Palm Court Office for Sale, MG Road Gurgaon

Palm Court is a finished office building on the Mehrauli-Gurgaon road, MG Road, at the IFFCO Chowk end, placed in Sector 14 by some listings and Sector 16 by others. One listing gives it two basements, a ground floor and eight upper floors and about 2,15,000 sq ft built up. Offices are owned unit by unit, let mostly furnished, and a coworking centre runs in the building.

The row this page replaces printed about Rs 12,000 to Rs 16,000 per sq ft. No sale at those rates was found. The one unit on offer with enough numbers to price works out to about Rs 8,800 per sq ft, and the arithmetic is below.

The one priced sale, divided out

A broker offers a 7,934 sq ft office let to a multinational at Rs 4.36 lakh a month, on a nine-year lease with a three-year lock-in, a six-month deposit and a 15 per cent rise every three years, at a printed 7.5 per cent return. The listing text found does not print the price, so work it back:

• Annual rent: Rs 4,36,000 times 12 is Rs 52,32,000.
• Price at 7.5 per cent: Rs 52,32,000 over 0.075 is Rs 6,97,60,000, about Rs 6.98 crore.
• Per sq ft: Rs 6,97,60,000 over 7,934 is Rs 8,793.
• Rent per sq ft: Rs 4,36,000 over 7,934 is Rs 54.95 a month.

If the seller's real ask differs, the return changes with it; the sale agreement settles the number, not the listing. On what can be established, a let Palm Court office prices at about Rs 8,800 per sq ft.

Why the old band does not hold

A buyer paying Rs 12,000 to Rs 16,000 for a building that lets at Rs 55 to Rs 70 would earn 4 to 7 per cent gross, below what let MG Road offices trade at. Delta Square, also near IFFCO Chowk, asks Rs 15,000 to Rs 16,000 but lets at about Rs 120, twice Palm Court's rent. The old band looks borrowed from buildings like that one. No registered sale deed for Palm Court was found to settle it either way.

The rent, and the rental yield on other units

Furnished offices ask Rs 60 to Rs 70 per sq ft a month: 4,600 sq ft at Rs 60, 2,700 sq ft on the fifth floor at Rs 65, and 2,250 sq ft at Rs 70. The large let unit pays Rs 55. Maintenance is not published on any listing found, so a net yield could not be worked out.

At Rs 65 an office earns Rs 780 a year per sq ft. Bought at Rs 8,800 that is 8.9 per cent gross; at Rs 12,000 it is 6.5 per cent. A furnished office also needs its furniture replaced every few years, a cost the seller of a bare unit does not carry. Brokers' general claims of 5 to 10 per cent returns on Gurgaon pre-leased offices are a market range, not a promise this building makes.

The lease you would be buying

For the let unit, the lease is the asset. Nine years from an unstated start date, a three-year lock-in and a 15 per cent step every three years: after the first step the rent is Rs 5.01 lakh a month (4.36 times 1.15), about 8.6 per cent on Rs 6.98 crore. The deposit of six months, Rs 26.16 lakh, passes to the buyer, who owes it back to the tenant at the end. Ask for the registered lease, the start date, how much of the lock-in is left and whether the tenant has an exit clause after it. A multinational that is not named cannot be checked.

The building and the developer

Two basements, a ground floor and eight floors, about 2,15,000 sq ft built up by one listing, with offices from about 2,250 to 7,934 sq ft and unit numbers such as 704. The developer could not be established: one broker summary names TDI Infrastructure without a source page, and two coworking pages call the building "DLF Palm Court", probably after DLF Colony next door, one of them placing a building of that name in Sector 17 on NH-48. Confirm the address and unit on the title deed.

The metro walking distance also could not be established. The Yellow Line stations at this end of the road are IFFCO Chowk and MG Road.

How it compares on MG Road

Palm Court is the cheapest office on the road per sq ft because it is also the cheapest to rent. The price-to-rent ratio is what matters, and here it is better than the newer towers. More let stock is on the pre-leased property page, and the road as a whole on the MG Road office page and the MG Road real estate guide.

Who this suits, and who should look elsewhere

It suits an investor with about Rs 7 crore who wants a let MG Road office at a gross yield near 7.5 per cent and will read the lease closely, and an occupier who wants to own a furnished office cheaply. It does not suit a buyer who needs a named tenant, one who wants a published maintenance figure before committing, or one who wants a small unit under Rs 2 crore: none was found for sale.

Before you pay anything

1. The price in writing, and the yield worked out from it yourself: rent times twelve over price.
2. The title: a registered conveyance deed in the seller's name for the unit number, and a charge search.
3. The lease: registered, with the tenant's name, start date, remaining lock-in and exit clauses.
4. The deposit: Rs 26.16 lakh on the let unit, and how it transfers.
5. Maintenance: the latest bills and who pays them.
6. The occupation certificate covering the unit.
7. Stamp duty: 7 per cent for a man, 5 per cent for a woman and 6 per cent jointly in Gurugram, plus registration.

Looking to lease rather than buy? The Palm Court rent page covers asking rents, maintenance, deposits and lock-ins in the building.

Frequently asked questions

What is the price of office space in Palm Court, MG Road Gurgaon?

About Rs 8,800 per sq ft on the one unit found for sale. A 7,934 sq ft office let to a multinational at Rs 4.36 lakh a month is offered at a printed 7.5 per cent return, which puts its price at about Rs 6.98 crore: Rs 52.32 lakh a year over 0.075. No other priced sale in the building was found.

Is the old band of Rs 12,000 to Rs 16,000 per sq ft right for Palm Court?

It could not be supported. No sale in Palm Court at those rates was found. At Rs 12,000 the let 7,934 sq ft unit would cost Rs 9.52 crore and yield 5.5 per cent; at Rs 16,000, Rs 12.69 crore and 4.1 per cent. The one priced offer works out to about Rs 8,800. Nearby Delta Square asks Rs 15,000 to Rs 16,000, which may be where the band came from.

What rent does an office in Palm Court earn?

About Rs 55 to Rs 70 per sq ft a month. Furnished offices of 2,250 to 4,600 sq ft ask Rs 60 to Rs 70, and the 7,934 sq ft let unit pays Rs 55. Maintenance is not published on any listing found.

What are the lease terms on the pre-leased Palm Court office?

Nine years, a three-year lock-in, a six-month security deposit and a 15 per cent rise every three years. The tenant is described as a multinational but not named. After the first rise the rent becomes about Rs 5.01 lakh a month, about 8.6 per cent on the implied price.

Who developed Palm Court?

It could not be established. One broker summary names TDI Infrastructure, but no developer page confirms it, and two coworking pages call the building DLF Palm Court, probably after DLF Colony next to it. For a resale, the seller's registered title matters more than the builder.

Where is Palm Court, and is it near the metro?

On the Mehrauli-Gurgaon road at the IFFCO Chowk end, in Sector 14 by some listings and Sector 16 by others. The Yellow Line stations on that side are IFFCO Chowk and MG Road; no source gives a walking distance.

Is Palm Court RERA registered?

No registration applies: it is a finished, occupied building sold unit by unit on resale. A purchase rests on the seller's registered deed, the occupation certificate and, for a let unit, the lease itself.