What makes Noida a commercial lease hub?

Noida is on its way to be transformed into a commercial lease hub because of commercial lease in Noida.

Enhanced infrastructure, new and upcoming SEZ and non-SEZ supply, increased metro connectivity and presence of premium buildings continues to attract multinationals and corporate bodies from across the world to the National Capital Region (NCR).

It is now estimated to be the second largest office market with 20 per cent share of the annual nationwide leasing volume as per a report by Colliers Research.

According to the report, NCR should retain its dominance in office demand over the next five years and commercial office space on Noida Expressway should witness a drive in demand.

Noida which makes up a pertinent part of NCR is likely to be transformed into an affordable commercial hub as per the report. When it comes to Delhi, redevelopment projects are expected to change the face of the national capital and enhance the overall Delhi commercial lease market. This is despite the fact that initial buildings were primarily occupied by banks, single tenant state-owned companies, and public-sector units.

For optimising real estate portfolios, large occupiers are being more strategic in their real estate requirements. They are pre-committing space for future needs, mentions the report by Colliers. For instance, large occupiers such as Bank of America, Gartner, Boston Consulting group and Google among others have pre-committed office spaces in upcoming Grade A properties.

In fact, in preferred micro markets, demand is expected to follow Grade A supply in the next few years which wasn’t thought or even witnessed before.

It is pertinent to note that Noida-Greater Noida Expressway micro market has a huge supply pipeline owing to which it is expected to gain prominence as a commercial lease property hub. Around 64 per cent of the total supply is concentrated along commercial properties in Noida Expressway as per the research.

With the completion of Phase 4 of the Delhi metro rail network, all the office locations of Noida are expected to have access within a 3.0 km radius over the next three years.

As the walk-to-work concept picks pace and becomes increasingly preferred in the Corporate Real Estate (CRE) world, robust metro network as well as increasing connectivity can hugely drive the demand for commercial properties in Noida Expressway. Rather than IT or IT enabled services, the real estate now offers commercial office space on Noida Expressway. Accessibility has become one of the main reasons that decides as well as drives the demand
for commercial properties in Noida Expressway.

When it comes to SEZs which are a magnet for technology occupiers, Noida accounts for only 30 per cent of the upcoming supply and is primarily concentrated at Noida Expressway. Unlike the traditional image it has, Noida is gearing up to host a plethora of MNCs in the next few years. In fact, as per the report, the city witnessed 1 million sq ft of absorption in Q1 2018 which was almost twice than Q1 2017 demand.

Reason, Why commercial property investment is Good…??

The average rental falls in the range of 6-10 per cent on commercial property investment according to industry experts.

The commercial real estate property investment reason you must factor-in for the success of your investment goals.


While the rental yields on residential properties has been low, the rental yields on office spaces seem promising in the long run depending on choice of location and quality of corporate tenants.


The average rental falls in the range of 6-10 per cent on commercial properties as compared to to 3.5 per cent on residential property according to industry experts.


When it comes to commercial rental yield in India, the demand for good office real estate assets is on the rise owing to imminent possibility of the first REIT listings and employment generation.


Offices located in Grade-A buildings, logistics centres and InfoTech parks are generating dependable ROI and steady investors who were mostly likely previously found only in residential property asset classes.


With the upsurge of private equity inflows in 2017, the trend is only likely to continue. Highest rental yields in India are expected with REITs bringing in liquidity into commercial property investment in India. This is expected to further enhance the willingness of developers focused on the commercial office segment to deploy further assets.


The continuing sluggishness on the residential property market prevails in combination with associated re-investment cycle risks. This is also expected to play a major role in driving more investments towards various categories of commercial real estate for commercial rental yield in India.


With good office spaces in smaller cities, corporate have began expanding in Tier-I and Tier-II cities as well. Such assets are often located in areas that support transport of goods and people.


Optimisation of office real estate portfolios in the most efficient ways in the current market scenario is also enhancing economies of scale.

Smaller cities are also helping in consolidating operations of corporate at reduced costs.This is being further enhanced by long-term leases to reduce operating costs. They may even look to sell these spaces which would mean quality spaces entering the market where the need for such services is more.


In our commercial property investment tips, it is important to mention that India’s start-up boom has contributed to employment opportunities and increased investments. Examples are previously established start-ups which are now showing excellent results.


While their initial contribution to commercial space absorption was less, e-commerce companies now account for over 3 % of the annual overall commercial space absorption in India. This is only set to increase provided the enthusiastic consumer response to e-commerce in India.

Start-ups in the retail, manufacturing and InfoTech as well as life sciences and biotech are only increasing the potential.


They are becoming the prime beneficiaries of the government’s Digital India initiatives. Note that India has already transformed itself into one of the world’s most promising and prominent destinations for start-ups.

Meanwhile, many start-ups which are focused on the real estate sector have had a positive influence on the highest rental yields in India such that they have brought about a higher saturation of architectural design technology utilisation and modern construction. They have further enhanced transparency and efficiency quotients of research services and real estate brokerage.

NRI Provisions for Tax on Commercial Property in India.

