Nikhil KamathEp. #20 | WTF are Indian Real Estate Giants Up To? Nikhil ft. Irfan, Nirupa, & Karan
EVERY SPOKEN WORD
150 min read · 30,012 words- 0:00 – 1:02
Intro
- NKNikhil Kamath
The question we want to answer today: I'm young, I'm twenty years old, I want to start a real estate company. How do I go about it? Should they invest? Should it be commercial? Should it be residential? Should they do fractional real estate? [upbeat music] Okay, we are back. Yeah? Started? Ready? [upbeat music] Thank you, guys, for coming. Uh, I know all three of you fairly well because we live in the same city, and we have met many times, dozens of times. For the people who do not know you, uh, I don't think there are many of those,
- 1:02 – 3:38
Irfan Razack's Intro
- NKNikhil Kamath
but maybe we can start with Irfan uncle. Tell us a bit about growing up in Bangalore and how you came about and became this, uh, original gangster of the real estate industry. [laughing]
- IRIrfan Razack
[laughing] I like that.
- SPSpeaker
[laughing] Where did you get that from?
- IRIrfan Razack
That's quite apt, though. I like that. [laughing] I like that. I love that. [laughing] You know, Nikhil, I never, ever thought that I'll be a developer or a real estate, uh, professional in whichever way. Of course, Bangalore, in our days, because I'm ancient, was a very, very sleepy, old city. So-
- NKNikhil Kamath
Were you also born in Bangalore?
- IRIrfan Razack
Yeah, I've been born in Bangalore, bred in Bangalore.
- NKNikhil Kamath
Parents moved to Bangalore?
- IRIrfan Razack
Uh, parents... My grandparents came in from Kachchh, Bhuj. That is about more than a hundred years ago.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
My parents also were born in Bangalore. They studied in St. Joseph's. I studied in St. Joseph's. I did my college in the commerce college in St. Joseph's, graduated from, so this e- even those days... Today, kids, the moment they'd finish the school, the next thing they'll be looking at which uni to go, which part of the world they need to go and study. We never had such concepts.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
The only concept was, okay, after you finish this, uh, what do you do next? So you have to graduate. You do that, and then later on, it was for me, I, I had a passion for numbers. I had a passion for law, so I did my stint in, uh, year plus in the law college and then dropped out, and I did also an articleship for, uh, my chartered accountant, which I, again, opted out because I got sucked into my parents' business.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
So that's what happened, and that was fashion, menswear fashion. I made Nirupa's dad's, uh, uh, wedding clothes.
- NKNikhil Kamath
Really?
- SPSpeaker
That's right. [chuckles]
- IRIrfan Razack
She, she wouldn't know about it-
- SPSpeaker
I wouldn't
- IRIrfan Razack
... because she was, she wasn't there. [laughing] So when, uh, her dad walked in, the whole family... See, the- we used to get all the coffee planters from different part, from, uh-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... the, the section. We used to get the industrialists, the businessmen, including the, the, the, the, where we are sitting, uh, Mr. Mallya himself used to come and make his clothes with us.
- NKNikhil Kamath
On commercial street?
- IRIrfan Razack
Yeah, yeah, yeah, and of course, a lot of VIPs.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
That, that's how we have that connect. We know all the who's who.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
That made things easy also.
- NKNikhil Kamath
Mm.
- 3:38 – 6:15
Why did Irfan start a real estate company
- NKNikhil Kamath
So why did you think of starting a real estate company from-
- IRIrfan Razack
Quirk of fate, destiny. This happened in the year nineteen eighty, eighty-one. We sold a family property. So I, I was maybe as old as Karan here.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
My parent, my dad, and my two uncles wanted to sell that. They put me and said, "You, now you do the entire transaction." So that was way back in eighty. So i- they said, uh, some Bombay developer wanted to buy it. In fact, there were several people, uh, somebody from Delhi, somebody from Bombay. Finally, we chose someone, and then that entire process of s- doing the agreement of sale, getting the entire money out from the developer, and then again, the reinvestment.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
The reinvestment, that was what made it all very attractive, you see? Once the money came in, of course, my two uncles took their share, and, uh, we had to reinvest for ourselves and did something, and that, in that, uh, quest of- [clears throat] - selling and buying, we got this little bit of taste of real estate where, you know, we, we did some quick profits and some flipping over and-
- NKNikhil Kamath
What year was this in?
- IRIrfan Razack
This is nineteen eighty, so that is, uh, a good forty-four years ago. Which, [clears throat] which property was this first? The Infantry Cross Road, where it's now, it's called the Blue Cross Chambers. Ah. That's where... That was a family home. Right. So one led to the other. We, we... The whole thing started as a reinvestment. Even today, you have the same model where you can reinvest and get, get the exemption for capital gains. So back then also, though, the tax rate was much higher-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... which is now lower. At twelve and a half percent, people are crying. Uh, Nirmala Sitharaman has done a disservice by doing it at twelve and a half. I believe whatever she has done is done well.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Without indexing, twelve and a half percent on long-term gains is, I think, uh, pretty decent.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
So those days, we had to reinvest. But my uncle, o- one uncle, of course, took his money, did whatever he... We didn't have any say on it. Between my father and my one uncle, we tried to do all that. So in that quest of doing that, we came to know about how things went about.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Values were much less.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
All houses were sold for lakhs, and the, I bought my, uh, my first plot for my own house in Nandi Road at hundred and thirty-five rupees a square foot.... today it's all thousands.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
People will say twenty-three thousand five hundred or thirty-three thousand five hundred. Don't know what the rate is.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
That's how things were back then.
- 6:15 – 9:35
What defines the Value of Land : FSI, Laws and more
- NKNikhil Kamath
What defines the value of land, Uncle? If today somebody says the value of land, let's say, on this road is thirty thousand, forty thousand per square feet, is it the monetization capacity of the land that attributes that value to it?
- IRIrfan Razack
See, now, uh, very different from what it was way back.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Way back it was affordability, and how can I, uh, you know, do I can afford that, and everything else. I know in 1973, my father bought a piece of land in Ali Asgar Road Cross. You know, what happened was-
- NKNikhil Kamath
Where the-
- IRIrfan Razack
'76-
- NKNikhil Kamath
... Elements Restaurant is.
- IRIrfan Razack
Yeah, see, what happened was that time we got the Urban Land Ceiling Act.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
'76 or '73, the act came in, so all the big, uh, landlords who had these huge houses, they had to quickly dispose of the excess land, so they converted them into plots. And that's how-
- NKNikhil Kamath
Yeah
- IRIrfan Razack
... these layouts came into Bangalore. That's the advent, I mean, that's the historical thing about layouts in Bangalore. Now, what defines... Today, what it defines is it's depe- depending on the what's the selling, uh, it's all about FSI on that road. It all depends on, uh, what's the selling price of the product would be and the construction cost, so that the, the entire way of calculating is very different now than back then.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
It, it's very different.
- NKNikhil Kamath
So you did the first land transaction 1980, '81 or '82, and then you made some money. And then?
- IRIrfan Razack
And then one led to the other. We did trading in real estate for about five years.
- NKNikhil Kamath
Okay.
- IRIrfan Razack
Then I said, "This is too boring. We must really do something which makes a difference, which we'll be noted for."
- NKNikhil Kamath
Mm.
- IRIrfan Razack
So I told my brother, I said, "Let's do some..." See, there was no good office buildings in Bangalore, so what, ironically, I did not do my residential buildings first. What we did was, we said, uh, I felt that office was a nicer way to do it. Mm, you are more known for it. You can either get rental income, or you can sell strata offices those days, and the office those days were very different from offices today. Today, you have these, uh, uh, large, large multinational clients having, needing hundreds of thousands of square feet. Those days, even an office of, uh, thousand or two thousand or five thousand square feet was big-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... because it's, who was the occupiers were professionals, small businesses, small industrialists, and all of it. And from where did it change was in the late '90s. 1988, '99, offices changed, so we, we started building office. My first building was on KH Road. It was called the Prestige Court. Then we did some, two buildings. One is Copper Arch on Infantry Road-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... and the other is House of Lords on St Mark's Road. Now, House of Lords, unfortunately, we sold it, and then we realized if you don't maintain it, it goes to seed. In fact, we installed the first escalators there.
- NKNikhil Kamath
Right.
- IRIrfan Razack
Uh, but, um-
- NKNikhil Kamath
What year was that?
- IRIrfan Razack
Uh, '80s, uh, '88, '89, maybe 1990.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Then that, uh, see, change. You see, then we started getting more and more opportunities on doing office in premium locations, where you see we now we, we also invented
- 9:35 – 11:10
What is Joint Development
- IRIrfan Razack
this joint development concept, where I told... In fact, the first one I did was my own father-in-law. He wanted to sell his family house. I said, "What?" I said, "Uh, do you have any use for that money?" He said, "No." I said, "If you don't have any use for this money, don't sell it, because money comes in your hand, it'll-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... vanish. So I'll do this joint development for you." That's how I did this Copper Arch, so I invented that. I had to literally tell the lawyers how we had to do the JDA agreement.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
And then, of course, one, uh, once you invent one thing, then from there it's very easy to replicate, and, uh, it becomes better and better as time elapses. So, so that was the, uh, thing that happened.
- NKNikhil Kamath
So when did you structure it as a real estate company? When did that happen?
- IRIrfan Razack
Yeah, '85. '85, '86 was the Prestige Estates and Properties and Prestige Constructions, two separate, um, uh, partnership firms were born.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Uh, one was to buy land, and the other one was to do the construction. But then finally, it all got merged, became one-
- NKNikhil Kamath
Mm-hmm
- IRIrfan Razack
... one firm, easier to operate, and then, of course, now we've got some hundred SPVs. That's a separate story. But you see, what happened is, based on the need, everything changes, everything evolves.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
And of course, we became a private limited company in, uh, I think around 2000, and then publicly listed in 2010.
