What are SCO Plots?

Everything You Need to Know About Shop Cum Office Spaces

In recent years, a new trend has taken the real estate market by storm: SCO plots, or Shop Cum Office Spaces. If you live in North India, chances are you’ve come across numerous advertisements and promotions for these properties. But what exactly are SCO plots, and why have they become so popular? In this blog post, we’ll dive deep into the world of SCO plots, exploring their evolution, benefits, and potential risks. So, let’s get started!

Understanding SCO Plots: A Comprehensive Overview

Before we delve into the details, let’s first define what SCO plots are. Put simply, a Shop Cum Office Space (SCO) is a standalone low-rise building that allows for commercial activities. Typically, these structures feature a basement and ground floor plus four additional floors. The basement and ground floor are usually reserved for retail activities, while the upper floors are dedicated to office spaces.

If you’re familiar with the South X market in Delhi or the GK market, Gurdwara sector 14, or Gurdwara sector 29, then you’ve already seen examples of the SCO concept in action.

The Evolution of SCO Plots

To understand how SCO plots came to be, we need to look at city master plans. In every locality and sector, there are zones marked for commercial spaces. The idea behind this is to promote local businesses and provide convenient access to markets for residents.

Traditionally, authorities had two options:

1. Allocate the land to a private developer to construct a mall or shopping complex.
2. Cut the plots themselves and sell them to individuals who would then be responsible for building their own commercial structures, obtaining approvals, and running their businesses.

However, in Haryana, the government decided to merge these two concepts. Now, private developers have the option to purchase land, develop the infrastructure, register a commercial project, cut plots, and sell them to people. This is the essence of the SCO concept.

What You Get When You Buy an SCO Plot

When you purchase an SCO plot from a developer, there are three possible scenarios:

1. Plot with Approved Construction: The developer provides you with a plot that has already been approved for a standard four-story construction. The necessary NOCs from DTPC have been obtained, and the developer will provide the gated structure, internal rules, lighting, infrastructure, water, electricity, sewage, and parking.
2. Structure with Outer Facade: Some developers go a step further and provide you with a structure that includes the completed outer facade.
3. Finishing with Structure: In this case, the developer delivers a finished product, including the glass, paneling, lift, and other elements of the outer facade.

It’s important to note that when developers provide the structure or complete facade, they are selling two different things: the plot and the construction charges (which typically range from 1,800 to 2,500 per square foot). This construction is mandatory and cannot be delayed.

Legalities Involved in SCO Plots

When it comes to the legal aspects of SCO plots, here are some key points to keep in mind:

• The minimum size of an SCO plot is 60 square yards.
• The property is 100% freehold, meaning you will have complete ownership of the plot and building.
• The current coverage allowed is 100%, as opposed to 60-75% in residential cases.
• As of now, you cannot register individual floors; the property must be registered as a plot or building.
• The new rule banning the 4th floor applies to SCO plots as well, so if the building plan is not approved, you won’t be able to construct four floors in the future.
• Loan options for SCO plots vary. Some projects offer loans for both land and construction, while others only provide loans for construction. The loan amount is usually limited to 50-70%, and interest rates are slightly higher compared to residential properties.

Why Developers are Embracing SCO Plots

The sudden surge in SCO plot projects can be attributed to several factors:

1. New Product Category: When the Haryana government gave permission for SCO plots, it created a new product category, which always leads to increased demand.
2. Easier Development: Compared to building a mall, developing an SCO plot is much simpler. The construction and maintenance costs are lower, and developers don’t need to offer pre-lease or lease support to customers.
3. Customer Motivation: In India, there is a strong desire to own land and property outright. By selling plots in the case of SCO, developers tap into this motivation, making it a win-win situation for both parties.