Rental income as well as capital gains has been a fairly lucrative source of income for NRI’s in recent times. Of course these are taxable means of income but they are taxed at different rates in tax on commercial property in India.

In context of such  tax on commercial property in India transacted by an NRI, it must be noted that those who are of Indian origin but do not reside here are Non-resident Indians. Whereas, those who are only visiting India are in no way associated to India are Non-residents in India.

For tax intents and purposes these separate categories of NRI’s are treated differently.


NRI diktats for tax on commercial property in India

 

When it comes to tallying the taxes of an immovable property, the FEMA definition of the NRI is taken into consideration. These NRI’s are also mandated to only deal in residential or commercial property and not any kind of agricultural property unless the same has been inherited by the person.

While citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong are not allowed to buy or sell such property in India they are certainly allowed to lease the same for less than or equal to 5 years.

The following tax provisions are applicable in case of NRI’s who intend on transacting immovable property:


1. The DTAA

DTAA exists to ensure that none are taxed twice for the same source of income. DTAAs exist between India and some 90 other countries. They help ascertain the tax due from an NRI individual based on their residential status and source of income.
Therefore, whatever taxes that an NRI has to pay on rent-controlling or selling a property here in India, can enjoy income tax exemption on commercial property in their present country of residence.


2. Capital gain calculation

India has the authority to charge an NRI tax on commercial property in India sales profits. If an asset is held for longer than 24 months it is considered to be a long term asset. The NRI can of course file for an adjusted cost of acquisition based on inflation.
In the event the property is sold within this period, the adjustment is not applicable. Long-term capital gains are taxed at 20% and short-term gains at less than that.


3. Calculation of rental income

NRI’s are supposed to pay taxes on properties rented out in India after the deduction of Municipal Taxes, standard deduction at the rate of 30% and interest paid on any loan taken for the acquisition/construction pre-construction of said property.


4. Withholding tax

Tenants are allowed to with hold tax from the rent amount in case the property has been let-out. The same is applicable in the event the property has been and the landlord has incurred capital gains. This can be with held by the payer during the time of credit or actual payment.

The exemptions are at a rate of 20% if the property has been let for over 24 months, and 30% otherwise. A flat 30% can be exempted from the rental amount in case the property has been let-out.


5. Further exemptions

NRI’s can request exemption under section 54/54EC/54F if the gains are further invested. Sec 54 and 54F applies for re-investment in a housing property and 54EC for NHAI and REC bonds.


6. Tax return filing liabilities

NRI’s must file their return of income by the 31st of July should the total tax amount become more than Rs. 250000. Those NRI’s who are earning rentals lesser than this figure only have to file the same to claim the refund of taxes
with held and deposited by the tenant with the government.

NRI’s can avail tax deductions based o Sec 80C to 80TTA which further streamlines their tax on commercial property India.

Looking For The Best Commercial Lease Terms? Keep These Points In Mind.

There is no doubt about the fact that no matter whether it is a small or a large business, negotiation does play a very crucial role. We try to negotiate and at times fail too. What might be the reason for the failure then? Lack of knowledge or the way of approach…!!! So, here we are with some of the tips that will essentially help you in negotiating wisely no matter whether it is any form of contract, commercial lease terms or any sales terms.


Commercial Lease Terms- How Can You Make The Best?

 

Below are some of the points to remember in commercial real estate property leasing that will help you prepare the right version of the commercial lease terms.


1. Do your research well:

First of all, you need to determine the type of commercial space you are looking for. Based on these aspects, you can determine the average cost of the space. Looking into some of the popular websites will let you compare the prices. Also, commercial real estate brokers can very aptly help you in providing information regarding the space in details.


2. Space as per your needs:

There is a basic difference between “Nice to Have” and “Requirements”. So, while selecting a space it is very important to keep in mind your essentials. Parking, infrastructure, utilities, ease of accessing roads etc. are few things to keep in mind.


3. Take professional help:

It is of no doubt that the commercial lease terms are
complicated for a layman lacking knowledge in this field. That is why it becomes essential to take professional help from attorneys and lawyers so that there is no scope for any commercial leasing issues. An expert in this field will help you with various terms and can also help you negotiate.


4. Know about the total cost:

There are various types of costs that are levied such as property tax, utilities, trash collection cost, repairs etc. Now based on your lease terms, you may be solely responsible to pay these alone or share with your landlord. So, you need to be totally clear about these costs to avoid any confusion later.


5. Property usage:

Another essential point that should be considered here is the exact purpose for which you are using the property. You need to be very clear about the zonal law, property permissions and other laws applicable to the area.


6. Be clear about renovations:

You may want to restructure the property based on your business demands but before doing any construction or modifying the infrastructure, know how far you can go and also be clear about the distribution of the cost between you and the landlord if applicable.


7. Everything in writing:

No matter what are the conditions you and the landlord are accepting, make sure to put them everything in writing so that you can have enough proof about the negotiations. So, there you go; by keeping these points in mind, the commercial lease terms can benefit you in every possible way- no matter bargaining or fixing an amount!

Here, you got these points as remarkable & considered respectively.

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