- NKNikhil Kamath
Mm. And publicly listed and doing very well in the last three or four years. How are you all friends,
- 11:10 – 17:09
Guidance for Growth in Real Estate
- NKNikhil Kamath
Uncle? I remember five years or six years ago, we were at dinner in Dubai, in some restaurant-
- IRIrfan Razack
Uh.
- NKNikhil Kamath
... and four or five of your competition, your competing real estate companies, uh, you were all telling me that you go on one holiday together every year. You catch up. This is strange. This is something I have not seen in any other industry. How does that work?
- IRIrfan Razack
Well, only, only in Bangalore. [chuckles]
- NKNikhil Kamath
Yeah. [chuckles]
- IRIrfan Razack
This is not, not, not all over. [chuckles]
- NKNikhil Kamath
One holiday, even I was there with them, and I was like, "This is weird."
- IRIrfan Razack
[chuckles]
- NKNikhil Kamath
Like, what is going on?
- IRIrfan Razack
No, it's not weird, you see, like, like-
- NKNikhil Kamath
All men with big egos and lots of money-
- IRIrfan Razack
[chuckles]
- NKNikhil Kamath
... four, five of them competing.
- IRIrfan Razack
No big egos. Actually, ego is the one that kills you.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
See, I always said, "If you learn how to bend-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... you'll not break."
- NKNikhil Kamath
Mm.
- IRIrfan Razack
"But if you are stiff, you, you, uh, you can break."
- NKNikhil Kamath
Mm.
- IRIrfan Razack
And, you know, we are, according to me, we are all in the same space, whether it's his dad or whether her dad-... like I said, I've, I've- we grew up, we didn't, both of us, when we got into this business-
- NKNikhil Kamath
Mm.
- IRIrfan Razack
-ironically, um, after I ma- bu- did his wedding suit, this, that, I was in my sh- my, uh, dad's shop making clothes-
- NKNikhil Kamath
Mm.
- IRIrfan Razack
-and doing suits for people who want to get married, and this gentleman was a coffee planter. One day he decided to do a build, uh, um, put up a building on Brigade Road, and that's how the word Brigade came.
- NKNikhil Kamath
Really?
- IRIrfan Razack
And, uh- [laughing]
- NKNikhil Kamath
Yeah. [laughing]
- KVKaran Virwani
[laughing]
- 17:09 – 22:58
Managing a Family Business
- NKNikhil Kamath
to manage family and business? This applies to all of you.
- IRIrfan Razack
Mm.
- NKNikhil Kamath
I know your brother, your father, your wife. I know Nirupa's dad. I know your kids, uh, nephews, nieces. It seems to be a very... What was this TV show I was watching? Uh-
- NSNirupa Shankar
Succession.
- IRIrfan Razack
Don't say Succession. [laughing]
- NKNikhil Kamath
Succession. [laughing]
- KVKaran Virwani
[laughing]
- NSNirupa Shankar
[laughing]
- NKNikhil Kamath
It's like different versions of Succession in each of your households.
- NSNirupa Shankar
Yeah.
- NKNikhil Kamath
How complicated is that?
- NSNirupa Shankar
So Succession is a show I haven't watched-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... because I found all the protagonists quite annoying.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
So I didn't take a liking to any of them. But, um, I think, like, if you look at it, right, most businesses are family businesses, right? Eighty percent of businesses globally-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... start off as family businesses, and then they get professionalized, and then they, um, go public. So we all start off as family businesses, and then you have to decide if second gen wants to continue or not. So only I think, I was reading somewhere that thirty-six percent of-... businesses get into second gen.
- NKNikhil Kamath
Hmm.
- NSNirupa Shankar
And then maybe about eleven or fifteen percent get into third gen, and maybe only four percent get into fourth gen. So I think the, um, the challenges in, uh, the, like you were saying, managing egos or managing people and managing, uh, relationships, because you might have the perfect org structure, but if the human element is not looked into, then the disruption happens. The way we have done it is my dad was very smart in the sense that he gave my sister and I, she's older than me-
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
-different verticals.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
And then we also have a cousin in the business, and we also have another family friend who's like a brother to me anyway, and an uncle, and then my mother was in the business. But all of us handled very different sections and verticals of the business, so there's no stepping on each other's toes.
- NKNikhil Kamath
Mm. But like every other family-
- NSNirupa Shankar
Yeah.
- NKNikhil Kamath
When, let's say, ten family members, being humans at the end of the day, like we all are, people get insecure, people get jealous, somebody gets more validation, somebody gets less. The next generation does not agree with the prior generation in, in the idealistic way of thinking, all of that. How do you cope with that and still stay together?
- KVKaran Virwani
I think you should answer this, [laughing] since you are, like, managing probably this at the highest level.
- IRIrfan Razack
No, no, I think similar structure, what Nirupa just now enumerated. Very important thing is this, what she very rightly said about stepping on each one's toes.
- NSNirupa Shankar
Toes, yeah.
- 22:58 – 25:01
What's the Minority Rule
- NKNikhil Kamath
the minority rule.
- NSNirupa Shankar
Mm-hmm.
- NKNikhil Kamath
So if four of us are individually of a certain psychology, when we come together as a group, the psychology of the group is completely different-
- IRIrfan Razack
Different
- NKNikhil Kamath
... from what we had individually.
- IRIrfan Razack
Absolutely.
- NKNikhil Kamath
And three of us might agree and be broadly okay with whatever is happening, but if that one person who is the minority who disagrees, disagrees vehemently enough, we will have to tweak the company or the decision of the group in a manner that appeases the minority. This happens with many things, right? Now, if you ask, why is most meat halal today? Why is Coke a certain way? Uh-
- NSNirupa Shankar
Yeah
- NKNikhil Kamath
... why, why are kosher foods the norm and not the exception? You see it across the world in different products. So in your family, uh, or in Irfan's family, if he has four in the next generation, and the one who is minority is very strong and very vocal about what he believes, how do you get him to go along with the other three majority who are more malleable in a way? That's a tough question, right?
- IRIrfan Razack
Uh, it is a tough question. Fortunately, we don't have that situation.
- NSNirupa Shankar
... Mm-hmm. Yeah, so right now, I agree. See, right now, you're also there, so everything, everybody listen to whatever you say. [laughing]
- NKNikhil Kamath
[laughing]
- KVKaran Virwani
[laughing]
- NSNirupa Shankar
All decisions are resolved then. [chuckles]
- KVKaran Virwani
Yeah.
- NSNirupa Shankar
But I think, like you said, we are also looking to have a executive council where the key members' decisions have to be done unanimously, and it's either convince or be convinced.
- KVKaran Virwani
Mm.
- NSNirupa Shankar
And there's a way to do it, right? There's numbers, there's facts. I think first generation, or OGs, as we call them, were more intuitive.
- KVKaran Virwani
Mm.
- NSNirupa Shankar
And I think as the organization grows, you have to g- grow from a person-dependent organization to a more process-driven one.
- KVKaran Virwani
Mm.
- NSNirupa Shankar
So then your numbers will come into play, logic will come into play, financing will come into play. There will be other factors. It's not, "I feel that this is the best decision," right?
- KVKaran Virwani
Mm.
- NSNirupa Shankar
We'll have to showcase it with logic, argument-
- KVKaran Virwani
Correct
- NSNirupa Shankar
... numbers, and hopefully, it's a convince or be convinced
- 25:01 – 34:25
Is passion overrated ?
- NSNirupa Shankar
situation.
- NKNikhil Kamath
If you had to start a real estate company that would thrive today-
- NSNirupa Shankar
Mm
- NKNikhil Kamath
... will the thinking of your generation work in that company or the prime- prior generation? Binary question. You can't have little bit of this and little bit of that.
- NSNirupa Shankar
Would Brigade-
- IRIrfan Razack
Prior.
- KVKaran Virwani
Prior.
- IRIrfan Razack
[laughing]
- KVKaran Virwani
I would say prior.
- NKNikhil Kamath
Yeah?
- KVKaran Virwani
Yeah.
- NSNirupa Shankar
Yeah.
- NKNikhil Kamath
Why do you say prior?
- KVKaran Virwani
I would say prior because I feel like building a real estate company, you need a lot of risk-taking ability. Like, if you wanna, you know-
- NKNikhil Kamath
So you need to be intuitive, you're saying
- KVKaran Virwani
... build from scratch and go-
- NSNirupa Shankar
Sorry, I'm saying your generation-
- NKNikhil Kamath
No, you need to be intuitive?
- NSNirupa Shankar
No, he- I think his point is intuition. I have a couple of other points, which I will add after him.
- KVKaran Virwani
Yeah, I think that, uh, today, maybe our generation is, you know, thinks a little bit too much before getting into, you know, stuff. Uh-
- NSNirupa Shankar
Analysis paralysis
- KVKaran Virwani
... and, uh, and the, and in real estate specifically, I feel like you do need to take these bold calls. You do need to take a lot of risk. You do need to build a very strong relationship with, you know, partners upfront, and I think the previous generation was slightly better at doing that, I would say, if I had to start from scratch.
- NSNirupa Shankar
Mm.
- KVKaran Virwani
But to take over a business-
- NKNikhil Kamath
Mm
- KVKaran Virwani
... and to build a business maybe from a platform or a foundation that w- it is at today, I would say our generation.
- NKNikhil Kamath
There will be more processes.
- KVKaran Virwani
Yeah, yeah, just more generation, more ability to tweak it, and, you know, have ability-
- NKNikhil Kamath
You're saying they had more risk-taking ability?
- KVKaran Virwani
Hundred percent, I feel.