Businesses Thriving in SCO Plots

SCO plots accommodate a wide range of businesses, depending on the floor:

• Basement and Ground Floor: Showrooms, banks, grocery stores, supermarkets, cafes, and restaurants.
• Top Floor: Cafes, restaurants, pubs, and clubs, as these spaces often feature rooftop seating.
• Middle Floors: Co-working spaces, back-end offices, professional services (e.g., chartered accountants), clinics, nursing homes, gyms, salons, path labs, and coaching classes.
• Entire Building: Hotels and hospitals often prefer to construct and utilize the entire building.

Popular Locations for SCO Plots

SCO plots are primarily being developed in up-and-coming locations, such as:

• Sonipat
• Karnal
• Faridabad
• Gurugram (Dwarka Expressway, SPR, Sona Road, New Gurgaon)

These areas are expected to see population growth in the future, leading to increased demand for markets and commercial spaces.

Advantages and Opportunities in SCO Plots

Investing in SCO plots comes with several advantages:

1. RERA Registered Projects: Developers handle all approvals and construction, making the process hassle-free for buyers.
2. Business Expansion: As these projects are located in developing areas, they offer opportunities for businesses to grow alongside the increasing population.
3. Land Value Appreciation: The value of land in India rarely decreases and usually appreciates well over time.
4. Flexibility: SCO plots offer a mix of retail and office spaces, allowing for flexibility in usage and reducing dependency on a single type of tenant.
5. Customization: Buyers can choose plot sizes and customize their spaces according to their needs.
6. Lower Maintenance: Compared to offices in malls or large office spaces, SCO plots have lower maintenance costs.

Risks and Challenges in SCO Plots

While SCO plots present numerous opportunities, there are also some risks to consider:

1. Dependency on Local Density: The success of businesses in SCO plots heavily relies on the population density and consumption potential of the surrounding areas. It’s crucial to assess whether there will be enough demand to support the shops and offices being built.
2. Competition from Society Shops: Many residential projects now include commercial shops within the society premises, which could pose competition for SCO plot businesses.
3. Changing Consumer Behavior: With the rise of e-commerce and online food delivery, consumer behavior is shifting. People often prefer the convenience and experience of visiting malls over local markets.
4. Oversupply: If too many SCO projects are ready in the next 2-3 years, there may be an oversupply of commercial spaces, leading to lower occupancy rates and rental yields.
5. Long-Term Investment: Investors looking for quick returns may need to be patient, as capital appreciation and rental yields in SCO plots are likely to increase gradually over time.

Who Should Buy an SCO Plot?

SCO plots can be a good investment for:

• Business Owners: If you have your own venture and plan to use at least one or two units of the plot, an SCO plot can be a suitable choice. You can evaluate the location based on your business requirements.
• Long-Term Investors: If you have a long-term investment horizon and are looking for capital appreciation and rental yields, SCO plots can be a good option. However, patience is key, as it may take time for the market to mature.

On the other hand, SCO plots may not be the best fit for:

• Short-Term Investors: If you’re expecting quick returns or believe in claims of “2x in 2 years” or “5x in 5 years,” SCO plots may not be the right choice. Real estate appreciation takes time, and predicting exact prices in the future is difficult.
• Those Seeking Immediate Rental Yields: Rental yields will increase gradually as the population in the area grows and projects are delivered. If you need immediate rental income, SCO plots may not be the most suitable option.

Final Thoughts

SCO plots have emerged as an exciting new product in the real estate market, offering a unique blend of retail and office spaces. While they present numerous opportunities for businesses and investors, it’s essential to carefully evaluate the location, market potential, and your own investment goals before making a decision.

If you have a long-term perspective and are willing to be patient, SCO plots can be a valuable addition to your real estate portfolio. However, as with any investment, it’s crucial to conduct thorough due diligence and seek expert advice when necessary.

I hope this comprehensive guide to SCO plots has been informative and helpful. If you found value in this post, please like and share it with your friends and family. And if you have any questions or topics you’d like me to cover in future videos, feel free to leave a comment below.

Until next time, take care and happy investing!