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5 Challenges Faced in Securing a Profitable Commercial Lease in India

As the world slowly bounces back after the pandemic, office space leasing in India reached an all-time high this year.

What is Commercial Lease? 

A commercial lease is an agreement between two parties in which the landlord permits the tenant to use their land or buildings exclusively for a particular duration (the tenure) in exchange for rent or a premium. 

Let’s look at some of the challenges companies face when trying to secure a profitable commercial lease India: 

Space

When looking at a commercial space in Mumbai, it’s important to determine how much room is encompassed in the rental. It is pertinent to clarify whether your rental expenditure was estimated using rental square footage or available square footage. If you have a good understanding of the space that makes up the rental, you will be able to determine whether the quoted rate is fair or not, and if needed, you will be able to negotiate well. 

Lease

The duration of the lease is referred to as its ‘term’. It talks about the commencement and end dates of the agreement, as well as whether or not there are any particular renewal options. It is extremely significant to keep the company’s requirements in mind when looking at a lease. A longer lease implies less flexibility in adjusting to change as the company grows. Moreover, if the market price of the rent drops, accepting a long lease period in advance could lead to the company paying above the market rent for the leased space. 

Dispute Resolution 

When you’re looking to lease an office space Powai, it’s important to pay attention to the terms of the contract, particularly for any dispute resolution. Expenses of litigation can easily exceed those for a small business with fewer resources. 

Legal Compliance 

Commercial spaces in India are generally subject to a horde of laws and regulations. Usually, a landlord is considered to be in charge of making sure that the entire property is in adherence with the law. But it’s vital to understand the expectations for any individual leased space. You need to ask the landlord to explain in detail the conditions of the lease if it’s not clear who is tasked with ensuring compliance with pertinent laws. 

Termination 

Any commercial tenant needs to be fully aware of all the procedures involved in terminating a lease early as well as the stipulations that come with ending a lease before any renewal. If the lease does not address any right to cancel, it might be wise to secure a right to end it early in exchange for the payment of a specified amount of liquidated damages to the landlord to give yourself an out. 

In a nutshell, these are some of the challenges that need to be addressed before securing a profitable commercial lease in India. 

CRE Matrix is a leading real estate data analytics firm in India. It gives access to several companies where you can take a look at the status and minute details of numerous commercial leases in the country. 

For more such exciting analysis and details on real estate, visit CRE Matrix.

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3 Reasons Why Startups are Leading the Demand in Increased Office Space in India

In India, the startup culture has been around for decades but has witnessed massive growth in the last decade. According to the joint study ‘Startups Scale Up’ by CRE Matrix and Colliers India, startups in this country have generated 6.6 lakh direct jobs and 34 lakh indirect jobs in the last decade. Overall, the startup landscape is growing with more depth and has bigger corporate participation. 

From the perspective of the commercial real estate sector India, startups have slowly but surely become a major force to be reckoned with. As per the report, Startups in India have demonstrated the demand for increased office space in 2021. The rise in office space from startups is only witnessing more traction in metro cities but also in non-metro cities as well. 

Let’s look at some of the reasons why startups are leading the demand in increased office space in India:

Key Government Incentives for Startups 

As per the report, 

  • The government has allotted 10,000 crore INR to provide capital to startups, via funds of funds scheme. 
  • 283 crore INR has been allocated to Startup India Seed Fund Scheme (SISFS)
  • Income Tax is waived for about three out of ten years from the date of incorporation 
  • Extra focus on digitization and fintech in budget 2022 can drive a boost to startups. 
  • Emergency Credit Line Guarantee Scheme (ECLCS) is applicable till March 2023. Under this policy, emergency loan facilities are to be delivered to businesses that have been afflicted during the pandemic. 

Preference for Collaborative Work Environment 

Startups have demonstrated a preference for collaborative and flexible work culture. A friendly, collaborative and creative workspace is usually believed to be the norm in a young startup’s (1-3 years) culture. Generally, there is a high preference for fully-managed commercial space India and flex spaces owing to lower capex and flexible lease terms. 

As startups become more prevalent and expand their services, their reach has also increased, leading to preferring quality Grade A buildings with enhanced wellness standards. A preference for a collaborative, flexible and hospitable work environment is one of the factors contributing to the popularity of startups that has led to the rise in the demand for office space. 

Pandemic Led to Increased Demand for Office Space 

COVID-19 witnessed reverse migration, with more and more people returning to their hometowns. This led to more opportunities for newer startups to emerge and step up as well as the chance to solve local challenges. Availability of talent, stronger & deeper internet reach and lower cost of living has made a powerful case for non-metro cities. According to the report, approximately, 40% of the new startups that were launched in 2021 were observed from non-metro cities. This suggests the rise in popularity of startups in non-metro cities. 

In a nutshell, these are some of the reasons why startups have been leading the demand for increased office space in the commercial real estate sector India. 