- 34:25 – 38:31
Building Wework
- NKNikhil Kamath
have time. [laughing]
- KVKaran Virwani
I would say for me, it, it has been a, like a defining angle to, you know, the path that I always, like-
- NKNikhil Kamath
Yeah
- KVKaran Virwani
... definitely wanted to pick, even from when I was younger, when I was in college, even to not jump in straight into the family business, to try to do something, even if it was small, like just set up, you know, a restaurant and do that. It was, for me, like a validation that I could do something without having to, you know, sort of like rely on the, the family business or, or, you know, kind of what my, my dad's built. I think a big reason why I have, like, you know, tried to, like, have a branch out also of-
- NKNikhil Kamath
WeWork
- KVKaran Virwani
... the traditional real estate business was just focusing on WeWork and building that was kind of a best of both worlds, where under, you know, uh, the umbrella and, you know, with, with the legacy, uh, able to sort of, like, continue the legacy. You add some contributing factor, which, you know, hopefully will end up becoming as big or, you know, like, will add something in equal parts, I think, to-
- NKNikhil Kamath
Mm
- KVKaran Virwani
... the business. I think, I think that's my way of looking at it, where... And I, I'm fortunate enough that I even got the, you know, the ability, the freedom to springboard off the platform and then be able to like, you know, do this, which has had its own journey, and, you know, touch wood, now that things are going well [chuckles] I can say that, but there could have been, you know, very well a situation where it, it just went completely under, and, uh, then I had to, like-
- NKNikhil Kamath
It could come back
- KVKaran Virwani
... retract back, you know-
- NSNirupa Shankar
We all have a chip on our shoulder [laughing]
- KVKaran Virwani
[laughing] ... into India.
- NSNirupa Shankar
We are something to prove.
- NKNikhil Kamath
In your truly unfiltered dream-
- KVKaran Virwani
Yeah
- NKNikhil Kamath
... is WeWork bigger than Embassy?
- KVKaran Virwani
I would love it to be.
- NKNikhil Kamath
But is it?
- KVKaran Virwani
Is it now?
- NKNikhil Kamath
In your unfiltered dreams?
- KVKaran Virwani
No, no, definitely not. Not yet.
- NKNikhil Kamath
What do you dream about, Karan? [laughing]
- NSNirupa Shankar
[laughing]
- KVKaran Virwani
What do I dream about? [laughing]
- NKNikhil Kamath
[laughing]
- NSNirupa Shankar
[laughing]
- KVKaran Virwani
I dream about...
- NSNirupa Shankar
Mm.
- KVKaran Virwani
I, I actually, uh, I-... I do believe that the competition is, like, healthy in some way, and, and growing up with three brothers, it's probably, you know, even more so across, like, everything that we've done. But we have, like, such a strong bond that it is like, you know, loving each other's success is probably the defining thing that, like, I dream about, which is, you know, we each are able to put or add something, like, to the family business.
- NKNikhil Kamath
But what if it was not like that, and one of you could pick?
- 38:31 – 47:39
What's happening in Indian Real Estate
- KVKaran Virwani
I feel like India is sort of where, and, you know, my dad also says this, like, where America maybe was in the '80s or '70s-
- NKNikhil Kamath
Mm
- KVKaran Virwani
... or '80s, where most companies were family businesses. They will slowly transition into, you know, being public. I think your world also gets to see how many are transitioning into that, into that field. And then they'll get professional, and you'll have boards, and you'll have charters and structures and succession planning, and all of that will happen like it has in many countries. And China is another example where, you know, similar things happen, where you don't really know the faces of those companies, but the wealth has definitely passed on multiple generations, right? And, um-
- NKNikhil Kamath
I see a lot of wealthy people, wealthy on paper, uh, techie guys-
- KVKaran Virwani
Mm
- NKNikhil Kamath
... software companies, uh, rich people in different industries. Nobody feels so... Nobody feels even remotely close to as wealthy as real estate people. [laughing] Your houses-
- KVKaran Virwani
[laughing]
- NKNikhil Kamath
... your cars, your planes. Like, why do real estate people-
- KVKaran Virwani
I think it's like cash flow over valuation.
- NKNikhil Kamath
Yeah.
- KVKaran Virwani
That's the-
- NKNikhil Kamath
Yeah.
- KVKaran Virwani
I mean, because, like-
- SPSpeaker
It's the best investment class, that's why. [laughing]
- IRIrfan Razack
[laughing] Not really. You see, of course, at least today, the bankers also have learned the value of real estate because that's the only asset that can't go up in smoke.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
At least even they have something to hold on to, which they can, if they hold on longer, they'll actually make money out of it rather than lose money from the whatever they have to recover.
- NKNikhil Kamath
You know, Uncle, that is what scares me most about real estate. Like, if I were to put five real estate developers in a room, the older they are, the more they will be forceful about this, but every single one of them will believe real estate prices can never go down, whatever happens. [laughing]
- IRIrfan Razack
[laughing] No, no, no. See, it, it depends country to country-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... population to population.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Now, take... cut and just come to India.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
With the type of population that you have in this country, and there is still, according to me, a tip of the iceberg. There's, you know, there's still a lot more urbanization that has to happen-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... a lot more people who are aspirationally wanting to buy a home. Yes, there have been periods, uh, real estate always has its periods where suddenly price goes up too high, too fast. Then there's a plateau, and that plateau continues for a little while, where your price neither goes down, doesn't correct itself, doesn't go up, or if somebody wants... That's why we say real estate is illiquid. You want to sell, there's not too many buyers.
- NKNikhil Kamath
What is the, what are the demographic change?
- IRIrfan Razack
And then, with the inflation, it goes up again. But with the type of people that we have in our country, the type of job creation that's happening, the type of industrialization we are talking about, and, and we are seeing it real. See, now, in the initial days when we got into this business, who was I selling to? Who was my buyer? It was people who were retired, who had their provident fund, or who had sold some property somewhere in a larger city, in the bigger city, and came here with that little extra and wanted to buy a house. And then the, the transactions were few and far between. Just this morning, I read that the maximum housing sales have happened in the last quarter.
- NKNikhil Kamath
Yeah.
- 47:39 – 53:26
Is Real Estate Pricey now?
- NKNikhil Kamath
Do you, do you agree that real estate prices today for land and finished product are pricey?
- IRIrfan Razack
See, it's micro market dependent- I say we are being very, very conservative in our pricing. According to me, it has to be very sensibly priced because otherwise affordability doesn't hit in. Moment you become pricey, the number of customers reduce, the number of takers reduce. So we have to balance both together properly. So that's why our margins are all very, very, very minimal. I mean, you go anywhere else in the world, the margin for a real estate developers are huge-
- NSNirupa Shankar
Yeah, but it-
- IRIrfan Razack
... for the type of trouble they take.
- NSNirupa Shankar
The last few years, I think post-COVID, there wasn't much of a price appreciation, right? In 2020, '21, '22, there wasn't too much of a price appreciation. Last couple of years, and, and prior to COVID, we used to see, what, an average of five to seven percent increase per year.
- IRIrfan Razack
Mm.
- NSNirupa Shankar
But in the last couple of years, I think we've seen twenty percent increases, twenty-five percent increases, and that's mainly because of just the latent demand.
- NKNikhil Kamath
Sometimes more, no? Hundred percent more.
- NSNirupa Shankar
Yeah, I'm saying on-
- NKNikhil Kamath
No?
- NSNirupa Shankar
... not hundred percent.
- NKNikhil Kamath
Uh-huh. Uh.
- NSNirupa Shankar
But like, say, twenty, twenty-five percent, and that's a factor of two reasons. One is because there's just no inventory-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... um-... in our major cities, like Bangalore has an overhang of, what, three and a half quarters?
- IRIrfan Razack
Mm.
- NSNirupa Shankar
Which is nine months or so.
- IRIrfan Razack
Mm.
- NSNirupa Shankar
And just to get projects approved, it takes nine to 12 months. So-
- IRIrfan Razack
18 months.
- NSNirupa Shankar
Okay, 18 months in some cases-
- IRIrfan Razack
But-
- NSNirupa Shankar
-but on average, about nine to 12 months. So there is, like, all the inventory that we have will sort of run out if we don't launch more and more projects, so that's the kind of demand that there is. Um, so yeah, so that's why I think-
- KVKaran Virwani
I think that is... I mean, all players have deeper pockets, willing to spend more.
- NSNirupa Shankar
Mm.
- KVKaran Virwani
Lot more listed companies-
- NSNirupa Shankar
Mm.
- KVKaran Virwani
-need to grow.
- NSNirupa Shankar
Mm.
- KVKaran Virwani
So there is some amount of, a little bit of splurging also happening, irresponsible- Like, not everyone has been as responsible with, you know, pricing and signing certain JDA terms or paying, you know, certain price for land, and-
- 53:26 – 57:57
How to get into Real Estate Now
- IRIrfan Razack
Mm
- NKNikhil Kamath
... we always speak to young wannabe entrepreneurs, so we need to tell someone young: How do I start a company, anything real estate-related or a real estate company? And the second question is: Should they invest, for people who have the means, should it be commercial, should it be residential? Should they, uh, do fractional real estate? So we want the answer primarily to the question, "I'm young. I'm 20 years old. I want to start a real estate company. How do I go about it?" If we were to start the journey of real estate companies, at some point, it used to work in the manner that you would design a certain project, you would go to a bunch of people, they would give you money, and they would buy, and with that, you would execute the project. When did that happen up until?
- IRIrfan Razack
That's happening even now.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
See, that, that's how it's-
- NKNikhil Kamath
Now there are rules where you need to have done, acquired the land-
- IRIrfan Razack
Yeah, yeah
- NKNikhil Kamath
... that ABC before you sell, right?
- IRIrfan Razack
Yeah, yeah, yeah. So see, the thing is, yeah, you're right to a certain extent. That's where everything went wrong in real estate also, where then people probably thought they had the land, they thought that they had the approval, or they thought that they can get the approval, and then they went to a bunch of people and said, "Listen, I've got this land, I've got this approval. I'm putting up this building." And then, uh, uh, you know-
- NKNikhil Kamath
Adam Neumann
- IRIrfan Razack
... then everything became a nightmare.
- NSNirupa Shankar
Mm.
