M2K Anchor Shop Resale, Sector 51 Gurgaon

An M2K anchor shop resale in Sector 51 Gurgaon is a five-crore asset, not a one-crore one, and the gap between those two numbers is the first thing this page has to correct.

The two resale units actually on the market in M2K Corporate Park Shopping Plaza are both 1,293 sq ft, offered at Rs 4.88 crore furnished and Rs 5.2 crore semi-furnished. Divide them and the rate is Rs 37,742 and Rs 40,216 per sq ft. An entry price of "Rs 1.2 crore onwards" corresponds to nothing on the board here.

The rate, and the rent that has to justify it

Rs 40,000 a square foot is a serious number for Gurugram retail, at the level of prime ground-floor space on Golf Course Extension Road. So the question is what it earns. Two leasing quotes are published in the same complex, and they do not agree with each other:

A gross yield of 4.5 per cent would be respectable for Gurugram retail. A gross yield of 2.2 per cent would not be — it is below what the same money earns in a fixed deposit, before you have paid maintenance or property tax.

The unusual part is which unit gets which rate. The larger 5,600 sq ft unit lets at more than twice the rate per square foot of the smaller one, and that is the opposite of the normal pattern, where small units carry a premium per foot. The most likely explanation is position: a large ground-floor space with frontage against an upper-floor or rear unit. That is exactly the difference you cannot see in a listing and can see in ten minutes on site.

What settles it is the lease deed on the unit you are actually buying, read against the landlord's bank statement. If the unit is vacant, ask the leasing agent what comparable space on the same level has signed at in the last year — not what is being asked.

What this complex is

M2K Corporate Park Shopping Plaza sits at Sector 51, by Mayfield Garden, in what is genuinely central Gurugram rather than a corridor waiting to fill up. It was completed in May 2016 and is built as an office environment with two levels of retail beneath it — which is the structure that makes the ground-floor and upper-floor rent gap so wide.

Two cautions on the published information about this building. First, one listing page describes the project as "spread over approximately 1,900 sq ft of land", which cannot be true of a building containing 5,600 sq ft retail units; it is a data-entry error, and a reminder to check any site area that seems impossible. Second, M2K has more than one development in Sector 51 — the Symphony Floors are residential and have nothing to do with this complex — so establish which M2K you are being shown before comparing any price.

Anchor units: what you are really buying

A unit of 1,293 sq ft on a retail level is at the size where a single recognisable tenant takes the whole thing — a bank branch, a clinic chain, a restaurant, an electronics or apparel brand. That has two consequences worth thinking about before you commit five crore:

• The upside. One tenant, one lease, one payment, usually with a long lock-in and a corporate covenant behind it. Far less administration than four small shutters, and far more likely to keep paying through a bad year.
• The risk. When that tenant leaves, you have a hundred per cent vacancy on a five-crore asset, and a unit of this size takes longer to re-let than a 300 sq ft shop. Model six months of it and see whether the arithmetic still works.

The lock-in and the notice period in the existing lease are therefore worth more attention than the rent itself. A high rent with a three-month notice is a worse asset than a modest rent with a five-year lock-in.

What you pay beyond the price

• Stamp duty and registration. Haryana charges 7 per cent for a male buyer inside municipal limits, 5 per cent for a female buyer and 6 per cent joint, plus a slab registration fee that reaches its Rs 50,000 cap from Rs 90 lakh. On Rs 5 crore that is up to about Rs 35.5 lakh.
• GST. Nil on a completed property holding its completion certificate. The building has been finished since 2016.
• Maintenance. Commercial common-area maintenance in Gurugram runs roughly Rs 15 to Rs 30 per sq ft a month. On 1,293 sq ft that is Rs 19,000 to Rs 39,000 a month, and against a 2.2 per cent gross yield it would consume most of the return.
• TDS. 1 per cent under Section 194-IA on the purchase, and 10 per cent under Section 194-I on the rent once it crosses Rs 6 lakh a year, which at either of these rents it does.

Frequently asked questions

What does an anchor shop in M2K Sector 51 actually cost?

The two resale units on the market are both 1,293 sq ft, offered at Rs 4.88 crore furnished and Rs 5.2 crore semi-furnished. That is Rs 37,742 and Rs 40,216 per sq ft. Any figure like "Rs 1.2 crore onwards" does not correspond to a unit being offered here, and a buyer arriving on that number will find nothing available at it.

What rent do these units command, and what is the yield?

Two leasing quotes are published in the complex and they disagree sharply: 5,600 sq ft of retail at Rs 150 per sq ft a month, and a 3,429 sq ft shop at Rs 2.50 lakh a month, which is about Rs 73 per sq ft. Against a purchase at about Rs 40,216 per sq ft those give gross yields of roughly 4.5 per cent and 2.2 per cent. The first is respectable for Gurugram retail; the second is below a fixed deposit before maintenance.

Why does the bigger unit rent for more per square foot than the smaller one?

That is the reverse of the usual pattern and it almost certainly comes down to position — a large ground-floor space with frontage against an upper-floor or rear unit. It is the difference you cannot see in a listing and can see in ten minutes on site. Walk both levels before you accept either rate as the one your unit would achieve.

When was M2K Corporate Park Shopping Plaza completed?

In May 2016. It is at Sector 51 by Mayfield Garden, built as an office environment with two levels of retail beneath it, in genuinely central Gurugram rather than on a corridor still filling up. Because it is complete, a purchase here attracts nil GST.

Is there more than one M2K project in Sector 51?

Yes, and it causes real confusion. M2K Symphony Floors in the same sector are residential and have nothing to do with this commercial complex. Establish which M2K development a price refers to before comparing it with anything. One listing page also describes this project as spread over about 1,900 sq ft of land, which cannot be true of a building containing 5,600 sq ft retail units — it is a data-entry error worth recognising as one.

What should I check before buying an anchor unit here?

The lease deed on the specific unit, read against the landlord's bank statement — and within it the lock-in and the notice period, which matter more than the rent. The maintenance rate per sq ft, because on a low yield it consumes the return. What comparable space on the same level has actually signed at in the last year, rather than what is being asked. And how long a unit of this size realistically takes to re-let, because a single-tenant unit going vacant is a hundred per cent vacancy on a five-crore asset.

Our view

At Rs 38,000 to Rs 40,000 per sq ft this is priced like prime Gurugram retail, and whether it deserves that depends entirely on which of the two published rent levels your unit sits at. At Rs 150 per sq ft a month the asset makes sense. At Rs 73 it does not, and no amount of central location fixes a 2.2 per cent gross yield. Everything therefore rests on the lease deed and on walking both retail levels yourself. Do not buy this on a rate — buy it on a tenant, a lock-in and a rent you have seen arrive in a bank account.

In short: two units at Rs 4.88 and Rs 5.2 crore, a rate near Rs 40,000 per sq ft, and a gross yield of either 4.5 or 2.2 per cent depending on a fact only the lease deed will tell you.

For the same question at a lower rate, see offices for sale in Omaxe Gurgaon Mall, Sector 49. For a pre-leased retail unit where the yield can be checked the same way, Emaar Colonnade in Sector 66, and for a mall-format asset with an anchor that makes the footfall, Elan Epic in Sector 70.