Information technology and IT-enabled services multinational companies willing to set up operations in India are seen to prefer leasing built-up space rather than build or own properties.

Pressure on curtailing cost and time, and the operational flexibility, which the leasing route offers are being touted as reasons for this trend by leading international property consultants.

Sanjay Verma, executive director, Cushman and Wakefield India Pvt Ltd, said: "Lease evolves into a more viable proposition for IT and ITES companies as they offer more flexibility in terms of relocation and expansion in a fast evolving business environment."

"Most MNCs view real estate as a passive non-core function and they would rather enhance shareholder value by treating real estate costs as an expense rather than as an asset in their balance sheet."

Additionally, with changing real estate dynamics, net value of leases works out to be lower over a long-term.

IT MNCs such as Accenture, EDS, IBM, Motorola and Dell have ramped up their business operations in India more by leasing built-up space rather than building own campuses.

Convergys and Sitel are some of the other MNCs, which have opted for leased built-up space.

Ramesh Nair, senior manager, corporate solutions, Jones Lang Lasalle India, said, "An MNC would prefer to lease space as this would involve minimum capital commitment, maximum flexibility and easier exit strategy.

"They want real estate to be kept off the balance sheet and the perceived risk associated with a potential India-Pakistan conflict," he added.

"A number of IT and ITES companies in recent years have decided that ownership of property is not core to the activities of a company and the capital invested in ownership could be better utilised for retiring debt or used in mainstream operations where the company can achieve a higher return on capital employed," Nair said.

A strategic integral to a decision whether to own or lease is how much control a company would like to retain over the property. Companies tend to lease facilities when they are needed in the short-term with maximum flexibility to expand or contract in response to a volatile market.

Nair said, "Companies in the high growth mode would prefer to take short-term leases for maximum flexibility and to cater to unpredictable growth."

Thirumalai Govindraj, head operations, Chennai, CB Richard Ellis, said, "The basic idea behind IT and ITES MNCs looking to set up operations in India is to reduce costs. Initially MNCs do not want to invest huge capital and cannot wait for the long time period involved in setting up their own campuses."

Moreover, this has also ensured that Indian cities, which have built-up space to offer are turning out to be hot destinations for MNCs.

For example, property consultants agree that a city such as Bangalore is preferred over Chennai or Kochi by MNC software companies purely because it offers ready-to-occupy grade -- built-up space rather than just land.