July 18, 2024 |
NCR Investors Shift Towards Shop-Cum-Office Plots as Residential Prices Soar
Investors in the National Capital Region are increasingly turning to shop-cum-office (SCO) plots, which offer rental yields of 9–10% amid soaring residential prices and builders seeking to capitalise on the trend.
Developers such as DLF, Emaar, M3M and Paras Buildtech have launched projects in the SCO segment, with DLF alone reporting revenue of Rs 1,150 crore from the segment in 2023–24.
Under a scheme floated by the Haryana government, developers can sell plots where buyers can construct up to four floors and use them for office or retail purposes.
“SCOs will significantly influence the future of commercial retail as the commercial landscape changes. SCOs, as an investment class, have the potential to be as valuable and stable as some of the other growing asset classes, offering steady growth and high returns,” said Aakash Ohri, joint managing director, DLF Ltd.
Initially popular in cities like Chandigarh and surrounding regions, the success of SCOs has led to their introduction in other parts of Haryana, including Gurgaon. This has resulted in a surge of new launches over the past two-three years due to increasing demand.
“Primarily located near residential developments, they cater to the everyday needs of consumers, making them hubs of convenience. With higher rental yields compared to residential properties, SCOs have become attractive investment options and are in high demand,” Ohri said.
DLF entered the SCO segment with Gardencity Central in Gurgaon in late 2021. Currently, it has multiple projects, including Central 67 and Arcade 68 in Gurgaon, SCO 84 Gardencity Central and Valley Central in Panchkula, and various built-up shops.
“Industry reports indicate a 25% increase in absorption rates for SCOs, with much of the demand coming from SMEs (small and medium enterprises) and startups seeking dynamic business solutions. The growing appeal of SCO projects across major urban centres is evident, particularly in regions like Dwarka Expressway,” said Kunal Rishi, chief operating officer, Paras Buildtech.
Paras Buildtech’s inaugural SCO project, Paras Arcade 114 in Gurgaon, is spread across 3.25 acres, and offers a total saleable area of 4,597 square metres.
SCOs are proving to be a high-return investment with low construction costs and maintenance. They offer 100% ground coverage, making them more appealing than high street retail or built-up shops.
“SCO plots have now become much more than just innovative investment options in the Indian real estate segment because of their flexibility and prime locational advantage. The prime locations, which are in most instances strategic, help the buildings accommodate diverse tenancies such as retail outlets, and corporate businesses,” said Pankaj Pal, managing director, Whiteland Corporation.
As leading developers continue to launch and promote these projects, the potential for stable returns and diversified income streams is attracting an increasing number of investors.
Following the Covid-19 outbreak, investors and company owners sought protection and security, preferring full ownership of land, which in turn resulted in a surge in demand for shop-cum-office sites.
Between 2011 and 2020, the prices of small-size themed SCOs appreciated about 350%, and those of large-size themed SCOs surged 450%. In contrast, the price appreciation for non-themed SCOs during this period was only 65%, according to industry data.
Source : ET
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