An agreement is signed between a landlord and a prospective tenant to enter into a lease at a date in the future, contingent upon the satisfaction of certain conditions.

• Fixed monthly income or rental returns.
• Higher potential for capital value appreciation than other property types.
• Reasonable break-even periods for investments, with opportunities for profitable exits down the line.
• High-quality tenants ensure stable returns and renewals.
• Prime or fast-growing locations mean that the property will always be in demand.
• Zero risks, i.e. you start earning from the beginning.
• Higher liquidity from the outset.

• Considerably higher price and initial investment than regular commercial or residential properties.
• There could be issues where tenants do not renew their leases, leading to a gap in income before a new tenant is found.
• Accompanying maintenance, repair and renovation costs for continuing to attract quality tenants.

• Location
• Lease terms
• Rental yield
• Tenant profile
• Property valuation
• Lock-in
• Maintenance cost
• Building occupancy
• Property grade
• Security deposit

• The lower your entry prices into the segment, the higher your overall return.
• The quality of the tenant is of high importance. Insurance companies, banks and PSUs usually ensure 6-8% in rental yields and they remain for longer durations.
• IT or ITeS firms, BPOs and MNCs along with other corporates usually ensure rental yields between 8-12% on average.
• Rental yields are calculated after accounting for basic pricing, car parking costs, and stamp duty without the security deposit. The annual lease/rent will be divided by this final price for obtaining the yield.
• The usual lease period is three years and this may come with 15% rent hikes at the time of renewal as per standard clauses.