Every few years, a founder or CFO in Bengaluru looks at the rent cheque and has the same thought: “We’ve paid enough rent to own this floor by now. Why don’t we just buy one?”
It’s a fair question, and the honest answer is that it depends. But “it depends” isn’t much use when you’re about to commit Rs 7 crore or sign a nine-year lease. So instead of opinions, this guide runs the actual numbers on renting vs buying commercial space for a real-sized office, shows you where the break-even sits, and explains the three things that decide which side you land on.
For a typical Grade A office in Bengaluru, renting vs buying commercial space comes down to three numbers: how long you’ll stay, how fast property prices rise, and what your cash would otherwise earn in the business. Buying usually loses if you stay less than five years, because stamp duty, registration and resale costs eat close to 10% of the price. It usually wins if you stay 10 to 15 years and your spare cash would earn less than about 12% elsewhere. For growing companies that need their capital to fund growth, renting is often the better deal even over long periods.
Why is this question coming up now?
Because rents keep climbing. Average office rents across India’s top seven cities were up 7% on a year earlier in the third quarter of 2026, according to Colliers. In Bengaluru, Grade A space runs from about Rs 55 per sq ft a month in Electronic City to Rs 250 in the CBD, and around Rs 95 to Rs 160 on Outer Ring Road.
At the same time, more strata offices (individual floors or units sold within a building) are on the market, and banks lend against commercial property at roughly 8% to 11% a year. On paper, an EMI can look close to the rent. That’s exactly when a careful calculation matters most.
The example we’ll use
To keep this concrete, here’s a single office we’ll price both ways. Every number is an assumption you can swap for your own.
| Item | Assumption |
|---|---|
| Office size | 5,000 sq ft, Grade A, roughly 50 to 60 people |
| Purchase price | Rs 14,000 per sq ft, so Rs 7 crore |
| Rent for the same space | Rs 100 per sq ft a month, so Rs 5 lakh a month |
| Rent increase | 15% every three years |
| Stamp duty and registration | 7.6% of the price |
| Loan | 60% of the price at 9.5% for 15 years |
| Property tax | About Rs 2.5 per sq ft a month |
| Selling costs when you exit | 2% of the sale price |
| Security deposit if renting | Six months’ rent, refunded at the end |
The Rs 14,000 figure sits in the range of current asking prices for office units in Whitefield, Electronic City and Hebbal, which run from roughly Rs 9,000 to Rs 15,000 per sq ft. At Rs 100 rent, it gives a gross rental yield of about 8.6%, close to the 7% to 9% that Grade A offices typically earn.
Two costs are left out on purpose because they’re the same either way: fit-out, and common area maintenance. You pay for interiors and building upkeep whether you own or rent.
What does each option cost on day one?
This is where the two paths split hardest.
| Buying | Renting | |
|---|---|---|
| Down payment | Rs 2.80 crore | Nil |
| Stamp duty and registration | Rs 53.2 lakh | Nil |
| Security deposit | Nil | Rs 30 lakh, refundable |
| Cash out on day one | Rs 3.33 crore | Rs 30 lakh |
| Monthly outgo at the start | Rs 4.39 lakh EMI plus about Rs 12,500 property tax | Rs 5 lakh rent |
Buying needs about 11 times more cash upfront. And Rs 53 lakh of that, the stamp duty and registration, never comes back. You’ve spent it the moment you sign.
The monthly picture flips the other way. The EMI starts a little below the rent, and it stays fixed for 15 years, while rent rises 15% every three years. By year 10, the rent on this office would be about Rs 7.6 lakh a month.
Renting vs buying commercial space: which is cheaper over time?
Comparing total rupees paid is misleading, because money today is worth more than money later. The fair way is to convert every payment into today’s value, using the return your cash could earn if you didn’t tie it up in a building. That return is your cost of capital.
For most growing companies, 12% is a reasonable figure: it’s roughly what the business expects to earn by putting money into hiring, marketing or product instead. We’ll also assume property prices rise 3% a year, a moderate figure.
| How long you stay | Renting costs (today’s value) | Buying costs (today’s value) | Cheaper option |
|---|---|---|---|
| 3 years | Rs 1.61 crore | Rs 2.04 crore | Renting, by Rs 43 lakh |
| 5 years | Rs 2.52 crore | Rs 2.80 crore | Renting, by Rs 28 lakh |
| 10 years | Rs 4.29 crore | Rs 4.26 crore | Roughly even |
| 15 years | Rs 5.54 crore | Rs 5.26 crore | Buying, by Rs 27 lakh |
Buying costs here are the down payment, stamp duty, EMIs and property tax, minus what you’d get from selling after paying off the loan and selling costs. Before tax.
The pattern is clear. The one-time costs of buying are so heavy that renting wins comfortably over short stays. The gap closes around year 10 and buying pulls ahead only after that.
How much do property prices need to rise?
