Orchid Centre Office for Sale, Golf Course Road Gurgaon

There is no published sale rate for Orchid Centre. The developer's answer is price on request, and every portal that appears to contradict that turns out, on inspection, to be printing something else.

One of them prints a range that looks exactly like a price list: Rs 6.06 lakh to Rs 36.29 lakh, for units of about 6,731 to 40,319 sq ft. Divide the small end by the small unit and you get Rs 90.00 per sq ft. Divide the large end by the large unit and you get Rs 90.01. Both ends land on the same number, to the paisa.

That number is not a capital value. It is this building's monthly rent — Rs 90 per sq ft a month is what the letting side of Orchid Centre is quoted at for raw space. A portal has published the monthly rent in the price field, and nothing on the page says so.

At a glance

Why that matters more than it sounds

A price listed in lakhs where the answer should be in crores is the tell. A buyer who takes Rs 36.29 lakh as the price of 40,319 sq ft is looking at Rs 90 per sq ft of capital value on prime Golf Course Road. The real number is in the tens of thousands. The error is not marginal; it is off by more than two orders of magnitude, and it is sitting in a field labelled price on a site people use to make offers.

The test that caught it is one any reader can run in ten seconds, and it is worth keeping: divide the price by the area and see whether the answer looks like a rent. If a "price" for a 40,000 sq ft office comes out at Rs 90 a foot, you are reading a monthly rent. If it comes out at Rs 25,000, you are reading a price.

So what is it actually worth?

We are not going to invent a rate. What we can do is the arithmetic the other way round, from the one number about this building that is solidly published: its rent.

Orchid Centre lets at Rs 90 to Rs 140 per sq ft a month, plus maintenance of about Rs 19. Capitalise the rent at the gross yields this research has measured elsewhere in Gurugram office buildings and you get a band:

That is a wide band, and the width is honest: it is what happens when the only published number is the income. Treat Rs 13,500 to Rs 28,000 per sq ft as the range a negotiation will happen inside, and understand that where you land depends on two things you can actually establish — what rent the specific unit achieves, and what return the seller is willing to be paid at.

For a cross-check: a small suite in Millennium Plaza near MG Road is asked at Rs 18,142 per sq ft on a Rs 100 rent, which is a 6.6 per cent gross. Orchid Centre is a better building on a better road with better tenants, so the honest expectation is a rate at or above that, at a yield at or below it.

What the building actually is

Orchid Centre stands on about 2.54 acres on main Golf Course Road, rising to five floors, developed by Orchid Infrastructure Developers. It is 0.2 km from Sector 54 Rapid Metro, and the tenant list is the strongest in this research: Audi, Coca-Cola, Vodafone, Walmart and MobiKwik among others.

That tenant roster is the valuation argument. A building let to companies of that size, on a road where multinational occupiers want to be, is a different risk from a building let to whoever will take the space. It is also why the rent range is so wide: Rs 90 is raw shell, Rs 140 is fitted and positioned, and the difference is what a tenant of that quality pays for.

The unit sizes decide who can buy

Units run from about 6,731 to 40,319 sq ft. Nothing small is on offer, and that changes the buyer pool completely.

At the band above, 6,731 sq ft is roughly Rs 9 crore to Rs 19 crore, and 40,319 sq ft is Rs 54 crore to Rs 113 crore. This is not a building an individual investor buys a suite in; it is floors, bought by family offices, funds and companies buying their own premises. That is a good thing for an owner — your co-owners are institutions who spend on the building — and it sets a hard floor under the cheque.

The maintenance, and the number under the number

Maintenance charges here are about Rs 19 per sq ft a month, Rs 228 a year, which is the top of the four-figure ladder this batch has built: about Rs 14.60 at Elegance Tower in Jasola, Rs 18 on MG Road, Rs 19 here on Golf Course Road, Rs 26 at Gold Souk in Sector 43. On a Rs 140 rent that is 14 per cent of the headline; on a Rs 90 rent it is 21 per cent.

So the same warning applies here as everywhere in this batch, and harder because the cheque is bigger: if the landlord carries maintenance, Rs 1,680 of annual rent becomes Rs 1,452, and a seven per cent gross becomes about six. On a Rs 50 crore purchase, that one clause is worth several crore of value.

What to settle before you make an offer

• Ignore any published price and ask for the rent roll. On this building the income is the only solid number, and the price follows from it. If the unit is offered pre-leased, the lease is the asset you are buying.
• The tenant, the unexpired term and the escalation, unit by unit. A floor let to a multinational with six years to run is a different asset from the same floor with six months.
• Who pays maintenance at Rs 19 per sq ft. It is worth about a full percentage point of yield.
• The area basis, before dividing any price by any number of feet.
• Whether the quoted figure is a rent. Divide it by the area. If it looks like a rent, it is one.

Frequently asked questions

What is the sale price of office space in Orchid Centre, Sector 53 Gurgaon?

No sale rate is published: the developer's position is price on request. The one range that circulates as a price list, Rs 6.06 lakh to Rs 36.29 lakh for units of 6,731 to 40,319 sq ft, is the building's monthly rent at Rs 90 per sq ft rather than a capital value, which is provable because both ends of the range divide to the same Rs 90 to the paisa.

So how should a buyer estimate a price?

From the rent, which is published. At Rs 90 to Rs 140 per sq ft a month, capitalised at the six to eight per cent gross yields this research has measured across Gurugram offices, the indicative band is about Rs 13,500 to Rs 28,000 per sq ft. That is our arithmetic rather than a market quote, and where a deal lands inside it depends on the rent the unit actually achieves and the return the seller will accept.

How can you tell a mislabelled rent from a real price?

Divide the figure by the area. A 40,319 sq ft office priced at Rs 36.29 lakh works out at Rs 90 per sq ft, which is a plausible monthly rent on Golf Course Road and an impossible capital value. Any commercial quote that divides down to two or three figures per sq ft is a rent in a price field.

What are the unit sizes, and can an individual buy here?

Units run from about 6,731 to 40,319 sq ft, so the smallest cheque is several crore and the largest runs into three figures of crore. There are no small suites, which means the buyer pool is family offices, funds and companies purchasing their own premises rather than individual investors.

What does maintenance cost, and does it affect the price?

About Rs 19 per sq ft a month, which is Rs 228 a year and the highest of the four readings this batch has collected on Golf Course Road and MG Road. If the landlord carries it, a Rs 140 rent nets down to about Rs 121, and a seven per cent gross yield becomes closer to six. On a large floor that single clause is worth crores of value.

Who occupies Orchid Centre?

Among others, Audi, Coca-Cola, Vodafone, Walmart and MobiKwik. The building is about 2.54 acres on main Golf Course Road, rises to five floors, was developed by Orchid Infrastructure Developers, and stands 0.2 km from Sector 54 Rapid Metro station. That tenant roster is the main reason a buyer would accept a lower yield here than elsewhere in this batch.