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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.

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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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Co-Working in India: A Growing Trend in Smaller Cities

There was a time when small businesses used to pay rents for the entire premises to conduct their business. Now, start-ups and individual business owners can rent a desk in a co-working space instead of paying for the complete space. Currently, this trend is not simply limited to the metro cities of the country, as start-ups of small Indian cities are also observed using such office space for growing their businesses. 

Nowadays, Tier II and III cities of India are witnessing a massive rise in the number of startup businesses. It is believed that the need for startup office space is also surging in smaller cities. For this reason, now co-working spaces have become extremely popular in these cities. 

In this blog article, we will discuss coworking meaning and how it has become a growing trend in smaller cities of India:

What is Coworking? 

Coworking in India is an arrangement in which employees or different companies or even freelance individuals share an office space, thereby saving cost and convenience by using common infrastructures like equipment, utilities, receptionist and custodial services, and in specific cases refreshments and parcel acceptance services. 

This concept is beneficial to independent contractors, freelancers, independent scientists, remote workers, and so forth. Moreover, co-working assists workers to avert the feeling of social isolation they may experience while working remotely or if they are in transit. This is a great way to remove distractions and focus on your work completely. The majority of co-working spaces charge membership dues. 

Changing Startup Culture in Smaller Cities 

Even though metropolitan cities such as Mumbai, Delhi, Hyderabad, and Bengaluru demonstrate a dynamic startup culture, the Indian innovation landscape isn’t restricted to them. Startups in smaller cities have begun to make significant differences these days and have made strong strides to establish themselves in the country. 

Currently, startups are established in cities such as Pune, Ahmedabad, Bhubaneswar, and Jaipur, amongst others. This is due to the infrastructure support, local investor confidence, state government amenities, and the availability of talent. With the growing development of the Indian metro, startups are rapidly increasing across smaller cities alongside bigger ones. 

Surge in Requirement for Coworking Space in Smaller Cities 

Since innovation is increasing and growing across India, the availability of shared workspaces is also needed. Startup culture has slowly but surely become popular in Tier 2 and 3 cities. These office spaces also offer young talent and startups a solid platform for growing irrespective of where belong to.

With time, rental rates are also surging a lot. This is why it’s difficult for a small startup business to sustain itself on its own. It’s extremely expensive for a company of any size to lease a traditional workplace in an urban area. The condition is far worse for individuals and startups that are looking to establish but are apprehensive about the cash flow. 

To lease out a traditional workplace, you will need to determine a fixed initial capital that integrates advance maintenance fees, refundable money, and other expenses for mandatory entities such as setting up electrical fittings, gadgets, office furniture, and so forth. In order to curtail costs and the rise of startups, it has led to the concept of coworking in Ahmedabad or coworking in Pune. 

CRE Matrix is India’s leading real estate data analytics company India. It offers accurate and authentic data on co-working spaces that can help in competitive analysis.

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

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Real Estate 101 – A to Z about the 99-year Lease Concept in India

In the Indian real estate sector, the concept of ‘freehold property’ and ‘leasehold property’ are a couple of the common jargon that one usually comes across regularly. When it comes to freehold property, the development authorities use the auction to sell the land to the developer. The property was constructed for such land and belongs to the owner for an unspecified amount of time. As for leasehold property, the developer can acquire the property via a lease for 30 to 99 years, from the time the construction commences. 

What is the 99-Year Lease Concept?

The landowner allows the land for lease for 99 years which commences from the date the allotment was conducted. The developer will have to abide by the specific terms and conditions of the government and the landowner for the lease. The developer is allowed to construct the property and put it up for sale. The buyer will be the owner for 99 years after which the landowner can assert ownership of the land again. The landowner is also given some ground rent which has been approved by both parties. 

The property owner can look at extending the lease by the lease renewal at the end of the term. The leasehold property can also be turned into freehold property by paying the fee for it. Moreover, it is also possible for property owners to purchase another lease when the original lease ends or even extend it to 999 years. 

Other than India, the concept of the lease being 99 years is also a globally-accepted concept. As per the conventional American common law, it is a subjective period to encompass the life expectancy of any lessee or lessor and safeguard the property ownership of the lessor. Moreover, the duration of 99 years is believed to include not one but three generations. 