- IRIrfan Razack
Everything went wrong.... That's where the confidence also was lost among people of real estate, and then we were all looked at as like those big, bad guys. But now with RERA in place, that's how another factor that has really, uh, changed the market is that because there's a confidence now. As I said, there's that, that much more, it's now completely transparent. You have to have everything in place. Of course, the land first, and then the approvals, uh, most importantly. Then you log in for, and get your RERA number. That, uh, that is very cumbersome. So what it has done is it has consolidated the number of players itself, and I always say that the people refer as big players, small players. I don't... I definitely don't subscribe to that. It can be even the smallest of the player doing one single project. If you do it well, do it professionally, do it sincerely, you can succeed. It's not that you can't succeed. Okay, in the olden days, you could just, uh, if you did it sincerely and said, "Okay, I've got this land, I've got- I'm going to get this approval. I've already got it, I'm pre-selling." Even today, we do the same thing, we do pre-selling. The only difference is today you do it with all approvals, everything in place, so nothing- there's no nothing left to, for things to go wrong, except that you are midway of a project, somebody files a, a litigation against you for no reason or whatsoever. That is something that you can't predict. That can happen to anybody, anytime, anywhere. But those are, like, very small cases. But if somebody really wants to get into real estate, is a youngster, yes, you have to learn to start small. You have to learn to take the baby steps first. You see, if I have to come to you, either I take the lift, it's not possible. If you have to climb the steps one by one, reach floor by floor, reach the top. You just can't go to the top from bottom to... It's not that easy. You have to work hard. You have to work for it, and if you've done some work, if you've got the confidence, you've produced it once, done it second time, done it third time, then there's nothing stopping you. That, I think that's how everybody started.
- SPSpeaker
Yeah, I think everybody started that way, and I think the first one is always the hardest because-
- IRIrfan Razack
Yeah
- SPSpeaker
... you don't have an established brand. People don't know if everything, um, is proper.
- IRIrfan Razack
They don't know who you are.
- SPSpeaker
They don't know who you are. But I think now, uh, again, given that if you're RERA approved, that means most of the sanctions are in place and everything-
- IRIrfan Razack
Not all the sanctions are in place.
- SPSpeaker
Yeah.
- IRIrfan Razack
Not most.
- SPSpeaker
All are in place, like, uh... So then you can't start your project without getting your RERA approval.
- NKNikhil Kamath
So if I'm twenty, and I've been, I've managed to borrow ten crores from a bank-
- SPSpeaker
Yeah
- NKNikhil Kamath
... I want to start a real estate company, what do do I, what do I do next?
- KVKaran Virwani
I, I don't know wh- like, you know, real estate also is now so broad-
- NKNikhil Kamath
Mm.
- KVKaran Virwani
And there are just so many levels-
- SPSpeaker
Can you define, can you define how broad? How big is the real estate sector in India?
- KVKaran Virwani
Oh, I don't know the exact, like, number-
- 57:57 – 58:38
Careers in Real Estate
- KVKaran Virwani
obviously, you can just do land aggregation as your sole part-
- NKNikhil Kamath
Mm
- KVKaran Virwani
... within real estate.
- NKNikhil Kamath
Mm.
- KVKaran Virwani
You can be a full stack developer that is, you know, doing everything.
- NKNikhil Kamath
Mm.
- KVKaran Virwani
You can be just in the con- construction, contracting business.
- IRIrfan Razack
You can be just a broker.
- KVKaran Virwani
You can be just a broker. You can be just doing property management.
- IRIrfan Razack
Mm.
- KVKaran Virwani
You can build proptech on top of it.
- IRIrfan Razack
Mm.
- KVKaran Virwani
You can do, you know, online, uh, like brokerage, which is now, you know, moving in that direction. So-
- NKNikhil Kamath
What should I do? I have ten crores I've borrowed from a bank.
- SPSpeaker
Yeah.
- NKNikhil Kamath
We, we established that the real estate market is six hundred billion in total. Residential is about forty-five percent, commercial is ten, plotting is twelve, and mixed and others are thirty percent.
- 58:38 – 1:04:31
Step by Step guide to start a Career in Real Estate
- NKNikhil Kamath
I want to deploy my money and start a business. Give me one, two, three in the real estate world, what should I do?
- IRIrfan Razack
What you should do?
- NKNikhil Kamath
Should I be a broker? Should I be a- [laughing]
- IRIrfan Razack
See, you, you need to learn the business first.
- KVKaran Virwani
Yeah, I, I would say...
- IRIrfan Razack
So the only way to learn the business is dabble in property, buy property, sell property.
- NKNikhil Kamath
Is that how I should start, buy and sell property?
- IRIrfan Razack
Yeah, I think that way you will get to know the nuances. You'll get to know how to read a contract. You'll get to know who to trust, whom not to trust.
- KVKaran Virwani
I would, I would look at an angle where there's firstly not enough players, there's not, you know, all these big [chuckles] big guys in it-
- SPSpeaker
So, so let me, let... Yeah
- KVKaran Virwani
... and then find, find an angle in there which-
- IRIrfan Razack
No, otherwise simple, take a small property, buy a small plot.
- KVKaran Virwani
Yeah.
- IRIrfan Razack
Either get into a JD with a small landowner who trusts you, pick up that plot, and do one... Concentrate on that one development, design it well, uh, and price it correctly. Sell it to your bunch of customers. That will be your first beginning point.
- SPSpeaker
Mm.
- IRIrfan Razack
Once you've done that and you get the confidence and the customers get confidence in you, you move to the next. You see now, a lot of these smaller guys did start this way. Brokers started doing, uh, development, but what happened is greed got better of them. They suddenly, they had so much cash flow, one led to the other, to the other, to the other. There was no RERA also that time. And they, they- and then another big problem was: don't follow the law. I call it simply, my building, my law; no building, byelaw.
- SPSpeaker
[chuckles]
- KVKaran Virwani
Mm.
- IRIrfan Razack
On a small plot, uh, we can build X. You do X into plus something, one more floor extra, whatever else. So that actually brought into, got a lot of them into trouble.
- NKNikhil Kamath
So you would suggest for me to start entering this industry-
- IRIrfan Razack
Start with all your approvals in place
- NKNikhil Kamath
... find a small plot, get approvals-
- IRIrfan Razack
Follow all the rules
- NKNikhil Kamath
... build something, and sell?
- IRIrfan Razack
Exactly.
- NKNikhil Kamath
Got it.
- IRIrfan Razack
Do it once, do it properly. Maybe your ten crores will give you a couple of crores.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
That couple of crores, you again reinvest it back. It'll slowly grow. It won't grow overnight, but what it does is, what will grow in you is your confidence-
- NKNikhil Kamath
Mm
- 1:04:31 – 1:07:40
How to get the highest return on real estate
- NKNikhil Kamath
why do I pay one, 2% when I'm buying and somebody pays 2% when they're selling? It seems unrealistic that that would be the price after all this price discovery mechanism.
- SPSpeaker
People are doing that. There are many, many brokers-
- SPSpeaker
No, this is what, uh, uh, he mentioned, is Karan mentioned, is a lot of brokers now have gone into tech. Now, the j- uh, the conventional brokers have sort of become dinosaurs. All of them have used tech. All of them are sort of going onto different technologies, where they're able to generate inquiries from customers, answer those queries, hire a whole lot of people, young kids who can go online, get the booking forms, and, and, and actually popularize the product in a much larger platform. And that is what is happening, because the volumes that are happening today, the conventional agent probably today, what he's doing, he or she's doing, is only the bringing a land to the developer and doing a land transaction. But the, the volumes that come today from a broker where we pay our 2%, and I think in our company at least, I know that for sure, it's, uh, 50% of it is done through brokers. Because they become my selling arm, and they are using only technologies, and all new names are there. No one single old name in the market that is there, and the youngsters are doing it. So that is one thing where brokerage happens. So brokerage is the easiest business. The only investment, again, is in technology. But if you want to become a developer, per se, my thing is-
- NKNikhil Kamath
No, no, I'm not saying, I'm not saying developer. I'm saying I have this much money, I want to have-
- SPSpeaker
Some
- NKNikhil Kamath
... a return on the money, anything real estate.
- SPSpeaker
Anything real estate.
- SPSpeaker
So if you tell me rent office space and make it coworking, I can do that also.
- SPSpeaker
Yeah.
- NSNirupa Shankar
No, are you saying you want the highest return, or are you saying you want to create a business?
- SPSpeaker
Ah, create a brand.
- NSNirupa Shankar
Because-
- NKNikhil Kamath
Tell me, tell me one for both
- NSNirupa Shankar
... if wanting the highest return, I'll tell you-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... highest return is i- if you ask me, you take that 10 crores, invest in, um, land, do some plotted development, develop it yourself, and sell it. I think you'll get the highest return. The next highest return would probab- probably be with doing a JDA, with a find somebody who wants to develop the land. But why will they trust you if it's your first pro- project? That you have to-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... have the credibility and the sales pitch to-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... convince them.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
The third less riskiest, and probably one with least capital required, is a brokerage firm.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
But then I don't think you're... You will get your 2%, but it's, d- is your network good enough to connect the two-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... people? And it's a very, very competitive space, not only online-
- NKNikhil Kamath
What about something REIT r- related?
- NSNirupa Shankar
So REIT is, in the end, it's technology, right?
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
And I look at technology as an enabler.
- 1:07:40 – 1:09:01
LiteStore and their unique concept
- NSNirupa Shankar
next unicorn.
- NKNikhil Kamath
One REIT company that you would put your money on if you had to do it all over again today?
- NSNirupa Shankar
Mm, so we did. So we've seen some good success-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... in a couple of them, which again-
- NKNikhil Kamath
One.
- NSNirupa Shankar
One was-
- NKNikhil Kamath
Best favorite
- NSNirupa Shankar
... Today, I will say LiteStore.
- NKNikhil Kamath
What do they do?
- IRIrfan Razack
That's Kishore?
- NSNirupa Shankar
Uh, Mahendra and Na- Mahendra has invested, Axel has invested in them. So it's for retail. It's, um, uh, it's basically sub- uh, leasing a retail space, and it's for D2C. Basically, it's for, uh, D2C brands-
- IRIrfan Razack
This is Raghunandan's?
