Shop-cum-Offices (SCOs) are emerging as a transformative investment asset within India’s commercial real estate sector, drastically reshaping the market landscape. These hybrid spaces, integrating retail and office functionalities, have garnered substantial attention from both developers and investors alike.
SCOs offer a unique blend of convenience and practicality, catering perfectly to the evolving needs of modern businesses. By providing an integrated environment where companies can operate offices alongside retail spaces, SCOs capitalize on synergies that enhance customer engagement and operational efficiency, particularly in densely populated urban centers where spaces are avilable at a premium.
Driven by investor demand for diversified portfolios and stable returns, industry leaders are leading the charge with numerous SCO projects launched across the region. The appeal of SCOs lies in their versatility and profitability compared to traditional office buildings or shopping malls. These spaces offer a flexible approach to commercial real estate, accommodating a wide range of businesses under one roof.
DLF, India’s leading real estate developer, reported significant SCO sales totaling approximately Rs 1,150 crore in FY 2023-24. Their entry into the SCO segment with Gardencity Central in Gurugram in late 2021 has expanded to include multiple projects such as Central 67, Arcade 68 in Gurgaon, SCO 84 Gardencity Central, and Valley Central in Panchkula.
Aakash Ohri, Joint Managing Director & Chief Business Officer at DLF Ltd, says, “The increasing popularity of SCO (Shop-Cum-Office) plots is significantly driven by their strategic blend of retail and office functionalities. They address the diverse needs of modern businesses, offering unparalleled benefits. Prime locations with high-visibility zones enhance customer engagement, while the flexible design allows businesses to tailor their space for maximum efficiency. As the commercial landscape evolves, SCOs are set to play a crucial role in shaping the future of commercial retail. SCOs today are redefining urban spaces with a bold approach, marking a significant departure from traditional commercial developments.”
As an investment class, SCOs have the potential to be as valuable and stable as some of the other growing asset classes, offering steady growth and high returns.
“Originally gaining traction in urban areas such as Chandigarh and its neighboring regions, the success of SCO developments has prompted their expansion into other regions of Haryana, including Gurgaon. This expansion has resulted in a notable increase in new project launches over the past two to three years, driven by escalating demand. Strategically situated near residential areas, these developments address the daily needs of consumers, establishing themselves as centers of convenience. With rental yields surpassing those of residential properties, SCOs have emerged as appealing investment opportunities and are experiencing significant demand. Their complete ground coverage maximizes the available space, offering substantial value for investors. Additionally, the adaptable design of these units facilitates customization, allowing businesses to enhance their operational efficiency,” Ohri adds.
Industry players such as Emaar, M3M, Whiteland Corporation, Paras Buildtech, Aarize Group and Royal Green Realty have also made significant strides in the SCO segment. Paras Buildtech’s Paras Arcade 114 project in Gurugram, spread across 3.25 acres, exemplifies innovative design and strategic location, offering a variety of commercial SCO plots ranging from 104 to 143 square meters.
Kunal Rishi, COO, Paras Buildtech, says, “SCOs are reshaping the commercial real estate sector in India by providing a distinctive blend of retail and office environments. In recent times, there has been a notable rise in the demand for SCOs, attributed to their adaptability and economic viability. Industry analyses reveal a 25% growth in absorption rates for SCOs, with a substantial portion of this demand originating from small and medium enterprises (SMEs) and start-ups in search of innovative business solutions.”
Rishi adds, “The growing appeal of SCO projects across major urban centres is evident, particularly in regions like Dwarka Expressway. The commercial viability of Dwarka Expressway has significantly increased in the past few years, thanks to enhanced connectivity and rapid infrastructure development. This area now offers the perfect environment for the launch of SCO spaces, providing unparalleled convenience and accessibility for modern enterprises and consumers alike. With their strategic locations and innovative designs, SCOs are setting new benchmarks in the commercial real estate market. This trend is set to reshape the industry, driving growth and fostering vibrant business ecosystems that attract a diverse range of enterprises.”
Yashank Wason, Managing Director, Royal Green Realty, says,“Our newly introduced SCO spaces in Bahadurgarh are designed to provide affordable solutions and enhanced convenience for businesses. Companies will have access to shared infrastructure and amenities, including communal areas and parking facilities, among others. These spaces are expected to contribute positively to the local economy by creating a variety of job opportunities. Most significantly, they present an attractive option for startups and entrepreneurs looking to establish their presence in tier-2 cities, particularly in Bahadurgarh.”
AARIZE South Drive, located in Sector 69 off Southern Peripheral Road, is a premier SCO plotted development, blending retail, Restro Bars, entertainment zones and office spaces. Designed for renowned retail brands, it offers complete land ownership, capital appreciation, and customization.
“In the rapidly-evolving landscape of Indian real estate, SCO plots represent a groundbreaking shift. These hybrid spaces embody a fusion of retail and office functionalities, meeting the multifaceted needs of contemporary businesses. At AARIZE Group, we recognize the transformative potential of SCOs. They not only maximize space utility but also create vibrant business ecosystems, driving growth and innovation in urban centers. Our commitment to pioneering such projects is reflected in the overwhelming response to AARIZE South Drive, which stands as a testament to the future of commercial real estate in India,” says Aman Sharma, Co-founder and MD, AARIZE Group.
The commercial success of SCO projects underscores their appeal as high-return investments with low construction and maintenance costs. With 100% ground coverage maximizing usable space, SCOs are claimed to offer greater value compared to high street retail or built-up shops. Historical rental yields of 9-10% further enhance their attractiveness as an investment option.
The rise of SCO plots as a preferred investment asset class is reshaping India’s commercial real estate market. As leading developers continue to introduce and promote these projects, the potential for stable returns and diversified income streams is attracting an increasing number of investors. This trend is poised to redefine the investment landscape, positioning SCOs as a prominent player in the realm of real estate investments.
Source : FE