Visit CRE Matrix, a prominent real estate data analytics company in India that offers various tools and resources to check crucial real estate data with regard to companies and brands across industries. 

For more such exciting analysis and details on real estate, visit CRE Matrix.

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3 Factors to Consider While Leasing Commercial Property in India

Before you negotiate a commercial lease, it is essential to assess your business requirements. Moreover, it is also crucial to decide your budget and preferred location. 

What is a commercial lease? It is one of the most significant elements required for a business to thrive and prosper. Since rent remains an important hidden expense, it is vital to negotiate a decent commercial contract that drives your business development in the long term. 

A well-negotiated commercial lease will enable you to avert any issues or at least put you in a fantastic position. In general, any kind of investment in real estate is dicey. This kind of investment in commercial real estate needs to be conducted with thorough research and study to avert any foul game. 

Here are a couple of factors that need to be kept in mind while leasing commercial property India. 

Conduct a Thorough Research 

It is extremely vital to conduct thorough research before finalizing the location. Be sure to take a look at as many properties as you can, and be open to exploring multiple premises. The correct space in your business can be a make-or-ruin scenario so you want to make sure you take as much time as possible to conduct it effectively. 

Don’t compromise for a lesser-quality building. Moreover, it is extremely significant to choose a commercial property in India to lease where there are numerous major landmarks, and obviously, where your customers can connect with you easily. 

Period of Lease

Before you commit to leasing commercial space Mumbai, you must take care to find out the period of the lease you require. When you begin a business, it’s tough to estimate how it will perform. With a long-term business, however, you can commit to a 5-year lease settlement as you’ve got the price range to pay for the lease. You don’t want to get stuck in a long-time lease when you’re commercial business isn’t always dependable. A brief lease comes with its own benefits as you can move to another facility when you feel your business requires it. 

Review the Lease Agreement 

It is extremely vital to review your leasing contract before you commit to leasing office space in India. Your task as a prospective tenant is to review the lease agreement completely and request changes that will be suitable for your business. 

It is critical for both the tenant and the landlord to clearly describe the location and the accurate square footage of the premises. The tenant needs to also make sure that the landlord has the legal authority to enforce the lease, and has all the important documents in place, including the registration certificates and property tax receipts. One must take extra precautions to make sure that there is no ambiguity in this respect. 

In a nutshell, these are some of the parameters that you need to keep in mind before signing a lease for office space in the commercial real estate sector in India. 

CRE Matrix is India’s leading real estate data analytics company in India, which can provide you with critical lease-related details about various firms across industries that can help you make informed decisions about your business. 

For more such exciting analysis and details on real estate, visit CRE Matrix.

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Key Differences between Lease & Rent: What Should You Opt For?

How many of us were aware that leasing and renting is not exactly the same thing? Thanks to their many similarities, it’s easy to assume that both the terms are one and the same. Until you enter into a leasing or rental agreement India, you will not be able to spot the subtle differences between the two concepts. Even though the two words are frequently used interchangeably, leasing a commercial space is not the same as renting it. 

In this blog article, we aim to educate on some of the key differences between a ‘lease’ and ‘rent’. 

Lease vs. Rent 

A rent contract, a document signed between the tenant and the landlord to make the renting process official, can either be a lease or a license. Whether a tenancy could be carried out via a license or a lease agreement is fundamentally decided by the tenure of the tenancy. 

Under the lease, the landlord is required to transfer the right to make use of the property, to the tenant for a specific period of time in return for the rent. Leasing is typically observed more in the commercial real estate space sector in India. On the other hand, a rental agreement India is regarded as a legal contract where the landlords give their property to a tenant for residential/commercial use for a shorter period. 

Key Differences between Lease & Rent

Here are a couple of differences between leasing and renting based on the following factors:

Parties Involved: When you enter into a lease contract India, the parties involved are referred to as lessor and lessee, whereas in a rental agreement, the relevant parties are known as a landlord and tenant. 

Time Span: A lease is generally agreed upon for a longer duration, i.e. 6-12 months or more as decided by both the parties. On the other hand, rent is for a shorter time frame, i.e. on a monthly basis or it can be up to 11 months. 

Repair Expenditures: The monetary expense for maintenance and repairs has to be borne by the lessee whereas when it comes to a rental agreement, the tenants need to pay for this expenditure. 

Terms & Conditions: In a leasing contract, the terms and conditions cannot be altered once they have been signed and agreed upon by both parties. Nevertheless, if both the lessee and lessor decide to revise some portion of the agreement they will have to get into a lease amending the contract. On the other hand, landlords can modify the terms in a rental agreement arrangement by giving a head’s up to the tenant. 

To sum up, these are four key differences between leasing and renting a residential or office space in India. You can use CRE Matrix – a leading real estate data analytics firm in India – to give you a detailed breakdown of the leasing and rental status of numerous brands/companies across the country. 

For more such exciting analysis and details on real estate, visit CRE Matrix.