This is the most useful table in the article. It shows how much the office would need to appreciate each year for buying to break even with renting.
| Your cost of capital | Stay 5 years | Stay 10 years | Stay 15 years |
|---|---|---|---|
| 7% (cash would otherwise sit in deposits or bonds) | 1.5% a year | Buying wins even with flat prices | Buying wins even with falling prices |
| 12% (a typical growing business) | 4.2% a year | 2.9% a year | 2.0% a year |
| 15% (a fast-growing business) | 6.0% a year | 5.4% a year | 5.7% a year |
Read it like this. If your company has spare cash that would otherwise sit in fixed deposits, buying is attractive for any long stay. If your capital earns 12% inside the business, buying only makes sense when you’re confident of steady price growth and a long stay. If you’re growing fast and every rupee earns 15% or more, renting is almost always the smarter choice, because the money does more work in your business than in a building.
What about tax and GST?
Tax changes the numbers, but it doesn’t settle the question on its own, and the details depend on how your company is set up. A few points to discuss with your CA:
- Rent is a business expense. It’s fully deductible from taxable profit.
- Owners deduct differently. You claim the interest on the loan and depreciation on the building, not the EMI itself.
- GST. Commercial rent carries 18% GST, which GST-registered businesses can usually claim back. A ready-to-move purchase with an occupancy certificate carries no GST on the sale, while under-construction units commonly attract 12%, which may not be fully recoverable.
- Capital gains. If the property rises in value, you’ll owe tax on the gain when you sell.
Because these effects partly cancel out, the pre-tax comparison above is a sound starting point. Just don’t sign anything without running your own tax numbers.
The things the spreadsheet doesn’t capture
Some of the most important factors never show up in a cash-flow model.
When buying makes more sense:
- Your team size has been stable for years and will stay that way
- You need heavy, specialised fit-outs such as labs or secure rooms that you’d hate to rebuild
- You want a permanent address in a micro-market you’re sure about
- You have surplus cash that isn’t needed for growth, and you want a long-term asset on the balance sheet
When renting makes more sense:
- You expect headcount to change by more than 20% in the next few years
- You might move as metro lines open and new corridors mature
- Your cash earns more inside the business than a property would
- You want the option to upgrade buildings, which matters more as tenants increasingly prefer green-certified Grade A space
There’s also liquidity. Selling a strata office can take months, and a whole floor in a less sought-after building can take longer. A lease, by contrast, has a known end date.
A middle path worth knowing
You don’t have to choose all one way. Two options sit in between:
- Rent your office, invest separately. If you like commercial property as an asset, buy a pre-leased office let to another tenant and collect rent, while your own team stays in flexible, rented space. Your operations and your investment then stay separate.
- Rent now, buy later. Lease for three to five years while your size settles, then buy once you know exactly how much space you need and where.
If flexibility matters most, managed and coworking options remove even the deposit and fit-out costs. Our guide to flexible office space in India covers how those compare.
How Login Realty helps
The right answer to renting vs buying commercial space depends on numbers specific to your business, and we’re happy to run them with you. Login Realty has spent more than 30 years in Bengaluru’s commercial real estate market.
- Side-by-side cost models using real quotes for both leases and purchases in your preferred area
- Lease advisory to negotiate rent, lock-in and yearly increases if you rent
- Investment advisory and due diligence on title, approvals and tenant quality if you buy
- Zero brokerage on office space for rent in Bangalore
For current rents by area, see our office rent guide for Bangalore.
Frequently asked questions
Is it cheaper to rent or buy office space in Bangalore?
Over less than five years, renting is almost always cheaper because buying carries nearly 10% in one-time costs. Over 10 to 15 years, buying can be cheaper if property prices rise steadily and your spare cash would earn less than about 12% elsewhere.
What are stamp duty and registration charges on commercial property in Bangalore?
Typically about 7.6% of the property value in Bengaluru: 5% stamp duty, a 10% cess and 2% surcharge on that duty, and a 2% registration fee. Check the exact rate on the Kaveri portal before paying.
What rental yield does office space in Bangalore give?
Grade A offices generally earn a gross yield of about 7% to 9% a year, depending on the building, location and tenant.
How much down payment do I need to buy an office?
Banks usually lend 50% to 70% of the value of commercial property, so expect to pay 30% to 50% yourself, plus stamp duty and registration on top.
What is the break-even period for buying vs renting an office?
In our example, buying and renting cost about the same after around 10 years, assuming 3% yearly price growth and a 12% cost of capital. Faster price growth shortens that period, and a higher cost of capital lengthens it.
Should a startup buy or rent its office?
Most startups should rent. Their headcount changes quickly, and their cash usually earns far more invested in the business than tied up in a building.
The idea that rent is “dead money” sounds right but rarely survives the math. Buying locks up large amounts of cash and loses nearly a tenth of the price to transaction costs on day one. It pays off only for companies that will stay put for a decade or more and don’t need that capital to grow.
Weighing up renting vs buying commercial space for your next office? Tell us your team size, budget and preferred area, and we’ll build a side-by-side cost model with real numbers for both.
