A Matter of ‘Prestige’
As I walk into the corporate office of Prestige Builders aptly called ‘The Falcon House’ to meet Bangalore’s best known builder Irfan Razack – CMD, Prestige Group, I was quite struck by the aptness of the falcon with the growth of the company. And with the Real Estate (Regulation and Development) Act, 2016 coming into force today, there could be no one better than Mr. Razack who has just completed his term as Chairman of Confederation of Real Estate Developers’ Associations of India (CREDAI) to tell us more.
If there was one person who can be described as a visionary leadership with a foresight that is spot on and has sharp business acumen, it will have to be Irfan Razack. Referred to as a humble and approachable individual, his leadership traits can be traced back to his college days when he was a student leader. Today, his vision can be witnessed and experienced in the success of the Prestige Group, a truly diversified and fast growing business conglomerate. He founded the Prestige Group in 1985 and today, the company has completed several million sq ft of world-class real estate development across the residential, commercial, retail, leisure and hospitality sectors in cities including Hyderabad, Kochi, Mangalore, Mysore, Goa and Chennai, besides Bangalore. The Group’s businesses also include Property Management Services and Interior Design. Under his able leadership, the Prestige Group has flourished into an entity that is considered the symbol of innovation and international offering and the market capital of the listed company on the National Stock Exchange (NSE) is in excess of Rs 9700 crores! Beyond all these however is a man who is simple, self assured and confident at one end and amicable and affable at the other – a balance that has seen him ensure his company soars to heights beyond the falcon!
Tell us about your early days and growing up years.
I was fortunate to study in good schools and colleges that largely moulded the values I have today. Also my parents and family upbringing gave me a background for life. From my early days itself, I was also disciplined and passionate about whatever I did. I always wanted to do anything to the best of my ability. In my college union elections I won the post of President and rallied around me. People believed in me then and even now and I guess it is the trust factor that is most important even today. In fact my father gave me total freedom to choose my path that gave me confidence to success. Likewise success does not come without failure but how you deal with that failure is what is moulds you as a person. If you have regrets in your life it will impede you to go ahead. There will be losses in business but it is important to look at the larger picture and what should drive you is the sense of achievement.
Did you always have the entrepreneurial spirit in you?
When I finished my graduation I wanted to be a lawyer for a while or even get into finance and do Chartered Accountancy. My father took me to a friend for me to my articles as well who asked me to choose right as he said I could not be a partner in my father’s business (in clothing) if I joined him. And my father also said since the business was already going I could think and choose, so I decided to join the business.
What drew you to real estate?
We (with his brother) were selling our family property and bought new property to ensure the capital gains were invested and this process got us interested and for 4-5 years we traded in properties only buying and selling. But after that we felt that there were no good developments happening so we decided to start building with the thought of making some rental income. As we went along, we had people who wanted to buy. So we sold it and got back the capital and profit which we ploughed it back to the business and soon enough we got sucked into it. But soon I told myself that it was important to look at different concepts and getting recognition and it is not just about making money.
Tell us your views about Real estate regulatory act and what it means for developers?
The Real Estate Regulatory Bill, passed by Parliament in 2016, will be the transformational legislation on how real estate business is done. It advocates a completely different method of conducting business, starting from registration of a project after approvals before the launch to keeping 70% of the collections in a designated account meant solely for that particular project, timely completion and delivery, commitment to specifications, total transparency in terms of availability as well as a five-year warranty post completion. All this and more will make the Real Estate Developer that much more accountable and responsible to the home buyers, will eliminate the weak, the freelance and the fly by night operators, and will bring in overall professionalism and accountability. It will also bring in a lot of consumer activism. These steps though, while protecting the customer, will have an impact on the supply and increase the cost of the product. This in turn will increase the price, which the customer will have to bear. While there is a lot of expectation overall, the expectation that the price of property will correct itself downwards is baseless. While the Regulatory Bill is being implemented, sadly the Government machinery, both official and political, has not been made accountable as a part of this legislation. Hence, getting approvals for building developments quickly and in time, including services and occupation certificates, still remains a challenge. The sooner the Government realizes this and implements measures to set right this deficiency as a part of their endeavour for ‘Ease of doing business’, the faster the economy can grow. This will also help the business of real estate and property development to be conducted in a seamless and transparent manner.
You have a lot of hospitality projects in the pipeline too. Please share details about them. Will hospitality continue to be a focus area?
