments. Sometimes the stretched budgets are not enough to buy property. A good location is a factor that carries as lot of weight when settling for a rented house.

There are many instances of people who have been scouting for property but finally settled for a rented place as they did not want to compromise on their preferred locale. Also, it works in a situation of Easy Monthly Installments (EMIs) being higher than the rent.

The cost of flats in real estate dominated markets certain areas such as Bandra, Mulund and Central Mumbai has gone up by over 40%. But for quite some time, the downhill trend in rental yields in some areas has been very sharp, diving from a 12% to an average 4.5%.

The amendment in the Rent Control Act which states that government employees, semi-government, multinational companies, consulates and companies with paid-up capital of more than Rs. 1 crore cannot seek protection under the Act. This, helped by the increase in property prices has enhanced high-end property rentals.

There is a more confident breed of owners now that are comfortable leasing out their flats to big corporates.

Delhi

The real estate brokers have been negotiating lease rental deals. The cases of buying are few and far between and happen among people who stand to gain from the price rise.

In residential area and suburbs like Noida and Gurgaon, a flat fetches double and triple the rate at which they were bought. The high price tag as well as the inflated 'cash element' that is part of the resale are major put offs. The cost of an average two-bedroom apartment in Gurgaon had tripled a couple of years back.

In such times, for the middle-class buyer, settling for rented homes is a wise decision. The interest rates and EMI on home loans are hardly encouraging buying. Rentals provide a great succor as they have risen only marginally by 20-25%.

Kolkata

The scrambling for rented homes in Kolkata is driven by the influx of IT and other professionals. Industries are paying handsome packages and there is a healthy demand for rented flats.

The segment of high-end rentals is on a roll as high-value rentals in the residential sector have really taken off in the past year. Salt Lake due to its proximity to the IT hub is an important location for middle-rung executives in call centres and BPO firms. In the satellite township, rents have been revised upwards by 45-50% in the past 12 months alone.

Executives posted in the city are opting for apartments at posh colonies. Since they have plans for taking up a job elsewhere in a couple of years, they would rather pay rent than make a purchase.

NRIs have been buying into complexes and condominiums, which now are up for rent. The going rate for a fully furnished apartment at City Centre is a whopping Rs 70,000-80,000.

Bangalore

Bangalore residents show more interest in purchasing a residential property while at the same time they also find renting commercial space and houses for corporate guesthouses as a viable option.

As capital values and interest rates rise further, real estate experts expect renting to find favor with them. Many people choose to stay in rented houses.

In many cases you can rent a property for a short term and then increase or extend the period later. This will give you the opportunity to evaluate the property and the area and assess it's suitability before committing to a longer rental contract. Property owners/agents are often prepared to negotiate on the rental term.

As a licensee (tenant) you are not liable to pay out any society outgoings. The Society Outgoings in most of the buildings today varies between Rs.2 to Rs.4 per sq. ft, and in select buildings which have modern amenities like club house and swimming pools etc it would depend on how the society is managed.

This is an important saving on the part of the Licensee (tenant). He can also get a semi- furnished or furnished home.

Summary

Nevertheless, you are entitled for tax break in both the conditions of residential buying or renting. For a salaried employee who takes an apartment on a personal lease, he/she is entitled for a complete tax deduction towards House Rent Allowance (HRA).

It has found favor with executives from Banks and Corporates as it is tax efficient for both parties. The mode of payment is also hassle-free. Property owners accept payment of deposit and monthly rent by way of post dated checks.

Payment made by individual licensees to property owners (licensors) is not subject to Tax Deduction at Source and this spares them an upfront deduction of nearly 16.83%.

The reasons for going in for rented property may well depend on individual circumstances. It can range from short term accommodation plans of staying in a particular area, limited financial means, preference for other types of investment, hassle-free home move. However there is an upside of staying on rent.

The returns of your property in an average and upcoming location is around 4 to 6% and in prime locations with high end apartments would be more depending on a lot of factors.

A person who has to pay an interest rate at 9.5% to 10% per annum for a new home loan as well, the rent vs. buy equation favors renting a property rather than buying one.