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.

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.

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.

7 Crucial Points to Keep in Mind before Signing a Rental Agreement

Renting a home in India can be quite complicated because of the research and the planning required. If you wish to rent a home in India, it is extremely vital that you’re aware of what to look for prior to signing a rental contract

There are numerous elements that can be included in a rental agreement, and not all of them are beneficial to the tenant. In this article, we will talk about some of the most vital things you need to check before signing a rental agreement in India. 

What the Rent Includes

You need to thoroughly check the rental contract. Generally, the monthly rental amount typically comprises utilities such as electricity, water, and gas. However, be sure to check if it also contains maintenance charges and property taxes. 

Kinds of Tenancy

There are two kinds of tenancy agreements in India – the leave & license agreement and the lease agreement. A leave & license agreement consists of a duration of 11 months, after which it can be renewed. A lease agreement has the lease tenure for up to at least 12 months and can be renewed once the term is over. 

Notice Period & Penalty

If you’re looking at homes for rent India, one of the most important things to look at would be the notice period and penalty. The majority of the rental agreements have a minimum notice period of 30 days (one month). If you wish to leave earlier, make sure to check if there is a clause that talks about an early exit fee. Generally, one month’s rent would be charged as a penalty. 

Rent & Deposit

It is important to check the monthly rent amount. Ensure that the rent is budget-friendly for you and that it is light in your pocket. It is also imperative that you check the amount for the security deposit. This is generally one month’s rent but it can change depending on the landlord the agreement can differ depending on the landlord. The contract will state the monthly rental amount and the security deposit. Be sure the rental amount is aligned with the relevant market rates. 

Register the Rental Agreement 

Once you have signed the rental contract, ensure that it does get registered at the office of the sub-registrar. The fees for the registration are generally around 0.25% to 0.50% of the entire sum of the agreement. 

Check for Lock-In Period 

The majority of the contracts have a lock-in period of approximately 3 years. This means that you cannot exit the property before this period is over. 

Duration of Rent 

When you’re looking at available flats for rent in Mumbai, it is imperative to look for the length of the lease in the rental contract. The tenure of the lease is generally around 11 months, after which it can be renewed. Be sure to check if there are any clauses that state an escalation in the rent after the initial first year. Make sure to enquire about it before you sign anything. 

If you wish to know more about the various residential projects by a number of developers across India, then subscribe to CRE Matrix, a leading real estate data analytics company in India, as they can offer several tools to facilitate this. 

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

Real Estate 101 – A to Z about the Lock-In Period in a Leasing Contract

Commercial properties such as office buildings or warehouses can be observed as excellent investments. This is because they deliver high yields, are reliable, and escalate over time. It is well-known that location affects the value of a property. If it’s a commercial property with a high degree of accessibility, it is natural for the asset to make a high rent. An important but usually ignored part of CRE investments is generally the lease and lock-in periods. 

What is a lock-in period? 

Lock-in periods belong to a part of the lease contract. The significant bit is – while landlords are tied by the lease duration, lessees are bound by the lock-in period. If a property has a lease term of 9 years and a lock-in period of 3 years, the tenant needs to continue staying in the space for 3 years or pay the rent for the lock-in period if they choose to shift basis. 

Why is a lock-in period significant? 

A clause with the lock-in period in leasing agreement India is extremely important because it makes sure your returns are steady and guards your investment against struggling. Even if the lessee decides to abort the ship or the market conditions go bad for some reason (a pandemic, for instance), a decent lock-in period can be a saving grace in this scenario. It gives you more time to look for a new tenant or wait for the market to bounce back while still providing you with a return on your investment. 

So, what’s a ‘good’ lock-in period? 

In commercial real estate, the lock-in period in leasing can change from 3 years to anything like 9 years. That’s a substantial range and it generally comes down to the kind of asset and tenant in question. For instance: Firms that are into manufacturing need an industrial space that they can personalize to the last bit. They seek out longer lock-in durations (occasionally 15 years or more), since their work floor is regarded as the most stable portion of their business. 

White-collar companies require offices. They need desks, chairs, and some computers, and their necessities are met. This is why these companies want lock-in periods that are on the shorter end of the spectrum (lesser than 5 years). When it comes to warehousing, the lock-in periods typically tend to remain within 5-9 years. 

When you’re deciding to invest in commercial real estate, do keep in mind the type of property and the lock-in period it has, irrespective of the tenant. If the period is too less (e.g. lesser than 3 years), the tenant might not consider sticking around. If you’re not able to renegotiate for a longer lock-in with the tenant, it is best not to go for the property.

On the other hand, if the lock-in is too long, you have to pay the rent that’s lower compared to the market average, which is still fine as long as you are making stable returns. Several other intricate details need to be taken into consideration when you’re deciding to invest in a commercial space in India

CRE Matrix is a leading company that offers real estate data analytics India. It offers elaborate details about the leasing status of numerous businesses across the industry. You can take a look at what their leasing agreement entails including the lock-in period clauses of those contracts. 

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

4 Things You Need to Know Before Signing a Contract for Leasing Commercial Space

Signing a lease is a significant milestone for a new business owner. Whether you’re launching a store or shifting to a new office space or leasing out facilities for production. At some point, you’re most likely going to have to set aside some space for your business. 

Once you have zeroed in on the space, signing the agreement often feels like the final step before you can shift in and concentrate on running your business. But similar to the majority of other legal agreements, a business lease is a vital piece of document that needs thorough research. 