Till date, the Prestige Group has completed four hospitality projects, Oakwood Premier Prestige, UB City, Oakwood Premier Prestige, Whitefield, 24 Tech Hotel in Prestige Tech Park, Angsana Oasis Spa & Resorts, Doddaballapur and Aloft Bengaluru Cessna Business Park in Prestige Cessna Business Park. The company has three major projects in the pipeline, Sheraton Bengaluru Whitefield in Prestige Shantiniketan, JW Marriott Bangalore Prestige in Prestige Golfshire – South India’s only golf residential development and The Conrad from Hilton International on Kensington Road, Bangalore. The hospitality industry is on the threshold of growth with a positive business environment. There are opportunities in different micro-markets as opposed to an overall generic demand, depending on the products, services and brands on offer, as these factors play a pivotal role in the hospitality industry in particular. My constant attempt is to stay one step ahead of changing market dynamics and create benchmarks in the hospitality sector in South India. Furthermore, there is a huge demand for mid-segment hotels in the three-star and four-star categories. If one looks at the masses, one of the main requirements among them is for mid-segment hotels. This sector is currently quite disorganized. We are looking at how to separate the hospitality vertical into a separate business segment.
What is your opinion on the current state of real estate in India?
In terms of residential real estate, the demand is set to grow steadily this year and the long-term impact of the recent economic changes will be positive for the market. However, in the Indian context, housing is a significant need. With rapid urbanization, the demand for housing will always persist in the affordable and mid-income group segments. As long as developers are able to produce homes between fifteen lakhs to a hundred lakhs, there will always be a constant demand. The demand for commercial space is a direct by-product of world economy. With the business world flourishing globally and several processes getting outsourced to India, the absorption of space will pretty much be constant, given that the economy does well internationally. This in turn creates jobs, which leads to the demand for homes as well as consumer spending.
What drives you to constantly innovate?
It is important to be self motivated and at a point in your life you no longer work for yourself and rather have a huge team. I call it the spider’s web and once that web is woven there is no escape and you have a huge responsibility of what you have built. There is a huge responsibility to continue that momentum and you have to adapt and innovate to the times. Every time you must understand what your customers need and create a product that suited for that. When we started we were known as a luxury developer but soon we realised that the volumes came from the mid and lower-mid segments. So we started designing homes to cater to them as well and priced projects sensibly so we can reach out to the market. We have to balance the company’s need to make profits with value for customers and do things right to be successful.
In your recently concluded role as Chairman of CREDAI, what kind of changes did you drive?
The term is for two years and it ended on 31st March 2017 and it was an absolutely satisfying experience to get all the stakeholders together. Bringing CSR into CREDAI and adoption Swatch Bharat and Skill development programs of the Government of India and setting up a scholarship for education were key highlights. It has got the huge energy boost that it required and the youth wing of CREDAI should be able to take things forward. The CREDAI brand now has credibility and that is a huge satisfaction.
What will be the impact of GST on property prices?
While the Goods and Services Tax (GST) may be beneficial in the long run, its immediate impact is expected to be inflationary. As a result, prices of real estate products will increase and the customer will have to bear it.
Do you feel that Prestige has more potential of unlocking value to its shareholders?
The decision to go public came after a lot of thought in 2010 and it’s been 7 years already and I am happy that we have been able to recognizing and capitalizing the opportunity to unlock value for ourselves and our investors. Also our investors have made an informed and well researched decision to invest and the share has been trading above the offer price. Also the commitment we made in terms of what we will deliver in terms of real estate spaces have been exceeded. So the potential of real estate in India is tremendous provided you do it right. It is a continuous struggle to do things right – right from acquiring land, getting approvals, converting ideas to reality and then execute the plan.
Please tell us about the philanthropic causes that the Prestige group is associated with?
Corporate Social Responsibility is a full time commitment at Prestige and we believe in taking it seriously and are committed to give back to society. Prominent among these are the Akshaya Patra Foundation which assists the Government of Karnataka in providing healthy midday meals to lakhs of school children, the charitable trusts of Rotary Club Chapters which support various social amelioration programmes, the Catholic Club Orphan’s Trust which provides care and builds a future for orphaned children, Janaagraha – the organisation that works towards creating and fostering democratic values among citizens, and the Al Ameen Scholarship Trust that provides much required financial assistance to needy and deserving students. We also actively work with Government agencies, assisting them in road development, landscaping and beautification activities to create a cleaner and greener Bangalore. Prestige has also undertaken the up-gradation of Vittal Mallya Road, Bangalore to world-class standards (in association with the UB Group), setting a benchmark for the rest of the city. Now I am keen to work on Ulsoor Lake and make the water potable but I am still waiting for the Government’s permission to go ahead.
What does success mean to you?
