Commercial RE Gachibowli, Financial District - Part ownership schemes

Hello friends.

We are now seeing some financial schemes structured as commercial real estate investments. As investors, it is our duty to understand a few facts before evaluating such investments.

1.      Why would somebody price the property more than double the price of a similar property next door?

2.      Why would somebody promise to pay the rent from the very next day of investment, even though the building is not ready yet?

3.      And, the rent is also more than double of what is the running rate in that market.

The first tenet of investment of any kind is to keep it simple (KISS).

Given the tight tax benefit scenario for real estate investments created after the recent budgets, People would tend to look at such commercial propositions and land deals favorably.

The question is - what is the value proposition for you and the builder?

If you're thinking this could be a scam and might not end well, I am with you. But, pray that everything should be fine for those who have put in the money already.

Don’t bank on the media to call out the risks of such investments beforehand, mass media is only interested in what is HOT. They would surely come in with all guns blazing after the scam drowns many but not when it is in the making even though they know it.

It is our duty as investors to fight this war alone. If all of the above sounds something like a

Multilevel marketing scheme starting with Axxxxx and Qxxxx etc.it is not a coincidence. Check if the builder is making payments for past projects from cash flow coming into the current project. I hope RERA is tight enough to monitor this kind of cash leakage.

As an investor, everybody would think that they would have made a smart investment. But unfortunately, in this situation, the customer needs loads of luck and prayers for the smarts of the builder / agency to pull the scheme off without hurting anybody.

Capital preservation is the need of the hour, if capital is allocated to the right product, returns will come – it could be a matter of time. In a hot market, plan for guarding the capital, leave alone over the top (OTT) returns.

Thank you.