Two pre-leased offices can show different rents per sq ft and still pay you the same money. Or they can show the same rent and pay you very different money.
The reason is simple. Nobody told you which area the number is on.
The short answer
Before you compare rent per sq ft or price per sq ft on a pre-leased property, ask one question: which area is this on, carpet area or super (chargeable) area? Then ask for both figures in writing. Your yield is always annual rent divided by total price, so the area basis does not change the yield. But it changes every comparison you make against the market, and it can change how easily the space re-lets when the lease ends.
Three areas, three different numbers
| Term | What it usually means |
|---|---|
| Carpet area | The space you can actually use inside the walls. |
| Built-up area | Carpet area plus the area under the walls. |
| Super / chargeable area | Built-up area plus a share of common areas such as lobbies, lifts and stairs. Also called saleable or leasable area. |
Fact: The Real Estate (Regulation and Development) Act, 2016 defines carpet area as the net usable floor area, excluding external walls, service shafts, and exclusive balcony or open terrace areas, but including internal partition walls. RERA's definition of an "apartment" covers units used for commercial purposes too, so offices and shops in registered projects fall within it.
The gap between carpet area and super area is often called "loading". It is not fixed. It depends on the building, its common areas and how the developer measured it.
Why this matters for your money
A lease is a contract. The rent can be fixed on whatever area the landlord and tenant agree, and in many commercial buildings it is fixed on the larger, chargeable area. So when someone says "the rent is ₹120 per sq ft", that figure only means something once you know the area behind it.
This affects three things:
- Market comparisons. If you compare one property's rent on super area with another's on carpet area, you are comparing different things.
- Price per sq ft. A low price per sq ft on a heavily loaded area can be an expensive price per usable sq ft.
- Re-letting. When the lease ends, the next tenant will look at how much usable space they get for the rent. A building with heavy loading may have to offer more to compete. (Opinion: this is a judgement about market behaviour, not a rule.)
Illustrative example
Illustrative example. Not a real property or tenant.
Two offices. Both cost ₹4 crore. Both have 1,300 sq ft of carpet area. Both earn ₹2,40,000 a month in rent.
| Office A | Office B | |
|---|---|---|
| Chargeable area | 2,000 sq ft | 1,600 sq ft |
| Rent quoted | ₹120 per sq ft | ₹150 per sq ft |
| Price quoted | ₹20,000 per sq ft | ₹25,000 per sq ft |
| Price per carpet sq ft | about ₹30,770 | about ₹30,770 |
| Yield (₹28.8 lakh ÷ ₹4 crore) | 7.2% | 7.2% |
On the brochure, Office A looks cheaper and under-rented. Office B looks pricier and over-rented. In fact they are the same deal. Only the area basis is different.
Now flip it. If two offices both quote ₹120 per sq ft, but one has far more loading, the one with less loading gives the tenant more usable space for the same rent. That one is usually easier to re-let.
If you are comparing a few options and the numbers are on different bases, we can help you line them up. Call / WhatsApp: +91 9315368515.
How we look at it
At VRX Capital, we compute the yield ourselves from the price and the rent, rather than repeating a quoted percentage. The area basis is part of that check. Yield is not the investment thesis. The tenant, the lease, the cash flow, the asset, the location, the price and the exit all matter, and the area figures sit inside "asset" and "price".
See also: how rental yield is calculated and why round-number yields deserve a second look.
Common mistakes
- Comparing "₹ per sq ft" figures from different listings without asking the area basis.
- Treating a low price per sq ft as a bargain without checking the carpet area.
- Assuming the area in the lease matches the area in the sale deed. Check both.
- Ignoring maintenance. In many buildings it is billed on chargeable area, so loading affects the tenant's total cost. If the lease puts some of it on you, it affects yours too. See CAM charges explained.
Checklist before you buy
- Get carpet area and chargeable area in writing.
- Confirm which area the lease rent is calculated on.
- Confirm which area the sale price is quoted on.
- Check the area in the lease, the sale deed and any builder allotment letter match.
- Work out price and rent per carpet sq ft before you compare with other options.
- Work out the yield from total price and total annual rent, not from per sq ft figures.
Area definitions and how they apply to a specific building or document can vary. Verify the legal points with a qualified professional before you rely on them.
FAQ
Does the area basis change the yield on a pre-leased property?
No. Yield is total annual rent divided by total price. The area basis changes per sq ft comparisons, not the yield itself.
What is loading in commercial property?
Loading is the difference between the carpet area and the super or chargeable area. It reflects the share of walls and common areas added to the usable space. It varies by building.
Is commercial rent in India usually paid on carpet area or super area?
It depends on the lease. Rent can be fixed on any area the parties agree, and in many commercial buildings it is on chargeable area. Always check the lease.
Does RERA apply to commercial units?
RERA's definition of an apartment includes units used for commercial purposes, such as offices and shops, in registered projects. Confirm how it applies to a specific project with a qualified professional.
What should I ask the seller about area?
Ask for carpet area and chargeable area in writing, which one the rent and price are based on, and copies of the lease and title documents that show the area.
Talk to us
Want a second pair of eyes on the numbers before you commit? Share the lease rent, the area figures and the price, and we will walk you through it. You can also see how we work with investors, browse current pre-leased listings, or get in touch.
Call / WhatsApp: +91 9315368515
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