DLF Centre Court Office for Sale, Golf Course Road Gurgaon

Two corrections before any number. This page used to place DLF Centre Court on MG Road; DLF's own site puts it in DLF 5 on main Golf Course Road, Sector 42, beside the DLF Golf and Country Club, about 0.1 km from Sector 42-43 Rapid Metro. And the figures that circulate as this building's price — a range of roughly Rs 6 lakh to Rs 20.4 lakh — are not a price at all.

On a building whose Block A floor plate is about 19,400 sq ft, Rs 20.4 lakh would be about Rs 105 per sq ft. A capital value of Rs 105 a foot on prime Golf Course Road is not a low price; it is an impossible one. Those figures are monthly rents, sitting in a price field.

At a glance

The second time this batch has found the same error

This is not a one-off. A few hundred metres along the same road, a portal publishes Orchid Centre's monthly rent as its sale price range, and there the arithmetic is decisive: both ends of the published range divide to exactly Rs 90 per sq ft, which is that building's rent to the paisa.

Two buildings, one road, the same mistake. That makes it a pattern rather than an accident, and it makes the test worth memorising. Divide the price by the area. If the answer is two or three figures per square foot, you are reading a monthly rent. A real Gurugram office price divides down to five figures.

So what would a floor here be worth?

No sale rate is published for this building, and there is a reason for that beyond neglect: DLF's own page offers Centre Court for lease, not for sale. This is an institutional landlord holding an income asset. A purchase here is therefore either a secondary transaction between owners, or a whole-asset deal, and in neither case does a published rate exist.

What can be done is the arithmetic from the income, which is published. DLF offers space from Rs 75 per sq ft a month — the letting side of this building sets out that figure and the Rs 50 quote we do not believe — and a fitted upper floor will be quoted above it. Capitalise both at three yields:

Which column to use, and why it is not the one you would guess

Everywhere else in this batch we have worked at six to eight per cent, because everywhere else the asset is a strata suite in a building run by an owners' association. This one is not, and that changes the column.

An institutional building with one landlord, on the best office road in the city, let to Vertex, Hewitt Associates, Fidelity Investments and other Fortune 500 occupiers, with a metro station at the door, trades at a lower yield than a 1,378 sq ft suite off MG Road — because the income is more certain, the building is properly maintained, and the buyer pool is far deeper. Using a strata yield here would understate the value by a third.

So read the five and six per cent columns as the realistic ones: something in the region of Rs 15,000 to Rs 21,600 per sq ft, which puts a 19,400 sq ft floor somewhere between about Rs 29 crore and Rs 42 crore. That is our arithmetic from a published rent, not a market quote, and it is offered as the range a negotiation happens inside rather than as a valuation.

For a cross-check in the other direction: a small suite in Millennium Plaza is asked at Rs 18,142 per sq ft on a Rs 100 rent, a 6.6 per cent gross. A better building on a better road, with an institutional landlord, should not be cheaper per foot than that.

Which block, and what you are actually buying

Centre Court is twin-towered. Block A has eight floors with a plate of about 19,400 sq ft; Block B has five. Records address them differently — Sector 42 for one, Golf Course Road for the other — and the two are not the same asset: a taller block carries more upper floors, and upper floors both let for more and sell for more.

The building sits on about 5.51 acres and is described as roughly 2.87 lakh sq ft of covered area and separately as 240,000 sq ft of built-up area. The 47,000 sq ft difference is the ordinary distinction between everything under a roof and the area that is actually let, and on a purchase it is the whole ballgame: you are buying the second number, not the first. At Rs 18,000 per sq ft, mistaking one for the other is a difference of about Rs 85 crore.

Why the tenant list is the valuation

On an asset like this the building is almost beside the point. What you are buying is a stream of rent from named companies, and its value is a function of three things you can read off the leases: who the tenants are, how long they have left, and what happens to the rent while they stay.

This research has found the unexpired term on a nine-year Gurugram lease worth about eleven per cent of value on its own. On a Rs 35 crore floor that is roughly Rs 3.85 crore, which is more than any plausible negotiation on the rate. So the diligence order is: leases first, rate second.

What to settle before you make an offer

• Ignore every published price and ask for the rent roll. The published figures for this building are rents.
• Which block, which floors, and the lettable area — not the covered area.
• Each tenant, unexpired term, escalation and lock-in.
• Whether DLF is selling at all, or whether this is a secondary or whole-asset transaction.
• The maintenance charges and who bears them. Golf Course Road runs about Rs 19 per sq ft a month on this batch's ladder, which is a quarter of a Rs 75 rent.

Frequently asked questions

What is the sale price of office space in DLF Centre Court?

None is published. The figures in circulation, a range of roughly Rs 6 lakh to Rs 20.4 lakh, are monthly rents rather than capital values: on a floor plate of about 19,400 sq ft, Rs 20.4 lakh works out at about Rs 105 per sq ft, which is an impossible capital value on prime Golf Course Road. DLF's own page offers the building for lease, not for sale.

Is DLF Centre Court on MG Road?

No. DLF's own site places it in DLF 5 on main Golf Course Road, Sector 42, beside the DLF Golf and Country Club and about 0.1 km from the Sector 42-43 Rapid Metro station. Various records also call it Sector 43 or simply Golf Course Road; the MG Road description this page previously carried was wrong.

How should a buyer work out a price, then?

From the rent. DLF offers space from Rs 75 per sq ft a month, and a fitted upper floor will be quoted higher. Capitalised at five to six per cent, which is the right range for an institutional building on this road rather than the six to eight per cent a strata suite needs, that supports roughly Rs 15,000 to Rs 21,600 per sq ft, or about Rs 29 crore to Rs 42 crore for a 19,400 sq ft floor. That is our arithmetic, not a market quote.

Why use a lower yield here than elsewhere in this research?

Because the asset is different. One institutional landlord, Fortune 500 tenants including Vertex, Hewitt Associates and Fidelity Investments, the best office road in the city and a metro station at the door make the income more certain and the buyer pool deeper than for a 1,378 sq ft suite in a strata building. Applying a strata yield to an asset like this would understate its value by about a third.

Which block should a buyer want?

Block A has eight floors and a plate of about 19,400 sq ft; Block B has five. Upper floors both let and sell for more, so the taller block carries more of the valuable space. The two blocks are also recorded under different addresses, one as Sector 42 and one as Golf Course Road, so name the block in every question you ask.

Which area figure applies to a purchase?

The lettable one. The building is described as about 2.87 lakh sq ft of covered area and separately as 240,000 sq ft of built-up area on about 5.51 acres, a difference of some 47,000 sq ft which is parking and services rather than space anyone pays rent on. At Rs 18,000 per sq ft that distinction is worth about Rs 85 crore, so establish which number is in the agreement.