Success is the happiness when I deliver a product as promised to my customer and he sees value in it. Basically whatever work you do you must be relevant and be able to make a difference in the lives of people. In fact I tell my fellow builders that you are in a noble profession and you are creating wealth not just for yourself but your buyers and the nation at large. A friend’s daughter told me how Prestige had touched her life through the places she worked in as all of them happened to be our buildings and I felt it was a wonderful acknowledgement of our work.
What are the biggest challenges you see today in your business and how do you plan to overcome them?
The Government needs to bring in certain specific reforms and initiatives to create a healthier work environment for the real estate sector in particular. On the Government side, speedy issue of approvals for a project in totality is paramount. The ease of obtaining all permissions will go a long way in improving the overall business environment in Real Estate, which also includes benefit to the end consumer by way of lower cost and quicker delivery. Moreover, in cases where approvals have been issued – no retrospective actions should be taken by the Government. This also includes matters such as cancellation/revocation of approvals, which have been obtained with substantial investments in time, finances and effort. There is definite scope to rationalize regulation and to enable city development in the context of modern urban development. The difficulties faced in implementing projects by developers can definitely be streamlined. Laws need to change with time, and facilitate creation of modern cities.
What does wealth mean to you?
It is easy to talk about wealth after you reach a certain stage of your life. I think wealth comes to people who are chosen by God as he believes we can take care of it. After all we do not carry anything with us when we leave the world so how we can use it for well being is the key. Ultimately you need to understand how much money you need to live and learn to balance your need with your greed. If you can do work that positively impacts the life of someone who needs it then the wealth is worth it. Otherwise an extra zero in your bank account does not really matter. The ability to give – not just about money but also your time, emotions and knowledge, it comes back to you multi fold. Also if you try and hold on to your wealth it has no meaning, but if you are detached you will be more peaceful and you will have pleasure in sharing it.
How important is IT in your business? What kind of investments have you made in IT?
Technology is very important in today as it helps in growth and become more efficient. In fact right from the time we started we have used technology to help customer interactions with the company seamless. Also we are constantly innovating to see how the product becomes better and how each funcation – HR, Admin, production and Finance can leverage technology to get better. Something as simple as document management system that handles original papers is so important to be a better functional place.
What is the roadmap planned for your company?
At Prestige, growth and expansion is constant, as change is constant. So we have to think creatively all the time to see how new initiatives can be taken up. In 2015, we actively got into the warehousing market, and have been pursuing this asset class more aggressively since. This year, we will be focusing on several new launches in different parts of Bangalore as well as in Chennai and Mangalore. We are launching 2-3 large-scale IT developments in Bangalore. Simultaneously, we are also in the process of finalizing a piece of land in Pune for an IT Park. We have also set aside properties for office buildings as well as an IT Park in both Ahmedabad and Kochi. We are also very excited about opening the doors of our malls, both in Mysore as well as in Prestige Shantiniketan, Bangalore in 2017. Am also seriously looking at Mumbai but nothing is signed or final as of now. Though Prestige is already a national entity, it is my dream to give the company a pan India presence.
What kind of succession plan do you have in place?
Firstly as a company it is important to bring in professionalism, accountability and responsibility which we have done. Also we need to have proper job roles and responsibilities. In fact we have not told our next generation that they need to follow in our footsteps as it is important that anything must be done with passion. We are fortunate that they have got involved in some aspect of the business and they are constantly learning what it takes to run the business. It is like a sub conscious succession plan. Also what we have done as a family is that we have set up a trust and put all our shares there so that it benefits the family and the distribution is fair and equitable.
What do you like doing outside of work?
I enjoy travelling and adventure sports. While on my travels, I enjoy learning about new cultures and experimenting with different cuisines. I also enjoy trying my hand at the best adventure sports the country offers. Among other things, I have done Bungee jumping over the Victoria Falls and Parapenting (like parasailing) off the Swiss Alps.
Please tell us something about yourself that most people don’t know.
Most people see me as a successful entrepreneur focused on growing the company and moving towards my next goal. What many don’t realize is that, for me, this business is not about creating personal wealth anymore. It is about creating value for people. As developers, we have the privilege of giving people one of their most precious assets – a home. At Prestige, we have been trying to create quality homes for people for over 3 decades now and my biggest satisfaction comes from happy customers who come and tell us that they have made significant returns on their investment in Prestige homes. Over the years, we have also created assets for cities via Tech Parks, Malls, Hotels etc. and contributed to the overall economic growth of South India and in particular, Bangalore. People live in our homes, work in our offices, visit our malls, hotels and spas for recreation and in some way, we have managed to touch everyone’s lives and I am grateful for having had the opportunity to achieve this.
This story is the cover story in Millionaire Asia’s May-June 2017 issue here: Cover Story May-Jun 2017