Pointers about 99-Year Concept 

  • Numerous authorities provide land to develop apartment projects but only on a leasehold basis.
  • It is possible to lengthen the lease duration to 999 years by paying a fee. 
  • On buying a leasehold property, the home buyers need to verify whether the seller has been provided with a transfer memorandum from the local development authority. 
  • Developers choose to erect flats on leasehold lands since the expenses of such parcels are lesser when compared to freehold lands. 
  • Banks do not favor funding the purchase of a leasehold property, particularly when the remaining lease duration is lesser than 30 years. The value of such properties also drops down as the end of the lease period looms ahead.
  • The main benefit of buying a leasehold property is the rate, which is usually lower than properties that were constructed on freehold land. 

CRE Matrix is India’s leading real estate data analytics company in India. The firm offers significant crucial data in the commercial and residential real estate arena through its various tools and resources. 

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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3 Ways in Which a Lease could be Terminated

In India, the landlord-tenant association is regarded as a jural relationship and is regulated by the provisions of the Transfer of Property Act, 1882 (Act). When it comes to a landlord/tenant connection, the parties are typically observed as a lessor (landlord) and lessee (tenant). The contract under which the landlord-tenant relationship is tied is a lease agreement. 

A real estate lease contract is a binding agreement between you and your landlord. Thus, if you feel the need to prematurely terminate your lease, there will be consequences – legally and financially. There are many reasons that can be used to end a lease, but the majority of them will not offer you legal relief from your landlord. 

Occasionally, after signing a rental agreement or lease, a tenant may feel the need to leave the rental unit prematurely for several reasons. In the same way, a landlord can terminate the lease under specific circumstances. It is vital to adhere to state laws, as well as specifications that are listed within the lease, for delivering notice of intent to end a lease. 

Usually, lease termination in India can happen for a variety of reasons and by both the parties – landlord and tenant 

Termination of Lease by Tenant 

Since a lease is bound by an agreement, tenants have to adhere to the length of the tenure specified. This means that they are accountable for paying the rent stated during the duration of the lease. There are exceptions to this rule, especially if the landlord breaks or violates the lease. 

If the landlord breaches the terms of the lease, particularly health and safety codes, the tenant may be able to leave without giving notice or providing less notice than needed. In case there is a natural disaster or significant impairment to the property, it prevents the tenant from continuing to stay in the rental unit. However, if the tenant violates a lease without a legally protected reason, the landlord is entitled to sue for damages.

Termination of Lease by Landlord 

A landlord is able to legally end a lease if the tenant violates the terms of the lease or has broken the law. The violation by the tenant needs to be significant like late rent or having a pet despite the rule stating ‘no pets allowed on the premises. Other violations of the law, like selling drugs on the premises also justify the landlord’s decision to terminate the lease. 

The landlord needs to first dispatch a termination notice to the tenant, thereby making it clear that the tenancy has ended. The tenant may be offered time to amend the violation, by paying outstanding rent, for instance. There will be a notice that declares that the tenant needs to move out of the premises or risk eviction. 

Issues Pertaining to Security Deposit 

Generally, the landlords have about two weeks to one month to give back the tenant’s security deposit amount after the lessee vacates the rental premises. Landlords may subtract from the tenant’s security deposit for legitimate reasons. Deductions need to be shown in a written document and itemized, and the payment needs to be refunded for any deposit balance. It is vital to check with the landlord if the deductions are not accurate. Any agreement reaches needs to be logged in writing. 

In a nutshell, there are many ways in which a termination of a lease agreement India can happen. If you wish to know the leasing status of many companies across the country, check out CRE Matrix and its many tools for it is the leading real estate data analytics company India.

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

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How to Apply for Loan to Buy Commercial Property in India

Getting a loan for commercial office space is not the same as acquiring loans for a residential property. Several businesses seek to get a loan for office space but do not know how to go about it. Acquiring a loan for a home is more popular, better, and more extensively given by banks and financial institutions. On the other hand, acquiring a loan for commercial space is difficult and the know-how of people in this regard is also rather restricted. 

People tend to get overwhelmed when it comes to applying for loan for commercial property purchase India. Even if they are aware of the minute details of home loan application procedures, they seem to find funding office space or commercial units tough. Commercial real estate transactions can be either for office spaces or maybe even retail outlets like stores or shops. They could be ready to occupy or under construction. 

Banks tend to be extra wary in granting loans for commercial property purchases. They are overly cautious commercial spaces that are currently being constructed. So, it is recommended that prior to applying for a loan, always check with your bank about the financing criteria and other requirements. 

