Which is better for investment, a virtual office space or a shop/office in a mall ? Where do I get better returns?

Do not invest in virtual spaces at all. ..

One of my friend (Manish)  have been looking at noida real estate for 10yrs now first as a house owner (flat) and then recently mostly in commercial. 

"My advice virtual space, lease guarantee is all a joke. I have seen so many reputed builders in noida having there cheque bounced etc etc just don’t trust any builder." -Manish

In virtual space, there is no registry at all. One space i.e actually 100sqft can be sold to 10 different people and you won’t even come to know about it.

Virtual space concept means let’s say there is a total of 10,000/- sqft then any “virtual space” of 100sqft or 50sqft you can buy. And when this entire space of 10,000/—sqft goes on lease you will get the rent portion of the amount of you have bought.

There are like so many problems and fraud which can be done in this.

1. Since no actual space you are buying, just “virtual”. The same 50sqft can be sold to 10 different people. You only have to trust the build the builder that he doesn’t sell it. And you cannot trust a builder at all period.
2. There is no guarantee that space will be leased out. I have seen primary IT parks in Noida not getting lease out and are empty mainly. So how can builder give a guarantee on returns.
3. So many more issues, the entire concept is flawed.

Why this concept works, for builders is because the ticket size is low. Smaller investment of 5lc, 10lc, etc and you know a space in a big IT part. This is the biggest catch and why small investors get stuck into this.

Also this is space where so much black money goes into. Brokers and other people like this a lot, invest money and sell in a small period and get returns. This is not at all for long term, this just short term and get your money out with quick return.

For an average investor a BIG NO NO. Stay away or else 5years you will be facing the same problem which house owner are facing today. NCLT, protests etc etc but no actual return.

As per me, if you have money

10–30lc: just don’t go into commercial. put in mutual fund and get normal 8% be happy! at least your money is safe.

30–50l; you can go for commercial shops. don’t think you will get ground floor at all. But in new under constructions you can get 1st or 2nd or 3rd floor etc. If location is good, you can get at-least rental income in future. Again only if you want to go into commercial. Or else MF is a good option. Peace of mind, you will get some return atleast. Most people underestimate this a lot!

50–1cr: you can get a shop in good location.

When buy commercial shops, make sure of these things

1. if its a market in society
1. then see how much is maintenance first. See if you can manage the costs if property doesn’t go on rent.
2. make sure its not restricted to one society. it should be open market.
3. see what is rent existing people are getting or in nearly place. generally in commercial priority rent is 5% average. So if you are getting rent of 20k per month means 1.2lc per year. So property value should be close to 60l. Make sure your buying property at good value. Don’t buy over-valued i.e buying property for 1cr and getting rent of 30k doesn’t make sense at all! 5% of property value should be annual rent. its a good indicator.
4. there should’t be things like centralized AC etc and there should be good visibility of shop.
2. if it’s in part
1. again, see maintenance costs. property doesn’t go on rent always. people leave. make sure u can manage
2. the builder should have 60% of the IT part on this name. i.e that portion is not sold small investor. big companies don’t deal with small investors only big builder. So if maximum portion is sold to small investors very less changes of big companies coming and success of IT park
3. if your buying in IT part, usually buy only if you have contact to get good brands to open shops. else don’t buy. In IT part small time people don’t open shops.

1cr+: see if you can buy plots (commercial plots) else buy shops only. plots is better but see if you can manage it.

In real estimate commercial is a good investment but there are many things to consider and manage....

-Manish Prakash