- NSNirupa Shankar
-to come, to come, uh, to come, uh, o- online. Uh, sorry-
- IRIrfan Razack
Offline
- NSNirupa Shankar
... online brands to go offline, and to check the market space. So what they do is typical retail leases are, like, nine years-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... six years. They take the space for three years or so, and then they give it out to brands for, say, three months at a time, and they-
- IRIrfan Razack
Okay
- NSNirupa Shankar
... churn around the space 48 hours.
- IRIrfan Razack
So we work for retail. [laughing]
- NKNikhil Kamath
Say the name again. They'll get a lot of traction after this. [laughing]
- IRIrfan Razack
[laughing]
- NSNirupa Shankar
I need to get traction, LiteStore.
- NKNikhil Kamath
Right.
- NSNirupa Shankar
So yeah, so they've been seeing very good traction. It's a brand I didn't... It's a concept I didn't think would see the kind of success that it did.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
So it actually started with these two founders from REIT, and then Raghu also-
- NKNikhil Kamath
Oh, okay
- NSNirupa Shankar
... joined them later.
- 1:09:01 – 1:12:12
Affordable or Luxury Housing
- NSNirupa Shankar
up pretty fast.
- NKNikhil Kamath
And if I were to be starting a new business, they say the split today of sales in housing: affordable is 27%, mid-premium is 30-
- IRIrfan Razack
Mm
- NKNikhil Kamath
... and luxury is above 41%. Where should I focus?
- IRIrfan Razack
I think that number, 41% luxury, is slightly wrong.
- NSNirupa Shankar
That's a recent number.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
I think I saw this, the Knight Frank report, I think-
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
That you saw.
- IRIrfan Razack
I know somewhere it's a little lopsided-
- NSNirupa Shankar
Yeah
- IRIrfan Razack
... because somehow some of these reports, I don't believe them.
- NSNirupa Shankar
This is the first half year of '24.
- IRIrfan Razack
Whatever it is-
- NSNirupa Shankar
Yeah. Mm
- IRIrfan Razack
... because that could be a little skewed, I would say luxury will always be in that 15, 20%.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
He can vouch for it. Then b- this mid segment will be that 50%, and the balance will be the other.
- NSNirupa Shankar
So, uncle, it's how they've defined it.
- IRIrfan Razack
Yeah.
- NSNirupa Shankar
I think in that report they said-
- NKNikhil Kamath
Luxury is one crore
- NSNirupa Shankar
... over one crore.
- NKNikhil Kamath
Yeah.
- IRIrfan Razack
Ah.
- NSNirupa Shankar
One crore, so then-
- IRIrfan Razack
If luxury is one crore, then everything is mid segment. [laughing]
- NSNirupa Shankar
Yeah. [laughing]
- IRIrfan Razack
So see, that's why they said-
- 1:12:12 – 1:16:31
Renting,Buying,Flipping Houses
- NKNikhil Kamath
I bought a house.
- NSNirupa Shankar
Yeah.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
How come? You're a convert. You always said you wouldn't buy a house.
- NKNikhil Kamath
I think you should-
- NSNirupa Shankar
No, I-
- NKNikhil Kamath
... make it public that you bought a house- [laughing]
- IRIrfan Razack
[laughing]
- NKNikhil Kamath
... just so people have some faith in real estate. [laughing]
- NSNirupa Shankar
He can be the poster boy for real estate now, huh? [laughing]
- NKNikhil Kamath
No, so the thing with renting, of all the advantages of renting, I think there is one disadvantage: that you don't have foresight as to when you can move out of the house. Like, I had to move out of this house, whereas maybe I would have liked to live for longer in this house. And that, not having the nuisance value of having to move, felt like it made sense to buy one-
- IRIrfan Razack
Buy a house.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Yeah, and I think that's the primary reason that-
- NSNirupa Shankar
But-
- IRIrfan Razack
Security of-
- NSNirupa Shankar
But let me ask you a question. So when you do your stock market analysis, right?
- IRIrfan Razack
Yeah.
- NSNirupa Shankar
You look at a, the health of a company-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... which includes, say, its balance sheet and how strong the balance sheet is.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
Now, for an individual as well, we also need to have a strong balance sheet, right?
- IRIrfan Razack
Mm.
- NSNirupa Shankar
So-called balance sheet to have that financial security.
- IRIrfan Razack
Mm.
- NSNirupa Shankar
So don't you think buying a home-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... adds to the financial strength, security, balance sheet of an individual?
- NKNikhil Kamath
Mm. I feel like something like gold can give that to me.
- 1:16:31 – 1:21:51
Land Prices Then vs Now
- NSNirupa Shankar
to 4%.
- NKNikhil Kamath
But if you were to look at the interest rates and inflation right now, you account for those two, that return is negligible or negative.
- IRIrfan Razack
Not in India. India doesn't work.
- NSNirupa Shankar
Yeah, but your underlying value of the asset is appreciating.
- NKNikhil Kamath
But if you make the assumption that real estate will always keep going up- [laughing] ... in value, which is an assumption I have not made.
- IRIrfan Razack
Uh.
- NKNikhil Kamath
I feel like-
- NSNirupa Shankar
I'm not saying it-
- IRIrfan Razack
You see, that's why I'm a dinosaur.
- NKNikhil Kamath
[laughing]
- IRIrfan Razack
I've seen it grow from here-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... from this thing, to going through the roof.
- NSNirupa Shankar
Yeah.
- IRIrfan Razack
I never imagined.
- NSNirupa Shankar
Yeah.
- IRIrfan Razack
So I said, "You know, if I was Rip Van Winkle, I would have just kept this huge tract of land, forgotten about it-
- NSNirupa Shankar
Yeah
- IRIrfan Razack
... gone to sleep-
- NSNirupa Shankar
Yeah, exactly
- IRIrfan Razack
... and come back about after 50 years later, and the value would have been, uh, exponentially more. There was no need to go all this circus all the time." [laughing]
- NSNirupa Shankar
Yeah.
- IRIrfan Razack
No need to do salaam to anybody.
- NSNirupa Shankar
That's why I said land aggregators make the most money. [laughing]
- IRIrfan Razack
But the biggest risk there is, if you come back after 50 years, don't know whether your land will be encroached-
- NSNirupa Shankar
[laughing]
- IRIrfan Razack
... or your property will be occupied by somebody else, or there'll be some other claimants. That's a big, big risk that you take.
- NSNirupa Shankar
Yeah. So-
- NKNikhil Kamath
And another point I'll make-
- NSNirupa Shankar
Yeah
- 1:21:51 – 1:25:12
What is a REIT ?
- NSNirupa Shankar
next."
- NKNikhil Kamath
But I want to make it tra- tangible and transient. I want to make it-
- IRIrfan Razack
How can you make it transient?
- NSNirupa Shankar
REIT. I, I can buy a gold bond.
- NKNikhil Kamath
I can buy a gold bond.
- NSNirupa Shankar
Yeah.
- IRIrfan Razack
You can buy REIT.
- NKNikhil Kamath
Yeah.
- IRIrfan Razack
I mean, the REIT is the best option then, at least for, for that.
- NSNirupa Shankar
Yeah, there it takes care of your li- liquidity, your-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... transaction costs are quite low.
- NKNikhil Kamath
And you get the benefit of the-
- IRIrfan Razack
You get a 7% return on a REIT-
- NKNikhil Kamath
Mm.
- IRIrfan Razack
... if you're investing in a REIT.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
90% of the, uh, income has to be distributed-
- NSNirupa Shankar
Mm
- IRIrfan Razack
... and it's tax paid, and then unfo- unfortunately, it's again not taxed second time.
- NKNikhil Kamath
Yeah.
- IRIrfan Razack
So you get tax-paid money into your hands.
- NSNirupa Shankar
Assets.
- IRIrfan Razack
So when the REIT structure did come in a few years ago-
- NSNirupa Shankar
Mm
- IRIrfan Razack
... into the country, I thought that was the best reform that ever happened for commercial property. Till then, we were doing strata sales of, uh, office.
- NKNikhil Kamath
Yeah.
- IRIrfan Razack
And we used to ma- uh, even today, I'm managing about three and a half thousand customers-
- NSNirupa Shankar
Mm
- IRIrfan Razack
... who have invested in me, with me, and, uh, it's like an unstructured REIT.
- 1:25:12 – 1:27:39
Benefits if REITs
- NKNikhil Kamath
it's happening now, if you see the last, like, three, four years.
- IRIrfan Razack
Tell us now, educate, educate now, why are REITs good?
- NKNikhil Kamath
So I think everything that uncle just said, which is you get a tax dividend income, you know, constantly.
- IRIrfan Razack
Mm.
- NKNikhil Kamath
You have the ability to diversify your risk across, like, a much larger portfolio and not have any vacancy risk that you might have if you own, like, a single property or, you know, a tenant paying that. You have a professional management team that is, you know, managing it, making sure that the asset value, uh, of the portfolio continues to increase. It's growing also because they have to also, you know, continuously buy and acquire new-
- KVKaran Virwani
... quality assets, if you've invested in a quality REIT, you know that the, the type of assets coming in also have been vetted and are actually in the, you know, marquee locations that will continuously, like, grow. So I think it's like get, you know, removing that entire murkiness, entire amount of like stamp duty and things like that, all the taxation that comes with it, and the hassle of having to manage it yourself if you're not from the real estate space. You just, you know, buy that, and you can enter as, as low as whatever it is, right? I think it's like thousand bucks.
- NSNirupa Shankar
Fifteen thousand or so.
- KVKaran Virwani
Yeah.
- NSNirupa Shankar
Ten-
- KVKaran Virwani
Ten thousand, ten thousand bucks.
- SPSpeaker
So if I buy the Embassy REIT-
- KVKaran Virwani
Yeah
- SPSpeaker
... I'll make 7% and?
- KVKaran Virwani
And the stock appreciation-
- SPSpeaker
Mm.
- KVKaran Virwani
-right, that it might have. Um, which as a REIT, it's not gonna be. It's more of like a steady annuity type of income, but India will see higher appreciation, I would say, than, than foreign REITs or like, you know, the US REITs and things like that, so...