Here is a guide with all the details that investors need to keep in mind before applying for a loan for commercial property purchase. 

First, you need to be eligible for applying for commercial real estate loans. Eligible applicants comprise both salaried and self-employed professionals. The latter category contains doctors, architects, engineers, chartered accountants, and lawyers. Traders, entrepreneurs, and contractors can also be eligible to apply for loans in this category.

Here’s a checklist to qualify for applying for a loan for commercial purchase.

  • Make sure that the builder comes with a strong background and profile with a successful track record of delivery.
  • Check the Title Deed of the commercial purchase. Make sure that it meets all official regulations and civic approvals. 
  • Ensure that you have a fair valuation of the commercial space in mind while asking for a loan. 
  • You need to have a good financial standing with a decent credit score, adequate monthly income, and other credentials. 
  • The age of the property needs to be in adherence with the criteria of the bank. 
  • Your commercial property needs to meet the minimum space criteria of the bank. 
  • All technical specifications of the commercial property need to be in place, with complete approval from the Government and other concerned and relevant authorities. 

Once you have met the eligibility criteria, you can expect to get your loan approved with a reasonable interest rate. Loan for commercial property interest rates is generally up to 4-5% more than interest rates on residential properties, contingent upon the borrower’s credit history. 

You can take the help of CRE Matrix, a leading real estate data analytics company India that can give you all the insights on loans that are taken for commercial properties across the country by numerous companies and the banks/NBBFC/funds that provided the loans to them. Users can evaluate and compare loans for commercial properties and do so much more on CRE Matrix platforms. 

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

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Significant Clauses in Commercial Lease that Tenants Need to Know

When you sign on to a commercial property on lease, a contract for the same needs to be carefully executed and planned. There is generally a massive rental outgo in commercial establishments and therefore, the premises to be taken on rent needs to be completely checked. The rental agreement becomes a vital part of your business and the conditions therein will affect your work and operations, as long as you are on those premises. 

Let’s look at some of the important clauses in a commercial lease India that a lessee should be aware of:

Competitor Clause: It’s imperative that you try to get a competitor clause in the leasing contract. This clause will prevent the landlord from renting out space in the same building, in which you are shifting, to your competitor. This can work out to be extremely useful, especially if you’re a retailer. 

Concessions in Rent: You need to find out if the landlord can offer specific relaxations, such as waiving the rent for the initial one or two months of the lease duration. Landlords can be flexible if the premises have been available for quite some time. Other relaxations can comprise sharing of renovation expenses or a paint job for the premises that will be paid for by the landlord. 

Gross Rent Lease or Net Rent Lease: There needs to be sufficient clarity between your landlord and you, about the elements other than the rent, such as maintenance fees, property tax, insurance, and expenditures towards common areas.When it is about the gross rental deed, you will be responsible for paying the rent and other relevant expenses. In a net lease deed, you will only be entrusted with the task of paying the base rent. 

Lease Termination Conditions: This is a significant clause in commercial lease. Inspect the conditions, under which the landlord can end the lease, as they can often be tight. One needs to plan for circumstances where the building is sold by the landlord, while the lease term has not finished. 

Lease Renewal Clause: Lease tenure of one or two years will offer you the flexibility, especially if you own a small business, to move out for expansion or to better premises when needed. Nevertheless, there needs to be a clause to renew the agreement, after the initial one or two years, at the same rent or a hike that has been agreed upon mutually. When you take a commercial space on rent, your leasing agreement needs to have a proposed escalation in rentals in writing, in case you opt to renew the contract. 

Security Deposit and its Return 

There will be a set sum that you would have to deposit with the landlord as security. This security deposit will be equivalent to two or three months’ rent. You need to try and negotiate the amount you have to keep as the security deposit. If you find that there are numerous vacant establishments in that neighborhood or if the landlord is not corporate, there is more scope for negotiation to work. Tenants need to also inspect the conditions relating to the return of the security deposit. 

In a nutshell, these are a couple of the significant clauses in a commercial lease every tenant should be aware of. 

CRE Matrix will give you all the leasing data including clauses across businesses and sectors. 

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

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Real Estate 101 – All About Commercial Property Leasing in India

The real estate industry is regarded as one of the most universally recognized sectors. It contains four sub-sectors including housing, hospitability, retail, and commercial. The evolution of this industry is accompanied by the development in the corporate setting and the need for office space as well as urban and semi-urban accommodations. 

