Real Estate 101 – A to Z about Fit-out Period in India

When it comes to a lease agreement in India, there are some general clauses in a contract to a lease or a lease deed. These provisions are commonly connected to the term of the lease, right to renew the lease, rent-free period, payment of the lease rent, security deposit, covenants of the parties, termination & penalties of termination of the lease, indemnity provisions, force majeure events, and several other miscellaneous clauses. 

What is the Fit-Out Period? 

The fit-out period in real estate India is essentially a rent-free period that is mutually approved by both the relevant parties in which the lessee is not liable to pay the rent and the time span is used to facilitate the lessee to set up important equipment for them to use the property for the intended reason. The fit-out period in India is generally agreed upon by the parries and may span from 3 months to 1 year, contingent upon the requirements of both the lessee and the lessor. 

The fitout period might be lengthened if both parties determine it to be necessary. Similarly, the maximum time duration for extension of the fitout period for office space in Mumbai would probably be agreed upon by the concerned parties. 

When it comes to commercial spaces, fit-out plays a significant role as the lessor/developer is needed to improve upon the basic structure and hand the same over to the lessee for them to begin fit-outs. Both parties might decide that upon the termination of the lease, the fit-out may be eliminated by both the lessee and the lessor. 

Advantages of Fit-Out Period 

Saves Time & Money

Your firm will gain a lot in terms of time when shifting into a building that had a fit-out completed. You will not have to worry about any delay while finishing your own fit-out, thereby letting your business get started immediately. You will also be able to save a lot of money as the fit-out will enable you to not pay for the office fit-out yourself. That can be a pricey procedure.

Flexible Lease

A lease for commercial space which has the fit-out already conducted by the landlord can imply a more flexible lease for the tenant. For example, a lease duration of 1-3 years is not considered to be unusual for a space that already had the fit-out completed. If the lessee leases an empty space and then finishes the fitout themselves, it’s rare that the lease period would be lesser than 3 years. 

In a nutshell, a fit-out period can benefit tenants looking for office space in the commercial real estate market in India

CRE Matrix is a leading real estate data analytics firm India that allows you access to crucial leasing data of a number of companies across industries. It lets you view the fit-out period, rent-free period, and security deposit details of many firms that can give you an idea about the market condition. 

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

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 reportStartups 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.