A good number of the Frequently Asked Questions (FAQs) that we receive at Jagaha are more related to commercial real Estate than Jagaha-related procedures. In order to help our clients and readers, we have listed down all the questions that would be beneficial to anyone who is interested in Mumbai commercial real estate right here in this blog post.

Q: What is lock-in period?

A: Lock-in period is the amount of time that a tenant & landlord guarantees they will be paying the rent for. Please note, that a lock-in period is different than contract tenure. For instance. If a lock-in period is 3 years, but the contract is for 10 years then after 3 years the tenant and the landlord can break the lease without reason by usually giving a 1-3 month notice. The lock-in period, contract tenure & notice period are all agreed upon during negotiations for the rent period.

Q: What is a preleased property?

A: A prelease Property is a property that already has an existing tenant. Investors tend to prefer buying preleased properties as there is already a tenant paying monthly rent amounts and so any potential buyers won’t need to spend time or energy finding a tenant, which can take weeks up to years in some cases! If you are looking to invest in a pre-lease property, Jagaha has a list of these properties in our internal data system and you can directly contact one of Jagaha’s real estate advisors to find out more about such investment opportunities.

Q: What is the best advice for someone who wants to invest in real estate?

A: Make sure you have an appropriate time horizon. Firstly, if you need the money in the coming years, it’s best not to tie up your money in not so liquid real estate. If looking out more than five years than we would suggest you look at investing in real estate with the best advice being…. invest in an area that you have experience with & that you know well. If you really enjoy that location for whatever reason, than likely others will as well (or already do). I would not get to speculative with your first real estate deal, choose the core areas or soon to be core areas of a city that already have a relatively strong market, this will protect one’s downside. This is one of the reasons we have chosen BKC as our number one choice for properties in Mumbai and why we are bullish over the long term on Mumbai real estate.

Q: What is the difference between built-up area and carpet area?

A: The difference between built up area & carpet area is that the carpet area, ie the usable area, is exactly that – it’s the usable square footage so any space within the walls of a premises. Whereas built-up area includes the usable area as well as the width of the walls and to a certain extent smaller portions of outside areas such as a terrace. The two terms, ‘built-up area’ and ‘carpet area’ are used primarily in the Indian real estate industry. Due to recent changes in 2017, namely RERA, it’s imperative that property developers quote their properties in carpet area and not built up.

Q: What’s the best commercial property for sale in Mumbai?

A: We can’t say for sure, as this question is very much subjective. Having said that, our number one pick for investment is for commercial property in BKC. For more details on why BKC is our number one pick in Mumbai, check out our video on the same. Other markets to consider in 2018 would be Navi Mumbai, Thane, Worli/Lower Parel & select parts of the western suburbs. Largely, we stay bullish for the long term on Mumbai real estate. For more detail on why Mumbai (and other alpha cities) are a safe bet, please see our video on THE reason to buy Mumbai real estate.

Q: What are the rare mistakes people make when searching for a commercial property?

A: The mistakes people make when searching for a commercial property is that they frankly don’t spend enough time asking questions and gaining knowledge before going out to different inspections. One should ideally be as educated as possible before going out into the market. We have seen an immense amount of growth in the education levels of those looking for residential properties in Mumbai over the last ten years, but for commercial it’s still not as well known. So clients usually waste their first day or two of inspections on looking for what they want irrespective of the market realities. It’s our job to make sure that this process goes a smoothly, efficiently and successful as possible by educating clients.

Q: Best locations in Mumbai to find the best deal?

A:This question is subjective of course, but we can take a stab at it. Although the most expensive, out of all localities in Mumbai we would have you consider buying commercial property in BKC as the demand is there and will be there for namely office space for rent in BKC. Other localities where one can find a good deal in Mumbai real estate looking over the next few years could possibly be:

Commercial property in Andheri West
Commercial property in Andheri East
Commercial property in Thane
Commercial property in Powai
Commercial property in Navi Mumbai
Commercial property in Lower Parel
Commercial property in Kurla

If you would like more details on any of the areas, please feel free to contact one of our real estate advisors.

Q: Why is there such a large cost difference between retail space & office space?

A: Largely speaking, retail space is on the whole about two to three times more expensive than office space in Mumbai. However, there are exceptions where high-end office spaces in BKC & office spaces in Lower Parel, to name a few, would be more expensive than some retail spaces in Mumbai. The reason retail space can rent for over 500 rupees per square feet or more, especially in the prime retail areas, is because of the demand for these spaces whether it’s for clothes or as we are seeing more and more of, could be those looking to open up a restaurant. The literal positioning of one’s shop or restaurant could be the difference between life and death for a company and generally speaking, with having massive amounts of footfall traffic will only help the top line! Lastly, if trying to create a brand, it’s not a bad idea to land a shop or restaurant in the best of areas where one can put up essentially their own hoardings on the commercial property itself, getting the brands name out there! This benefit is also considered when deciding to go for more expensive retail property.

Q: What can a real estate agent do for me in today’s day and age which I cannot do myself with the help of the internet?

