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The palace was originally the Devdi (Palace) of a wealthy businessman Kamal Khan which later Nizam of Hyderabad bought it from him. Since, Kamal Khan's initials incised on the walls and doors in the palace with the letters 'KK', the Nizam suitably changed the initials K.K. into King Kothi.
Since ascending the throne in 1911, he did not move to Chowmahalla Palace like his father did. He stayed and died in the palace in 1967. He is buried in a corner of the palace grounds.
Built in Neo - Classical style, the palace is divided into two groups and has three main buildings. The first group is located in the eastern half which now serving as a state government hospital , includes a grand reception room and this was used in those days by the Nizam for official and ceremonial purposes. The third building is the Usman Mansion which was destroyed in the early half of the eighties.
The second group is located on the western half which contains the main residential buildings, known as Nazri Bagh. Now a walled structure, the main entrance to Nazri Bagh always has a curtain draped across always it and is consequently known as the 'Purdah (Curtain) Gate'. It is said that when the Nizam went out of the palace, the purdah was lifted up, to give an indication to the people that the Nizam was not in palace.
It is now is replaced by a tall brick wall. The Nazri Bagh and the Mubarak Mansion are still belong to the private property of the Nizam.
The tallest structure is a clock tower, meticulously maintained over the years which is in the eastern side of Mubarak Mansion. King Kothi Palace has three steel trunk boxes locked with English made padlocks which contains lot of pearls, sapphire, rubies and diamonds. The palace has intricate woodwork, the sloping roofs are in octagonal shape.
The mansion's gate is guarded by the Maisaram Regiment, police, and the Sarf-e-Khas army. This palace was also home to the Judi Mosque. It is said that the sixth Nizam Osman Ali Khan wanted that he be buried in this mosque. It was just opposite his residence.