n recent years, there has been a significant rise in the preference of renting homes instead of purchasing among prominent players in various industries. Rising interest rates are one contributing factor to this trend.
Nikhil Kamath, the co-founder of Zerodha, has expressed a similar desire of renting a home instead of purchasing one, as he believed that the current real estate valuations were “ridiculous and retarded”.
During the ‘I Did it My Way’ podcast on CNBC TV-18 in September, Kamath expressed his reluctance to invest in real estate at current valuations. He finds them unreasonable, given the prevailing interest rates. “I could not get myself to buy real estate at today’s valuations because personally, I think they are ridiculous and retarded with interest rates where they are, for prices of homes and offices to go up does not make sense”, Kamath stated.
Kamath further disclosed that he preferred to stay in a rented house and planned to continue doing so in the future.
Kamath emphasised that his attachment to his parents’ home is primarily emotional and unlikely to change. He rationalised his investment strategy, highlighting that if he can earn 10-12% on his investments but only obtain a 3% rental yield on properties in India, it wouldn’t make financial sense for him to purchase a home. Instead, he prefers to deploy his capital where it can generate higher returns, such as renting out multiple apartments within his budget, thereby maximising his returns compared to the lower rental yields offered by homeownership.
In 2021, notable Bollywood figures including Madhuri Dixit and Kriti Sanon opted to lease a house in Mumbai rather than purchasing properties. Real estate agents stated that celebrities preferred this option to maintain a specific lifestyle.