The fine print in a commercial lease is extremely imperative. There are two basic steps that need to be followed prior to signing a lease: 1) Conduct a thorough search and 2) Need to know of general statutes that are included in business leases. 

Once the basic pricing and term structures have been established, it’s time to understand some of the less-obvious details. Here are a couple of things a business owner needs to be aware of before signing a leasing contract India:

Transfer Structure: Determine how your lease will get transferred if you wish to leave the space or your business shuts down. Typically, there are two structures for transferring a lease: assignment of the lease and subletting. 

Assignment of the lease refers to the fact that the complete lease is reassigned to a new tenant. Subletting happens when an existing tenant keeps their name on the lease but is given payment from the new tenant and then pays that money to the landlord. 

In both scenarios, you generally have to specify prior written consent before transferring the lease in the leasing agreement.

Personal Exposure: In a few cases, you may be needed to sign personal guarantees when you are leasing commercial space India. These contracts mean you’re personally on the hook for features of the lease even if your business defaults. Get legal counsel to negotiate this part of your agreement. If possible, you would only want your entity or legal business to take on the gamble when you’re signing a business lease. 

Holdover Rent: It essentially refers to a rent increase when the tenant continues to stay even after the lease has ended. For leasing office space Mumbai, a number of agreements, have a clause where it’s stated that, in these scenarios, businesses are accountable for up to 250% of their standard rent payment on a monthly basis. So, if you stay beyond your allotted time, it could cost you a lot of money. 

Non-disturbance Agreement: In numerous cases, if the landlord is not able to pay the mortgage on the property, the business will still be evicted, even if their making all of your payments, With a non-disturbance agreement, if this happens, you will be allowed to stay and continue paying whatever entity has seized control of the building from your landlord. 

In a nutshell, these are the five things you need to be aware of before you sign a lease agreement. Check out CRE Matrix, a leading real estate data analytics company India, which allows you to take a sneak peek at the lease agreement status and other details of numerous businesses across the country. 

Visit CRE Matrix for more such exciting analysis and details on real estate.

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.

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?

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. 

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.

Introducing the 2021 Retail Snapshot: New Leasing Report Focusing Exclusively on the Noida Region

Thanks to the swift growth of population and size, Noida has witnessed an emergence of a plethora of malls that will allow you to indulge in some much-needed retail therapy. Several upmarket fashion outlets, gourmet restaurants, sprawling multiplexes, entertainment arcades, and more guarantees that there is a lot for people to enjoy at these sprawling shopping malls in Noida.

CRE Matrix has presented its first ever retail leasing report that centers exclusively on the growing Noida region. Based on authentic registered data, our objective was to assess the demand, supply, and rentals across the Noida area, focusing only on the malls’ category.

Key Takeaways from the 2021 Retail Snapshot – Noida

  • According to the report, Noida has witnessed a demand of 3.2 Lakh Sqft in 2021.
  • The research observes that the organized retail segment has seen immense growth with 7.1 MSF and is supported by the increasing demand for housing in the city.
  • The study states that leading brands such as Hypermarket, Reliance Smart, Pantaloons and many others are making a beeline for mall space in the city as real estate developers prepare to finish their retail projects.
  • The retail demand for malls in Noida was the highest in Q1 2021 with 1, 26, 935 Sqft, followed by Q2 with 1, 04,814 sqft. After witnessing a drop in Q3 with 25,255 sqft, the demand rose again with Q4 with 54,913 Sqft.
  • Which tenant category accounted for the maximum mall space for lease in 2021? The report showed that anchor tenants were responsible for 54% of the leasing demand last year, tailed by Vanilla stores at 21%.
  • The research study observed that F&B brands accounted for 11% of the retail space for lease in 2021 while the mini-anchor shops were at 10%.
  • The passing rental of vanilla outlets was Rs 393 per sqft on a monthly basis with an average revenue share of 8.9% while the passing rental of the entertainment hub was only Rs 75 per sqft per month but had an average revenue share of 12%.
  • The anchor stores had a passing rental of Rs 101 per sqft every month with an average revenue share of 6.8% while the mini-anchor outlets had a passing rental of Rs 176 per sqft on a monthly basis with an average revenue share of 8.3%. 
  • The report analyzed that vanilla shops continued to draw higher rentals, while the average revenue share in the transactions of entertainment tenants was comparatively higher as opposed to others.

Download the complete 2021 Noida Retail Snapshot for key insights and to understand how Noida has become a premium shopping destination and the immense growth it has showcased in retail leasing.

What CRE Matrix CEO Abhishek Kiran Gupta shared about the 2021 Noida Retail Snapshot

“Over the years, Noida has successfully emerged as a formidable and finest destination for shoppers living in NCR. While there has been a drop owing to the pandemic, the retail economy has somewhat witnessed a resurgence last year. We will continue to witness growth in retail leasing space with increase in demand, supply, and rentals this year.”

About the Study:

CRE Matrix has conducted this research based on authentic registered data collected from all the retail leases of Noida that were signed in the last 1 year and analyzed their rentals and the total area that these occupied. Through these leases, we also understood how rentals are behaving floor-wise and across different retail categories. We also studied the supply of malls in Noida – which mall was built when and how much area was constructed in every year.

Download the complete 2021 Noida Retail Snapshot here.

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