- SPSpeaker
And what do you think about fractional real estate?
- IRIrfan Razack
I have a the same- I would say that a REIT is fractional. It-
- KVKaran Virwani
Like a large-
- IRIrfan Razack
- structured way. But you see, there's one more advantage, which, uh, Karan hasn't told you. For a developer, see, it's... We need to churn capital. Now, if I have a certain amount of critical mass of office real estate or retail real estate, I take it into a REIT. Now, I become the manager of that REIT. Like, you are the manager of the REIT, that means you're getting a certain fee for managing. I need not be the owner. Instead of fractionally selling my space to 100 people, what I do is I can sell a certain equity, a certain percentage of that, to the public or to the institutions,
- 1:27:39 – 1:31:19
India's 4 Listed REITs
- IRIrfan Razack
and as and when I need more and more liquidity, like in a listed company, I can keep selling my units. I get my, uh, liquidity. If I don't want to, don't want the liquidity, I keep it. So that, for a developer, it's a big advantage, uh, as a REIT.
- NSNirupa Shankar
It's very good, though.
- KVKaran Virwani
Developer, it's like a natural exit.
- IRIrfan Razack
It's a vehicle.
- KVKaran Virwani
It's a natural exit vehicle.
- IRIrfan Razack
It's a vehicle for exiting. So, like, you also have exited-
- KVKaran Virwani
Yeah, we, we exit. I mean, we developed and moved on.
- IRIrfan Razack
But the REIT is under your name.
- KVKaran Virwani
Correct.
- IRIrfan Razack
So you're the manager still, so you, whatever happens, you're still getting a certain-
- NSNirupa Shankar
Fee
- IRIrfan Razack
... uh, fee for it.
- KVKaran Virwani
Yeah.
- IRIrfan Razack
So it, it has a dual advantage. Now, fractional ownership, there, if there was no REIT, that was the only way if anybody could participate in commercial real estate. But I would say with the REIT in place, this fractional ownership is very difficult to manage. You see, we as a company have sold undivided share of, of-
- SPSpeaker
He's like the originator of fractional ownership.
- IRIrfan Razack
Yeah, but then-
- SPSpeaker
Now it's called fractional ownership
- IRIrfan Razack
... very difficult, because what happens is one generation changes, another there's a newer buyer. Well, for the first guy who you sold to, you have a relationship. The second guy need not know you. He would've bought at a much higher price. His expectation of return is different.
- NSNirupa Shankar
And it's quite unregulated right now, so-
- IRIrfan Razack
Very unregulated-
- NSNirupa Shankar
So I-
- IRIrfan Razack
... very difficult. See, people management-
- SPSpeaker
So you make a JV for each property?
- IRIrfan Razack
Not JV.
- KVKaran Virwani
That's what these guys are doing.
- IRIrfan Razack
No, no.
- KVKaran Virwani
Not, not-
- IRIrfan Razack
It's not a JV. When you are selling, you are selling to s- multiple people. Then what happens is, since, uh, everybody has bought it with the intent of leasing out, you are again leasing it back from them and re-leasing it to the, uh, end user.
- SPSpeaker
I see.
- IRIrfan Razack
So we make a sort of a arbitrage on that.
- 1:31:19 – 1:33:12
What's Strata
- SPSpeaker
Like Strata is a fractional REIT.
- NSNirupa Shankar
Yeah.
- IRIrfan Razack
Yeah, fractional.
- SPSpeaker
There's some regulation that has come out that allows that?
- IRIrfan Razack
No, there's-
- NSNirupa Shankar
Yeah. No, no, so SEBI has come up with a small-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... and medium-sized REIT, and I think it's to get... Because fractional ownership guys are still in the so-called unregulated space-
- IRIrfan Razack
Yeah
- NSNirupa Shankar
... they want to-
- SPSpeaker
They're in the SEBI sandbox.
- KVKaran Virwani
It's like SME IPO.
- NSNirupa Shankar
Yeah, so they, they wanna-
- KVKaran Virwani
SME IPO, yes
- NSNirupa Shankar
... get these guys as a small and med- into the-
- SPSpeaker
Mm
- NSNirupa Shankar
... SEBI regulation so that they can now monitor and have similar, um, similar structuring. Like, you know, the, the sponsor, uh, uh, the sponsor cannot be the same as the manager in terms of facility managing the property. Uh, 90% of the asset has to be leased. All that structuring is gonna come through, which wasn't there for a-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... uh, fractional ownership.... uh, REITs.
- NKNikhil Kamath
Would you bet on that business model today? Because then I can pick, I want a part of UBI City.
- KVKaran Virwani
Hmm.
- NSNirupa Shankar
Yeah.
- NKNikhil Kamath
Versus a REIT which has many properties.
- NSNirupa Shankar
Yeah, it'll be single, singly-
- KVKaran Virwani
I wouldn't-
- NSNirupa Shankar
property based
- KVKaran Virwani
... because you're still then limited to one asset-
- NKNikhil Kamath
Hmm
- KVKaran Virwani
... versus in a, in a l- in a actual REIT.
- NSNirupa Shankar
Hmm.
- 1:33:12 – 1:35:54
Commercial Real Estate Experience
- NKNikhil Kamath
Do you think, like fractional real estate... Uh, I was talking to Venkat. I called him up today in the morning, and I was like: Tell me some questions to ask which are non-obvious.
- NSNirupa Shankar
Hmm.
- IRIrfan Razack
Hmm.
- NKNikhil Kamath
And he was saying, "In a few years, all real estate will become so commoditized that four walls will be four walls, and they're similar to four walls, that real estate will become about services as a play." What do you guys think about that? Like, it'll be, okay, there is KFT. It won't be about the four walls that I live under, but it will be about do you add a mall which is attached to this? It'll become about the movie theater which is down. It'll become about the badminton court-
- KVKaran Virwani
Yeah
- NKNikhil Kamath
... about maybe a event-
- KVKaran Virwani
The facilities.
- NKNikhil Kamath
Yeah.
- NSNirupa Shankar
Yeah.
- KVKaran Virwani
I, uh, I mean, I would say that where we are as WeWork, and, like, what we are seeing, has s- in some way, shape, or form already happened in commercial real estate, where commercial real estate is very different from residential. It's basically just plain floors. Okay, residential, you still have, you know, design, and people have designed homes and things like that differently. But office is largely commoditized at, at the, that Grade A-ish level, where most assets are similar. There might be change of floor plan and things like that. Companies or people today are so focused on the human experience that they're having in the space-
- NKNikhil Kamath
Hmm
- KVKaran Virwani
... um, that we see, like, operators and service, you know, a service layer, hospitality layer on top of it is becoming like a driving factor, and we're doing it even on the traditional side, you know, within our parks, to have community engagement events, to have F&B spaces, to... You know, we do our own property management also, so that adds that service layer.
- NSNirupa Shankar
Hmm.
- KVKaran Virwani
So I think it's definitely, you know, something where if I'm coming and experiencing that space or need to live in that location for so long, I want an experience also on top of it. Um, and which is why maybe for the previous question also I, you know, like, talk about an operating company or, like, a service layer on top of real estate because I think that's finally where the pyramid is going, right?
- NSNirupa Shankar
Hmm.
- KVKaran Virwani
Is across commercial, across residential, warehousing, data centers even today. You have operators across all of these segments, and in commercial real estate, maybe what we are doing is an operator. What Four Seasons or Hilton did and h- h- you know, hotels is that. What Manipal is maybe doing in hospitals is
- 1:35:54 – 1:40:20
Selling an Experience
- KVKaran Virwani
that. You'll want a brand. You'd want an experience layer. You want a service level when you-
- NSNirupa Shankar
Hmm
- KVKaran Virwani
... come into it, and, and, uh, you'd prefer that over maybe going and trying to do, do it yourself or, uh, you know, just kind of going with the older model, so-
- NKNikhil Kamath
Would you agree with that, four walls?
- NSNirupa Shankar
Yeah. So, so if I add to that, if you look at it from the residential side-
- NKNikhil Kamath
Hmm
- NSNirupa Shankar
... what, what are people looking for-
- NKNikhil Kamath
Hmm
- NSNirupa Shankar
... once they come to a builder to buy their home? Uh, one thing we are adding is say, "We'll do your interiors for you," right? Because honestly, doing interiors in India [chuckles] is not like doing it in the US. In the US, it's like a weekend job. You move, you go to IKEA, you buy your stuff, you do it yourself, and you're done over a weekend.
- KVKaran Virwani
We do have IKEA here also.
- NSNirupa Shankar
Yeah, but here, it's, it's like I need a plumber, I need a des- a carpenter, I need a interior designer, I need a lighting consultant.
- NKNikhil Kamath
Why is it like that?
- NSNirupa Shankar
Because it is still fragmented. It's not very mature, and like I was saying, contract- contracting in the US is a turnkey-
- NKNikhil Kamath
Hmm
- NSNirupa Shankar
... turnkey job, and it's, like you said, it's even more commoditized. It's all DIY 'cause labor is also, um, expensive. Here, you can afford to pay for multiple people. People's level of customization is also very high. So the kind of experiences people are wanting is a one-stop shop. You know, "I'll buy from the builder. They will also do my interiors. Uh, if I need to resell the apartment, they will also do the rental for me. [lips smack] Whenever I want to resell, they'll manage the property. If I have a... L- like this place, if you have a banquet hall, they will service it.
- KVKaran Virwani
Hmm.
- NSNirupa Shankar
I can have my parties there." So-
- NKNikhil Kamath
Hmm
- NSNirupa Shankar
... everything is becoming experiential.
- NKNikhil Kamath
Will it go much further? Will they do my... Will they take care of the tuition classes that my son needs?
- KVKaran Virwani
Hmm.
- NSNirupa Shankar
Oh. [chuckles]
- KVKaran Virwani
Well-
- NSNirupa Shankar
We are taking care of enough as builders. [laughing] But I'm sure that's, that... See, I'll tell you, when we run some of our clubhouses, right?
