My concern for the imaginary palace would be for students with aphantasia - no visual imagery. It is why I always use physical palaces. That would be very few of your students, but you will have them. I would suggest checking with students how well they can remember imaginary palaces, and even let them decide which would be better - although a palace for the whole class would work best because of the group encoding.
I don’t think I helped at all! 
Lynne