In India, the real estate sector is considered to be the second-highest employment generator, following the agriculture industry. It is anticipated that this sector will gain more non-resident Indian (NRI) investment, both long term as well as short term. Bengaluru is believed to be the most preferred property destination for NRIs currently. 

While there is a high demand for purchasing commercial properties, there is a rise in leasing commercial lease India as well following the reduction in the severity of the pandemic. 

What is Commercial Leasing?

A commercial leasing India is essentially a lease that is utilized for a commercial property where a company would conduct its business. These leases comprise an array of unique terms, including tasks connected to the upkeep of the property. 

Unlike residential leases which are quite easy to comprehend, a commercial lease can be a little more complicated as it comes with numerous terms and conditions. Moreover, commercial property on lease is notonly given out to people but also to entities like the sole proprietorship, corporates, or HUF. 

Kinds of Leasing Structures in India

On a broad level, there are roughly two main types of leases in India:

Financial Lease

It refers to a long-term duration lease. It encompasses the capital outlay in addition to the required rate of return on funds for the duration of the lease. In this case, the lessor plans to cover the expenses of the capital of the property and also wants to acquire some required rate of return. This financial lease cannot be canceled and the lessee has to make several payments in order to use the property. 

In this case, the property rights continue to stay with the owner during the lease period. However, when the lease is about to expire, the tenant party is provided the choice to buy said property by paying the residual money. The amount is generally estimated at 10% of the value of the property or less. 

This kind of lease can be observed as a loan. The lessee will keep paying the lease rent and pay the remaining amount in the end to own the property.

Operating Lease 

When it comes to operating lease, the legal ownership of the property remains in the hands of the owner of the property. The owner only spreads the right to use his property for economic uses or business purposes for a pre-defined duration of time. 

Once the duration of the lease is coming to an end, it can be determined whether to lengthen the lease and continue to allow the usage of the property to the lessor or terminate the contract. In this case, the ownership always lies with the true owner throughout its run. 

If you wish to look for commercial properties for rent, you can take the help of India’s best real estate data analytics company – CRE Matrix – that allows stakeholders across different industries to view significant leasing data of various companies. 

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A Comprehensive Guide to the Leasing Process in India

Singing a lease is a significant step for any new business owner. Whether you’re inaugurating a store, shifting to new office space, or renting out your facilities, leasing comes into the picture. The universe of commercial real estate India can be complicated, and it can sometimes even take years to find your perfect space. 

Once you have found that space, signing the agreement would be the next step before you can move in and focus on running your company. But, like most legal contracts, a business lease is a significant document that needs some research. 

Let’s look into the steps that are involved in the leasing process in India: 

Lease Selection: 

You have to zero in on the commercial property you wish to conduct your business. The leasing process begins when the lessee agrees to enter into a leasing agreement with the lessor. After gathering information and conducting thorough research, the lessee goes to the leasing company or broker (lessor) and a lease contract is roughly negotiated and finalized between them. 

Title Ownership Validation: 

As a business owner, you need to make sure that you have all the details and the information pertaining to the ownership of the property. This is why access to the title deep is absolutely essential to validate the lease. Check to verify there is no sub-rent of any other form of lease linked to the property before getting into a contract with the landlord of the commercial property. 

Income Tax & Mortgage Verification:

It is absolutely recommended to check the income tax background of the landlord to investigate if there are any remaining disputes or illegal proceedings. If there is any ambiguity, you could get into serious trouble later and there will be financial consequences. 

Lease Contract: 

One of the most significant parts of the leasing process is the lease agreement. Both the lessor and the lessee need to sign a contractual agreement where they list the details, terms, and conditions of the contract. The duration of the lease agreement will be cited. For instance: A typical commercial lease agreement can last from 3 to 5 years. It could either be a full pay-out lease or nominal rentals may have to be paid. 

Lease Period: 

Generally, the regular lease rental is usually paid by the lessee. While this depends on the agreement, usually the tenant is the one who is entrusted with the responsibility of properly maintaining the commercial space. At the end of the lease period, the lessee has the right to either renew the lease or terminate it. If the property is up for sale, they can even try buying it. 

Once you have gone through the leasing process, you can move in as per the commencement date and begin running your business on said property. 

If you’re looking for a commercial property to lease, CRE Matrix can help you by offering you an extensive line-up of properties all over India along with their lease data. 

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