MUMBAI, Mar 19: The boot is now on the other foot. With rentals in prime commercial areas of Mumbai crashing by 20-30 per cent and security deposit rates dwindling, landlords are unwilling to let lessees vacate their premises, leading to reverse litigation by the latter to get back their locked-up funds.Many multinationals and big Indian companies are moving shop from busy hubs like Nariman Point in south Mumbai and midtown Worli to the suburbs due to the more attractive rates there. Alternatively, they are seeking better terms from their lessors or licensors to stay on. This has led to a situation where lessees are having to fight battles in courts to get back their deposits, often running into crores.
According to advocate Ranjana Parekh, who deals with property litigation, and who is currently handling about 10 such cases of this kind, the "most of litigation involves multinationals who, in the past, agreed to high lease amounts and exorbitant deposits, both for office premises and residences fortheir executives.
" The companies currently involved in litigation are reportedly located in buildings like Dalamal House at Nariman Point, and Zaveri House and Shivsagar estate at Worli.
Another advocate Mulraj Shah agrees that litigation is increasing. "Several cases have come to me from Nariman Point alone. This includes two companies in Maker Chamber IV, three in Free Press House, one in Jolly Maker and one at Atlanta building, who have filed cases against the respective lessors." Adds Shah: "Litigation is rising with landlords refusing to refund deposits which often run into crores of rupees or agree to fresh lease agreements at current rates."
Anu N Mavji, a consultant who deals with luxury apartments, offices and showrooms in South Mumbai, says "both rentals as well as deposit rates have crumbled for all commercial premises upto Bandra (a western suburb).
Earlier, if a lessee was willing to give a year's rent as deposit, now it has come down to just three to six months' rent as depositmoney." Given this weakness in the rentals market, it is not surprising that lessees are either unwilling to continue with high costs leases or even keen on renegotiating existing ones.
Lucky Pamnani, a real estate consultant, says the fall in rentals is even steeper when one looks at the real rate at which deals take place. "When taking into account the fall in rental rates, (one must note) the difference between quoted prices and traded prices. "The quoted prices have fallen by 20 per cent and traded prices, or the prices at which deals take place, have fallen by over 50 per cent in some areas." Advocate Parekh says "companies not only want to move out of their office premises but they also want to vacate the apartments rented for their executives at buildings in prime locations like Gamadia Road, Prabhadevi, or Cuffe Parade."
Many real estate consultants, however, feel that ultimately lessors have no option but to agree to lowering rents and deposits. "The markets are so bad that the lessor will(have to) agree to any condition put down by the lessee. "When the rates are rising, the lessor decides on the conditions of leases; when the rates fall it is the lessee who decides on the conditions of the agreement."
Reality Reality
Area Lease rates per Sq Ft per month
Present Previous
Nariman Point 100-120 150-225
Colaba 100-110 140-200
Worli 70-75 90-150
Bandra 50-70 90-150
Andheri 15-20 45-80
Kurla 40-60 80-100
New Bombay 15-20 25-70
(Note: These are market rates compiled from real estate brokers in each area and it pertains to average buildings. Some specific buildings may cost more or less depending on their locations and facilities.)
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
