Aoa,
Recently i have seen malls/buildings which are about to start construction (with completion of 2.5 years) providing apartments and shops with rental income from day 1 of down payment. The rental value they are providing is around 7-10%. It seems like a good deal. Is there any catch to this? Anything that they are hiding?
Muhammad sb
Promised rent is too high but they are still making money as number of units on sale is big.
If there is any catch, it must be in sale deed clauses!
One must read the document with extreme care and the clause like: " the rental may get impact by market forces...or different rent ratio at different floor and even at the same floor different location of the shop...etc etc"
....Is the ownership freehold, commonhold or leasehold?
...Will they be able to redefine rent as they please in future?
...Would you be able to sell or choose your renter, the way you please or your hands are tied in this regard as well?
...Big malls, profit may be big but conditions play vital role if one needs a win win situation.
...Big malls price the place on $ per sq inch formula and when the place got successful, how would they deal with poor investor, is very important question.
Stay away sir
regards
Big stay away. On ground possession property only
Malls, apart-hotels and business centers are growing like mushrooms. So naturally, there is competition to attract investors. The biggest attraction is, of course, steady rental income, and 7-10% is a huge return by any measure. So what's the catch for builders. Well, they must've build this cost in the price, second, they'll look to higher rental yield for themselves after completion, and third, this reduces their marketing cost, which sometimes runs to 20% of booking price.
As a matter of fact, high-end commercial projects give huge returns to the builders. So giving rent to attract buyers is not impossible. There are different techniques, for example, in Dubai they give you possession in 1 year for a 3 year payment plan.
So I wouldn't completely rule out such options, specially, if the builder has a standing and proven record of successful projects.