Narain Manzil Office for Sale, Barakhamba Rd Delhi

Narain Manzil is an office tower of two basements, a ground floor and seventeen upper floors on Barakhamba Road in Connaught Place, New Delhi, about 1,80,000 sq ft with floors of about 10,000 sq ft, a two-minute walk from Barakhamba Road metro. The row this page replaces priced its offices at Rs 35,000 to Rs 45,000 per sq ft in 548 words, with no rent, no yield and no unit. The one office found for sale in the building, a let unit, prices at about Rs 27,000 per sq ft. The old band was Rs 8,000 to Rs 18,000 above it.

The one office for sale, divided out

A broker listing offers a 2,419 sq ft office let to Central Square Foundation at Rs 135 per sq ft a month, with a three-year lock-in, four months' deposit and a 5 per cent yearly increase, at a stated 6 per cent return. The listing text read gave the rent and the return, not the price, so the price here is what the 6 per cent implies:

• Monthly rent: 2,419 x Rs 135 = Rs 3,26,565
• Yearly rent: x 12 = Rs 39,18,780
• Price at 6 per cent: Rs 39,18,780 / 0.06 = Rs 6,53,13,000, about Rs 6.53 crore
• Per sq ft: Rs 6,53,13,000 / 2,419 = Rs 27,000

If the seller's actual asking price differs, the rule is the same: rent x 12 / price. A higher ask means a lower return.

What the old band would have meant

The arithmetic: Rs 135 x 12 = Rs 1,620 a year per sq ft; Rs 1,620 / Rs 35,000 = 4.6 per cent. At the Rs 165 that vacant space is quoted at, Rs 1,980 / Rs 35,000 = 5.7 per cent. So the old floor of Rs 35,000 is only defensible for a unit let at today's full rent to a buyer content with under 6 per cent. On the one unit actually for sale, it overstated the price by about Rs 1.94 crore (Rs 8.47 crore against Rs 6.53 crore).

The rent, and the one that is below market

Vacant space in Narain Manzil is quoted at Rs 165 bare shell and Rs 190 to Rs 200 furnished on this site's Narain Manzil rent page. The let unit pays Rs 135, about Rs 30 below the bare quote. That is good for a buyer, within limits. With a 5 per cent yearly increase, Rs 135 becomes about Rs 164 in year five (135 x 1.05 to the fourth power = 164.1), so the rent catches up with today's quote over the life of a normal lease, and the return on a Rs 27,000 purchase rises from 6.0 to about 7.3 per cent without any renegotiation.

Sources do not agree on the building's rents. One broker page prints an average of Rs 100 to Rs 150 while others quote Rs 165 to Rs 200. The Rs 165 bare-shell and Rs 190 furnished figures come as a pair from one leasing page and a second broker confirms Rs 200 furnished; those are the ones this page relies on. The let unit's Rs 135 falls in between, which is consistent with a lease signed a few years ago.

Maintenance, and the net return

One broker page gives Rs 8 per sq ft a month for general maintenance and Rs 20 for full power backup and air conditioning. If the owner pays none of it, the 6 per cent is gross and net. If any of it falls on the owner, subtract: Rs 28 x 12 = Rs 336 a year, which on Rs 27,000 is 1.2 points. Read the lease to see who pays what.

The building

Two basements, ground and seventeen floors, about 1,80,000 sq ft, and floors of about 10,000 sq ft; eighteen floors of 10,000 sq ft is 1,80,000, so the figures agree. One page's claim that it spans 3 acres does not fit a Barakhamba Road tower plot and is not relied on. Tenants named on listings include ICICI Prudential Asset Management, Standard Chartered Bank, Kotak Mahindra Bank, Newsco International Energy Services and Central Square Foundation. Barakhamba Road metro on the Blue Line is about 100 metres away, and Rajiv Chowk one stop.

How it compares with Delhi's other office sales

Rs 27,000 puts a Connaught Place tower within the Saket range and about Rs 5,000 above Jasola, which is a modest premium for a Blue Line address in the centre of Delhi. The old Rs 35,000 to Rs 45,000 would have put it above everything else here. More let stock is on the pre-leased property page.

The case against

• Only one unit for sale was found, and its price is implied from a stated return.
• Rents disagree across sources, from Rs 100 to Rs 200.
• An older tower: services, lifts and parking are of its time, and parking in Connaught Place is scarce.
• Maintenance comes from one broker page only.
• A three-year lock-in protects the rent only for three years; after that the tenant can leave.

Before you pay anything

1. Title: the registered sale deed, and whether the land is central government leasehold, as much of Connaught Place is, and if so whether it has been converted to freehold.
2. The lease: tenant, Rs 135, the 5 per cent escalation, lock-in end date, deposit.
3. The price against rent x 12 / 0.06.
4. Maintenance: who pays the Rs 8 and the Rs 20.
5. Parking attached to the unit.
6. Stamp duty: in Delhi about 6 per cent for a man, 4 per cent for a woman and 5 per cent jointly, plus a 1 per cent registration fee.

Frequently asked questions

What is the price of office space for sale in Narain Manzil?

About Rs 27,000 per sq ft on the one let unit found for sale. That is a 2,419 sq ft office let at Rs 135 a month and offered at a 6 per cent return; Rs 135 x 12 / 0.06 = Rs 27,000, so about Rs 6.53 crore for the unit. The old row's Rs 35,000 to Rs 45,000 had no listing behind it and would give this lease a return of only 3.6 to 4.6 per cent.

What rent does an office in Narain Manzil earn?

Vacant space is quoted at Rs 165 a month bare shell and Rs 190 to Rs 200 furnished. The one let unit for sale pays Rs 135, about Rs 30 below the bare-shell quote. One broker page also prints an average of Rs 100 to Rs 150 for the building, which disagrees with the Rs 165 quotes; the let unit's Rs 135 sits between them.

What is the rental yield on a let office in Narain Manzil?

6 per cent gross on the unit offered, at Rs 27,000 per sq ft. If you paid the old row's Rs 35,000, the same Rs 135 rent would return 4.6 per cent; at Rs 45,000, 3.6 per cent. With a 5 per cent yearly escalation, Rs 135 reaches about Rs 164 in year five, roughly today's bare-shell quote.

What are the lease terms on the let unit?

The tenant is Central Square Foundation, an education non-profit, on a three-year lock-in, a four-month security deposit and a 5 per cent annual increase. The rent is Rs 3,26,565 a month (2,419 x Rs 135). The deposit, about Rs 13.06 lakh, passes to the buyer and is usually adjusted in the price.

How big is Narain Manzil, and who is in it?

Two basements, a ground floor and seventeen upper floors, about 1,80,000 sq ft, with floors of about 10,000 sq ft. Tenants named on listings include ICICI Prudential Asset Management, Standard Chartered Bank, Kotak Mahindra Bank and Newsco International Energy Services.

How far is Narain Manzil from the metro?

About 100 metres, a two to three minute walk, from Barakhamba Road station on the Blue Line; Rajiv Chowk, where the Blue and Yellow Lines meet, is one stop away.

What maintenance does Narain Manzil charge?

One broker page gives Rs 8 per sq ft a month for general maintenance and Rs 20 for full power backup and air conditioning, about Rs 28 in all. It is the only figure found; confirm it with the building's management before relying on it in a yield sum.