A: The internet has certainly improved the way in which those looking for properties in Mumbai as well as over the entire world. And we would like to think that Jagaha.com adds to the technological changes that are improving the real estate industry at large. Your goal, of course, is to make sure that you find the property, period. If you can do it online and have the time then great go for it, but often times it’s a broker who will end up closing the deal as he/she are accessing properties and providing consulting services. We wrote a blog article on whether you really need a broker or not, please have a read!

Q: Can I rent a property in Mumbai for 6 months?

A: Renting a property, outside of a PG accommodation, for a period of six months in Mumbai is very unusual. With that said, it is possible to do so. Most landlords won’t want to enter a contract for six months as it can take several months to find a new tenant so most are looking for minimum two to three years if not just at least a one year lock-in.

Q: When and why should I hire a commercial real estate broker?

A: You should hire one when you are looking for commercial property! Ideally look for a property 3-6 months before you need it as the process can take time for multiple reasons. And why a commercial real estate broker? A commercial real estate broker can assist you through the entire process and make it more likely for you to find the best commercial space available as per your specifications. There are plenty of commercial real estate brokers in Mumbai, but the team with the largest inventory and the most active, is Jagaha’s real estate advisor team.

Q: How are commercial real estate brokers compensated?

A: It of course depends at what firm you are working at, but at Jagaha.com our real estate advisor team receives a base salary then they get incentives for money generated for the firm. We think that most firms have some mix between incentives and base salary, but there are some where there is no base salary and these brokers would be at a more competitive incentive structure and those that have no incentives but would likely have a higher base salary.

Q: How much do I have to pay an agent to help me find a commercial property in Mumbai?

A: It depends if the property in Mumbai is for rent or for sale. If looking to buy a property, you will have to pay the agent 1% of brokerage for all re-sale properties (if buying what is called a ‘primary property,’ brand new from the developer himself/herself, the developer will pay your brokerage). And when it comes to commercial spaces for rent in Mumbai, the amount owed is dependent on how long the lease term is agreed upon. For lease terms under three years, it’s one month’s brokerage and for three years to five years it’s two months brokerage and for over five years the fee you will be responsible to pay is three month’s brokerage.
Please note that the brokerage fees are the same in Mumbai regardless of whether it’s a commercial property or a residential property.

Q: What do commercial real estate brokers need from their clients to be effective?

A: The more the client knows, the better! Let the real estate advisor, whether it be at Jagaha.com or elsewhere, know exactly what you are looking for. But you need to have some knowledge of pricing etc first and that’s why we recommend looking at the properties on our property site to get a feel and/or talking to one of our real estate advisors. The truth is, that nearly all clients want the properties well out of their budgets and for commercial real estate it can be a bit extreme as the general public is not that well versed in commercial real estate prices.

Q: Can we open a Mumbai restaurant on the first floor?

A: If looking to rent a restaurant in Mumbai, yes it is possible to have it on the first floor. And what we have seen over the last few years is more and more restaurants are opening on higher floors of commercial buildings given that the demand for restaurants has increased significantly. Take a look at our recent blog article and a brief video of Otis on Linking Road. So…. Forget just the 1st floors, the 2nd, 3rd, 4th etc are all in play now! BUT, make sure that all safety precautious are taken care of as there have unfortunately been issues recently with fires in the restaurant for rent properties that did not have the necessary safety measures in place and people lost their lives, most famously in early 2018. Extremely sad.

Q: Do I need a broker to help me find a space?

A: To ensure that your business improves its chances of finding the best commercial spaces in Mumbai then we would say most certainly, yes, we would encourage all looking for commercial properties. However, if you simply don’t have the money and you have the time, you most certainly can try to find properties on various property sites and try to get in touch directly with the owner. We see this more and more with residential properties in Mumbai; however, being your own broker still hasn’t taken off as the norm.

Q: How do I become a successful Real Estate Agent?

A: There are a million things one can do to become a successful real estate agent. From our experience, the one thing that you can do to ensure success as a real estate agent is to make sure you follow up on your leads. Remember deals don’t happen over night (well… most don’t!) and client’s requirements will surely change over time – stick with your client as long as it takes and if you do this over enough clients, you will surely become successful. This is simple to do, but it takes discipline and persistence not to give up. The other things that are needed to be successful is the ability to get along with people, to be able to easily build relationships, to have knowledge of the given area and of the properties.

Q: What are the issues faced by founders of real estate start-ups?

A: There are plenty, but in terms of problems of those building up a property site from scratch, there is only one…. Getting the properties onto your property site! Nobody is interested in visiting an online property site with 50 to 100 properties, users want thousand and thousands of properties to choose from. So getting the properties is the first hurdle, but those with properties only care if those looking for properties, actually come to your site! This can be quite difficult, but that would be the second issue. Then once you have the properties & once you have the demand, the founder can look to make money from advertisement (listings etc) and/or through a brokerage model.

This is the end of our Q&A Series. Comment below if you have any questions you want us to answer and we’ll include it in our next post.

The post Q&A Series with Otis – Jagaha.com Frequently Asked Questions Part 2 appeared first on Jagaha.