- NKNikhil Kamath
Hmm.
- NSNirupa Shankar
So in the clubhouses, you have your Zumba classes, you have- you can have yoga classes, and why not Hindi tuition also, if required, right? Now, coming back to office, like you're saying, it's more experiential. We all do our own facility management of our, uh, properties, and I'm telling my FM guys, "Guys, hire some events people into your team-
- NKNikhil Kamath
Hmm
- NSNirupa Shankar
... because office is just not office. People are coming back because of the vibe."
- NKNikhil Kamath
Hmm.
- NSNirupa Shankar
"Now, how do you create the vibe? Oh, I need a brewery, or I, I need different kinds of-
- 1:40:20 – 1:43:26
World Trade Center | The Office Experience
- NSNirupa Shankar
So since some of the s- skyscrapers, if you go wherever you go in the world, right, all the tallest skyscrapers have-
- IRIrfan Razack
Yeah, but-
- NSNirupa Shankar
... a rooftop bar, like a fancy pantsy rooftop bar. So when we were doing World Trade Center, it was the first in Bangalore. It was in Malleswaram-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... and it was not known for-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... an office destination. People were like, "Why are you doing office here?" The, it was the first office building in that location. So the way we sort of popularized it was by creating a rooftop bar called High Ultra Lounge, which we created, to sort of position... I mean, of course, World Trade Center itself has its own positioning, but to make it popular with the rest of the city, otherwise, only the people who go to office there know about it. Like, everybody knows Orion Mall or a retail space because you get a million customers a month. But office, only those 10,000 people who work in a particular space might know it. So when you do the hospitality element, it poshies as- poshies it up, it premiumizes the entire building also. So like, like in the US, right, where- wherever you have a Starbucks [chuckles] , the, the rental value of the pr- of a certain neighborhood might go up in the US.
- IRIrfan Razack
Mm.
- NSNirupa Shankar
Starbucks may not have similar, such-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... um, impact here.
- IRIrfan Razack
Mm.
- NSNirupa Shankar
But it's the same thing. Um, wherever you have high F&B, a lot of... You can add to the premiumization of the building itself.
- NKNikhil Kamath
And people are willing to pay-
- NSNirupa Shankar
Yeah
- NKNikhil Kamath
... a premium for amenities.
- IRIrfan Razack
Not willing to pay.
- NSNirupa Shankar
Mm. It's a must-have now.
- IRIrfan Razack
Your occupancy, if you don't have it, the occupancy-
- NSNirupa Shankar
Yeah
- IRIrfan Razack
... doesn't happen. The, the, the client doesn't... The first requirement of the client is, "Do you have this, this, this, this, this?" Only then they lease out the space from you.
- NSNirupa Shankar
Yeah, so s- so new strategy is to have the f- lease out the F&B first-
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Mm
- NSNirupa Shankar
... and say, "Okay, I have these cafeteria guys coming."
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
"I have this ca- coffee shop coming-
- IRIrfan Razack
And then, then your client comes
- NSNirupa Shankar
... come into the space."
- IRIrfan Razack
So it's not the-
- 1:43:26 – 1:46:30
Real Estate is a Regional Game | Cluster Cities
- NSNirupa Shankar
on bandwidth, on, uh, on time-
- NSNirupa Shankar
Right
- NSNirupa Shankar
... effort.
- NSNirupa Shankar
Yeah.
- NSNirupa Shankar
So I think it's... You can do six to seven cities if you really want to focus as well.
- NSNirupa Shankar
You can name the players like on, you know-
- NKNikhil Kamath
Yeah
- NSNirupa Shankar
... on your hand, and-
- NKNikhil Kamath
Who are they?
- NSNirupa Shankar
They haven't-
- NKNikhil Kamath
Prestige-
- NSNirupa Shankar
Not all of them have, like, succeeded in that sense, so-
- NSNirupa Shankar
Prestige. You should talk about it, Karan.
- IRIrfan Razack
I'm listening to you.
- NSNirupa Shankar
Of course.
- IRIrfan Razack
First, I wanted to hear you speak.
- NKNikhil Kamath
Is it a factor of who knows which politicians? You need to know so many to be pan-India.
- IRIrfan Razack
Not really.
- NSNirupa Shankar
No, I don't think so.
- IRIrfan Razack
Not really. You have to have the execution. That, that's the thing, you see-
- NSNirupa Shankar
Capability, right? Like-
- IRIrfan Razack
It all depends on your access to land. Yes, very rightly put, my Nirupa, is every city is a separate country.
- NSNirupa Shankar
Mm.
- IRIrfan Razack
When I go to Kerala, I say, "This is a separate country."
- NSNirupa Shankar
Mm.
- IRIrfan Razack
When I go to a Mumbai, it's a separate. If I go into Chennai, the whole nuances are very different.
- NSNirupa Shankar
Mm.
- IRIrfan Razack
Hyderabad, nuances are different. But, you know, we have moved away from tier two cities.
- NSNirupa Shankar
Mm.
- IRIrfan Razack
I've done work in Mangalore. Yes, it's a lovely city. Yes, it deserves some good buildings, developments, all of it.... but the, the overall appetite market is too small for the-
- 1:46:30 – 1:50:49
What is Redevelopment?
- IRIrfan Razack
uh, to puncture a hole in it.
- NKNikhil Kamath
Can you explain, Uncle, briefly, what is redevelopment?
- IRIrfan Razack
Redevelopment is an existing old building-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... where the, uh, the building has become old.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
The existing, uh, uh, uh, people who are the owners of that particular development, they call it society in Mumbai, they want a newer place, uh, with the, that much more bigger facilities and, uh, and, and, uh, probably, uh, since the FSI has changed, they'll get that much more built-up area extra.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
So that's how the redevelopment starts.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
So more, more apartments, more square footage, and most importantly is better plumbing, better lighting system, better vertical transportation, and better parking.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
So of course, the quality of life improves-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... better facilities also.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
And by, by being there as the old society, they get that incrementally higher square footage, which either they can sell back to the developer or keep it for themselves. They get a slightly larger home.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Like when we did that redevelopment in Mumbai, uh, I'm not giving one for one, then there's nobody is really. So it has to be one, four into 0.3 or 0.4 or 0.5 times more. So if I've got a 100 square meter house, if I get 130 or 140 square meter house, my house is going to become a little larger. It's going to become newer, with better finishes and better fittings, and obviously, what happens is the other, the, the sweetener is, while this is going to get built, I get my rental, I move into another alternate accommodation. The builder pays the, uh, the, the rental and the, the re- uh, uh, rehabilitation cost and all that, and they come back. The only thing is, they have to have the confidence in the developer that he takes it up and completes the development within the stipulated time as per the specifications. I have seen [chuckles] in fact, I have picked up, subsequently, many deals have come to me where these redevelopment projects have started and they've not fructified.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
And now we, we've gone there like a white knight and tried to save a lot of things. So, so one project led to the other, to the other, to the other, and now I'm doing some few million square feet, six million square feet plus of office and a few million square feet of-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... residential, which I never imagined that I could. I have to pinch myself every time to remind myself, am I really doing this?
- NKNikhil Kamath
Mm.
- IRIrfan Razack
But it is the most difficult territory to operate in.
- NKNikhil Kamath
Why is that?
- IRIrfan Razack
The laws are different.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
The premiums are different. The approval fees are all huge.
- NKNikhil Kamath
Mm.
- 1:50:49 – 1:53:02
Two Real Estate rules that can be changed in Karnataka
- NKNikhil Kamath
if two things for the government people watching, two rules they can change in Karnataka, what are they?
- IRIrfan Razack
Karnataka, simple thing is sim-, uh, I think they are doing it-
- NKNikhil Kamath
Mm.
- IRIrfan Razack
-and they should do it quickly, is streamline your TDR rules.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Issue, see, on the issue, TDR is a fellow who's losing land-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... instead of getting money, he gets a piece of paper-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... which is two times the value of his property.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
It's now linked to guideline value.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Now, it's a, it's a windfall, according to me, the land loser, and he should take it gladly. Only thing is product should be marketable.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
Now, where the, where the land loser lost confidence is in between, like Nirupa said, eight years it's in limbo because-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... of some, uh, stupid, uh-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... thing that happened, and, uh, it's, it's now still in limbo.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
But if they make the product marketable, if they allow s- the, uh, the buying and selling, I mean, once the TDR is issued, do it sincerely. Give it, uh, as, as a w- it's already the rules are there, one is to two times, and issue the TDRs as quickly as possible.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
A lot of land can be, uh, uh, sort of acquired for road widening-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... or for any public purpose or whatever else. The second thing is bring this premium FSI. Now, the debate was always they say, "No, no, if I bring premium FSI, TDR will be hit, or if I bring in, uh, TDR, premium FSI won't sell." I said, "Man, let the market forces decide that." Premium FSI is also based on the guideline value-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... so there's not much of a difference.
- NKNikhil Kamath
Mm.
- IRIrfan Razack
So basically, okay, they said 0.6 times of the base FSI, whatever was there in that area, you can either load ... Now, I've given them a formula, either load TDR and premium. So I said, "Do it as 0.3 times premium, 0.3 times, uh, T- uh, uh, TDR. Do a blend of both, a 0.2, 0.4, whatever, or just leave it for market forces. Just say 0.6 times, either use TDR or premium," uh, things will work.
- 1:53:02 – 1:58:49
Innovation in Real Estate
- NKNikhil Kamath
[coughs] innovation in real estate, first principles, how an apartment is today... I was reading this book, Bill Bryson, Home. I don't know if you guys have read it. He talks about the evolution of home, how we got a toilet, how we got a dresser for the first time. How did we come up with the concept of a bedroom, which is different from a living room? Why do we have a living room? If one were to extrapolate and say the last real innovation in real estate from a structural lens, maybe Corbusier apartment complexes. Why has nothing changed beyond that? Why do we still live in homes with a living room, a dining table, a bedroom, a bathroom, and a kitchen, all bifurcated with walls? Why is that?
