Commercial Real Estate Tips – Q&A With Anuj Puri #3

 Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India 

• What are the covenants one should keep in mind when investing in a IT/ITES property? What are the government rules and regulations with regards to the businesses to be undertaken in such properties?

There are a couple of important points to be kept in mind. An IT/ITeS building is designated for use by companies whose operations fall under the same category. Operation of non-IT firms in such properties is not allowed. When investing, the tenant mix of the property should be kept in mind. If you are buying an already leased space, you have the right to see the lease deed, which will provide you information on type of company, lease period, lock-in and other commercial terms as well as legal obligations and safeguards.

If you are investing in an under-construction IT/ITeS property, you can allow the developer to negotiate on your behalf with potential clients, and can communicate your minimum rent expectation to him. Alternately, you can market and negotiate yourself, which at times is a little cumbersome. It is important to keep in mind the exact IT/ITeS industry definition which clearly defines the legally allowed occupants in such properties. Other covenants are generic in nature and are concerned with the developer enjoying clear title of the land, having received completion certificate, other approvals for making the building fit for occupation and having built in accordance with sanctioned plan.

• What type of documents can I ask for with regards to a office building before taking possession and registration? Does physical possession of office space before registration in a newly constructed building not affecting the safety of buyer rights?

Before possession, one has to ensure that the developer has obtained the occupation certificate. In Gurgaon, there is a policy of self-certification, where developers can have a registered architect certify that the building is fit for occupation, as the original certification from the authorities takes time. This allows the developers to offer their projects sooner for leasing.

Registering a bought property is important to safeguard the rights of the buyer. If physical possession is offered before registration, one must check that the area allotted complies with the sale deed covenants in terms of size, efficiency, location and other payment terms and whether necessary approvals from fire, water, and other relevant government departments has been taken or not.

Physical possession will also lead to a kick-in of the non-usage maintenance charges in most cases. So, it becomes essential to get the property registered at the earliest. However, without a valid completion certificate, sale deed cannot be registered.

• If I lease my rooftop of 100 sqft to a mobile tower company for installation of 4 towers, how much rent would they pay for that and is it safe to lease them the property? Please suggest.

Frankly, leasing such a small space for four towers appears non-feasible. 100 sqft is too tight a space to install even one mobile pole (which is lighter and smaller compared to a tower). In NCR, mobile tower installation is banned in residential areas; however, mobile poles can be installed. Structural load for the property has to be tested to establish if it can take such a load. I would like to clarify whether you are referring to a commercial or residential property. Rentals are in the range of INR 25000–35000 per month for one tower. 

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Categories: Commercial Property, India Real Estate, IT/ITeS, Real Estate Tips