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Hello IRSF and members

I am Sumit and I am new to the forum as well as investing in real estate.

I am thinking of investing in a mall (Festival city in Ludhiana). It is being build by Aerenr on national highway connecting Amritsar to Delhi. They are advertising the mall as biggest in North India with 20 Lac sq Ft area.

Since I am new to investing and this would be my first investment, I would highly appreciate your help and guidance. I ll list some of the highlighting points for more information.

Good Points

1. Very Large Mall

2. On National Highway

3. Big Brands like IMAX, FunRepublic, Pantaloon already signed up

4. Builder is giving 10.5% gauranteed return till the shop is not let out.


Problemtic Points

1. Two More adjacent Malls being build by Omaxe and Gold Seuk

2. 15 KM outside Ludhiana

3. Rich people live on other side of Ludhiana on Ferozepur Road

4. 15 malls coming up in Ludhiana in Total

5 Uncertain Future of malls in India due to mushrooming up of large no of malls.


The mall initally sold the shops at price of about 7500 rs/ Sq Feet ( about 18 months ago). Now they have qouted following prices with space for negotiations

Ground Floor: 18000 rs /Sq feet

First and second Floor: 15000 Rs/Sq Feet


Can you guys please take time to advise me if I should think about investing in it.

I ll also appreciate advice about various loopholes in the agreement which will later cost me money.( for examples various management charges etc)

Thank you

Sumit

jambaavan

Dear Sumit,

I did go through your query on investing in Malls.........You have managed to give the bare bones of the proposal.....

Well the MOST IMPORTANT THING TO REMEMBER IS HOW YOU VALUE THE MALLS.....HOW INTERNATIONALLY IT IS DONE......

If you are buying the entire Mall then it makes sense......if you are buying a few shops then one thing is certain the whole Mall WILL FAIL.....Malls sold out to too many individuals will never succeed in future and given the way organised retail is growing,Malls sold out in bits and pieces will not survive....

In case of any further clarification please feel free to ask. Iam a international property consultant specialising in Retail and Real estate Investment strategy...........

saggii

Well said, my advice:don't buy.

Navi Mumbai's example:
there was one mall which was doing okay.
after an year another mall came up: both were doing okay.
2 years after that: third mall came up, both malls are shutting there shops.

1 year later: one very big mall came up, initial small malls are empty now.

if u want to invest in mall do buy in a large mall which is in high population density residential area.