Veritas Tower Office for Sale, Sector 53 Gurgaon

Office space for sale in Veritas Tower Sector 53 Gurgaon is almost always sold pre-leased, which means the price is not so much quoted as calculated. Here is the calculation, and the one transaction on the open record that it has to be checked against.

Office space in Veritas Tower, Sector 53, is worth about Rs 18,200 to Rs 24,000 per sq ft on the arithmetic — below the Rs 20,000 to Rs 26,000 this page used to print. The method matters more than the number. Rent here is Rs 110 to Rs 130 per sq ft a month; a Golf Course Road Grade A strata unit changes hands on a gross yield of about 6.5 to 7.25 per cent; annual rent divided by yield gives the price. The old top of the band implied a yield under 6.5 per cent, and nothing in this building supports that.

There is exactly one concrete price on the open record for Veritas, and it needs a warning attached.

The one transaction, and why it is stale

A pre-leased 2,500 sq ft unit has circulated at Rs 17,048 per sq ft, let at Rs 103 per sq ft a month, which is a return of 7.25 per cent. Check the arithmetic: Rs 103 times twelve is Rs 1,236 a year, and Rs 1,236 over Rs 17,048 is 7.25 per cent exactly. The figures are internally consistent, which is more than can be said for most quoted bands.

The problem is the date. The lease described started in June 2017 and ran three and a half years, so it ended around December 2020 — nearly six years ago. The listing has outlived the tenancy it was built on. Treat it as evidence that 7.25 per cent is the right yield to work with on this building, and not as evidence of what a floor costs today.

Working the price out yourself

On a 2,500 sq ft unit that is a spread of Rs 4.55 crore to Rs 6 crore for the same floor, decided by two numbers a buyer can check. Half a point of yield is about Rs 40 lakh on that unit. The yield is the thing to argue about; the rate per sq ft is the output.

What you are paying for against Sohna Road

Two and a half to three times the price for two points less yield. Sohna Road is cheaper for a reason, and that is not a mispricing; it is the market charging for a shorter void. Golf Course Road has never had the vacancy problem Sohna Road has, and a 2,500 sq ft Grade A suite half a kilometre from a station re-lets on a timescale a Sohna Road strata floor does not.

The question for a buyer is which risk they are equipped to carry. An investor who can fund six empty months and a fit-out contribution is paid two points a year to do it. One who cannot should pay the premium and buy the easier asset.

Five documents before you agree a price

1. The lease deed. Not a summary. The covenant, the permitted use and the assignment clause all sit in it.
2. The escalation clause and the lock-in remaining. A unit with four years of lock-in at 12 per cent every three years is a different asset from one with eight months left.
3. The security deposit held. It transfers with the sale, and it is a real number in the settlement.
4. The maintenance dues position. Arrears attach to the unit in a strata building. You inherit them.
5. When the rent was last reset. A floor let three years ago below today's market is worth more than its passing rent suggests; one let at the top of the market is worth less, because the reversion is downward.

The costs on top

Stamp duty in Gurugram is 7 per cent for a male buyer inside municipal limits, 5 per cent for a female buyer and 6 per cent for joint buyers, charged on the higher of your agreement value and the collector rate, with a slab registration fee that reaches its Rs 50,000 cap from Rs 90 lakh. On a Rs 5 crore purchase that is about Rs 35.5 lakh before anything else. GST is nil on a completed property that already holds its completion certificate. Check the current commercial collector rate for Sector 53 before you negotiate, because agreeing a price below the schedule saves nothing.

Our view

This is the easier of the two Gurgaon commercial purchases we have looked at this week, and it is priced that way. The yield is ordinary, the arithmetic is transparent, and the asset re-lets. What a buyer should not do is accept a quoted rate per sq ft without asking which yield it implies — the difference between 6.5 and 7.25 per cent is Rs 40 lakh on a small floor, and it is the number every negotiation on this road turns on whether or not anyone says so.

In short: Rs 18,200 to Rs 24,000 per sq ft, derived from the rent and the yield rather than quoted. Argue about the yield, and read the lease before the brochure.

Two comparisons worth making before you sign. Office space on Golf Course Road sets the rate for this address, and office space for sale on Golf Course Extension Road is where the same money buys newer stock further out — the trade this purchase is really making.

Frequently asked questions

What does office space cost to buy in Veritas Tower Sector 53 Gurgaon?

Derive it rather than take a quoted band. At rent of Rs 110 to Rs 130 per sq ft a month and a Golf Course Road yield of 6.5 to 7.25 per cent, the price works out at about Rs 18,200 to Rs 24,000 per sq ft. The Rs 20,000 to Rs 26,000 this page used to print assumes a yield under 6.5 per cent at the top, which nothing in this building supports.

Is there a real transaction to price off?

One, and it is out of date. A pre-leased 2,500 sq ft unit has circulated at Rs 17,048 per sq ft on a rent of Rs 103, giving 7.25 per cent — that is 7.25 percent of the capital value returned as rent each year. The lease it describes began in June 2017 and ran three and a half years, so it expired around December 2020. It is the only concrete price on the open record for this building and it is nearly six years stale. Use it as evidence that 7.25 per cent is the right yield to work with, not as evidence of what a floor costs today.

How do I work the price out for myself?

Calculate it as annual rent divided by the yield. A 2,500 sq ft unit at Rs 120 per sq ft a month earns Rs 36 lakh a year; at 7 per cent that is Rs 5.14 crore, or Rs 20,571 per sq ft. Move the yield to 6.5 per cent and the same unit is Rs 5.54 crore. Half a point of yield is Rs 40 lakh on one small floor, which is why the yield is the number to argue about rather than the rate.

Why does this cost three times a Sohna Road unit?

Rail, and the tenant pool that follows it. The Sector 53-54 Rapid Metro station is about half a kilometre away, and Golf Course Road has never had the vacancy problem Sohna Road has. A Sohna Road strata unit is cheaper at Rs 7,100 to Rs 8,800 per sq ft and yields 7.5 to 9.3 per cent; this yields 6.5 to 7.25 at two and a half to three times the price. You are buying a shorter void.

What should I ask for before agreeing a price?

On a pre-leased purchase: the lease deed, the escalation clause, the lock-in remaining, the security deposit held, and the maintenance dues on the unit. Then ask when the current rent was last reset — a floor let three years ago at a rate below today's market is worth more than the passing rent suggests, and one let at the top of the market is worth less.

Is a 6.5 to 7.25 per cent yield good for Gurgaon commercial?

It is the normal range for a well-located Grade A strata unit, and slightly above the 6 to 7 per cent often quoted for the city. Anything materially higher on this road should prompt a question about the covenant, the remaining term or the building rather than a purchase.