- KVKaran Virwani
No, what would you want?
- NSNirupa Shankar
Yeah, that still works.
- KVKaran Virwani
I mean, what more do you want?
- NSNirupa Shankar
It still works, right?
- NKNikhil Kamath
It could be anything, right?
- KVKaran Virwani
I think a home is like just, it's that Maslow's hierarchy of needs, right? It's like solving for a very basic, primal type of need, which is just security, feeling safe, feeling like, you know, where you have- when you come back from the outside world, that you have a sense of security, safety. So I would say largely it's, it's across cultures, very similar. If you see Japanese interior architecture to Indian to, you know, something in the West, I mean, the fundamental things are always taken care of. I wanna cook somewhere. I wanna have somewhere where I can put my head down. I need to, [chuckles] you know, use the toilet now. There are different sizes, formats-
- NSNirupa Shankar
Mm
- KVKaran Virwani
... and things of that-
- NSNirupa Shankar
And post, uh-
- KVKaran Virwani
... but it's, it's just about that security, I feel.
- NSNirupa Shankar
Post-COVID, you have a new room for offices.
- KVKaran Virwani
And the office. [chuckles]
- NSNirupa Shankar
But there are some-
- KVKaran Virwani
I hate that room.
- NSNirupa Shankar
Yeah, but there are some... Sorry?
- KVKaran Virwani
[chuckles] I said I hate that room. [laughing]
- IRIrfan Razack
[laughing]
- NSNirupa Shankar
There are some, um, innovations in the sense like we're talking about homes for the millennials-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... and the Gen Alpha or whatever, who don't want to cook as much, right?
- IRIrfan Razack
Mm.
- NSNirupa Shankar
So then I feel like it's going some of these places where it's, um-
- NKNikhil Kamath
No kitchen
- NSNirupa Shankar
... built to suit. No kitchen. There's a communal kitchen because people-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... want, people are lonely, right?
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
With the, with, as and when technology is, uh, seeping into our lives, they're getting more lonely, so they want to now create communal kitchens so that they know their neighbors. Otherwise, many times people don't even know their neighbors. But in terms of apartment, in terms of, um, living room, kitchen, all that, I think it's still very much required. People want that privacy versus-
- NKNikhil Kamath
But can't it change? Can't it change?
- 1:58:49 – 2:03:58
Real Estate Perspectives | Working with Adam Neuman
- NSNirupa Shankar
come and cook.
- NKNikhil Kamath
What do you think is working more in society today? Say, his dad is projecting X, your dad is projecting Y. Like, I have this really favorite philosopher, psych- psychia- psychiatrist. His name is Jung.
- NSNirupa Shankar
Okay.
- NKNikhil Kamath
He says that we are all like wine. We are a vintage of the year that we are born in, and hence, what we believe in changes. Like, Irfan uncle believes in a certain thing because he was born on a certain year. I was born in '86, so I believe in some things about life, so does Karan, and so do you. What kind of projection is working as a factor towards, for the lack of a better way of putting it, getting more deals done today?
- IRIrfan Razack
Mm-hmm.
- NSNirupa Shankar
So I think there's no right or wrong. According to me, there's no right or wrong. I think the way his dad is is a reflection of his personality, and the way my dad is is a reflection of his, and that could be because of how, like you said, they've been brought up-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... or the value system of the family, et cetera. Now, I think the way you run your company will also attract certain kinds of investors, okay, or home buyers.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
Like, everybody has a reputation. In the end, you know, it is... S- some people will look for certain attributes from a customer perspective, "Okay, I'm putting my life savings. You know, I want to go with a reputed, maybe conservative builder." But if it... Sometimes if you're looking at a more luxury product, or if you're looking for different aspects, so I just think whoever you are will attract different segments and different kinds of investors also.
- NKNikhil Kamath
Hmm.
- NSNirupa Shankar
Maybe certain things are, uh, risk-taking is associated more with, say, flashiness for some-
- NKNikhil Kamath
Hmm
- NSNirupa Shankar
... some cases, so you'll attract a different type of investor-
- NKNikhil Kamath
Hmm
- NSNirupa Shankar
... and customer, I think.
- KVKaran Virwani
Yeah, I, I think that's true. I mean, it's also who do you wanna partner with, right?
- NKNikhil Kamath
Correct.
- KVKaran Virwani
Like, I will, if, if I'm maybe up against someone super obnoxious or, you know, extremely flashy, I, I will automatically retract-
- NSNirupa Shankar
Hmm
- KVKaran Virwani
... and not try to- try to avoid partnering with that person at, you know, at maybe, like, all costs. But there are some people who are attracted by that, and some people who, you know-
- NSNirupa Shankar
Like, your, your dad was able to handle Adam Neumann.
- KVKaran Virwani
Yeah.
- NSNirupa Shankar
Like, not everybody can handle an Adam Neumann. [laughing]
- NKNikhil Kamath
Hey, tell us more about Adam Neumann.
- NSNirupa Shankar
[laughing]
- NKNikhil Kamath
So Adam Neumann stayed with, uh, Karan in their house for a week.
- NSNirupa Shankar
Yeah, I heard.
- KVKaran Virwani
I mean, I, I won't say too much, but-
- NKNikhil Kamath
And his, and his new company is kind of bringing together home in a different manner, right?
- 2:03:58 – 2:05:04
Nirupa and her Sister
- KVKaran Virwani
years.
- NKNikhil Kamath
How is the relationship between you and your sister?
- NSNirupa Shankar
Sister is very good.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
Um, I think when we grew up, this regular fighting over who has control over the remote, what do we watch-
- NKNikhil Kamath
[chuckles]
- NSNirupa Shankar
... all the silly stuff, who goes to the bathroom first. [chuckles] But I think from a work perspective, we went to the same colleges in the US. Somehow I just- older sister, so I just had to follow her footsteps for the most part-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... till grad school.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
But I think work-wise, touch wood, we haven't had-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... any sort of arguments in all these years.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
But I also think, um, that's because we have completely different domains.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
She doesn't get involved with what I do, and I don't get involved what she does, but we have a need to know-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... on what's happening in both the spaces. But yeah, right now, if there ever was something, couple of times when there's been a decision that both of us have an opposing view, we just have to go talk to my dad, and he sort of sorts it out. And I think going forward, it will rest with us to have the emotional maturity to make sure we resolve it in a am- amicable way. And-
- NKNikhil Kamath
So for a lot of women
- 2:05:04 – 2:07:29
Gender roles in Real Estate | Balancing Personal Life
- NKNikhil Kamath
who are watching this show, uh, gender roles in society have changed today drastically.
- NSNirupa Shankar
Yeah.
- NKNikhil Kamath
Uh, man is no longer the provider. Woman is no longer the comforter or, uh... The way in which each partner used to compromise has changed-
- NSNirupa Shankar
Yeah
- NKNikhil Kamath
... flipped. For somebody who is an operator of a company as large and successful as yours, is that burden borne by your marriage in some way?
- NSNirupa Shankar
Um, [exhales] what burden are you referring to, the, the switching of the roles?
- NKNikhil Kamath
Yeah. It's not easy.
- NSNirupa Shankar
To some extent. See, if I had a, if I had another... If I, if my husband was also heading a large public-listed entity, I'm not saying the marriage would sort of suffer for it, but maybe the children would. Because both of us traveling, both of us not being there, I think the children would suffer. So right now, I think- see, in many marriages, the woman is taking, like, 80 to 90% of the household burden-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... and the kids, and the work, and everything. I think initially when the kids were young, it was still, I was handling it. But now, after being married for, you know, almost 14 years, we've had to sort of divide up the responsibilities, and it has to be 50/50. I cannot, I'm not able to. If I have to travel for road shows, I have to go. If I have to have travel for conferences, I have to go. But we try not to both go at the same time. So there is a give and take.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
I can't be like, "My career is more important than yours," because everybody has a role to play, and everybody has, um, something they feel that they need to contribute to this world. And just larger doesn't mean more important also.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
You know?
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
Just because, you know, my f- my husband is a-
- NKNikhil Kamath
Not, not to you guys, but-
- NSNirupa Shankar
Yeah
- NKNikhil Kamath
... you live in society.
- NSNirupa Shankar
Yeah.
- NKNikhil Kamath
And society projects their opinions either vocally or subconsciously, one way or the other, eh?
- NSNirupa Shankar
So no- I mean, no opinions given to my face, but I would have to say that my husband is probably one of the most secure men-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... Indian, Indian males. Because at some point, I mean, it is a, it is a known fact that probably, obviously, he's a single entrepreneur. This is a public-listed entity.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
Yeah, I probably make more than him.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
So not many men would be comfortable. It takes a very evolved and secure person to be comfortable with it-
- 2:07:29 – 2:10:52
Nirupa and Sports
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... and I happen to have found one of them.
- NKNikhil Kamath
I've met him. Great guy.
- NSNirupa Shankar
Yeah.
- NKNikhil Kamath
And you guys do all these, like, healthy things together and all, right?
- NSNirupa Shankar
We used to.
- NKNikhil Kamath
Triathlon-
- NSNirupa Shankar
No
- NKNikhil Kamath
... run for 40 kilometers. [chuckles]
- NKNikhil Kamath
Still do it.
- NSNirupa Shankar
Our first date-
- NKNikhil Kamath
Still do it
- NSNirupa Shankar
... was playing basketball together, so-
- NKNikhil Kamath
Ah
- NSNirupa Shankar
... I think there was a love for sport, uh, that was there. But, uh, he does this-
- NKNikhil Kamath
Who won that?
- NKNikhil Kamath
[chuckles]
- NSNirupa Shankar
He's really have to get into that. [laughing] Is that important? The important thing is we went on the second date. [laughing]
- NKNikhil Kamath
[laughing]
- NKNikhil Kamath
She cycled, like, some-
- NKNikhil Kamath
I know she-
- NKNikhil Kamath
... 100 kilometers, ran for 20. What is that competition?
- NKNikhil Kamath
Ironman.
- NSNirupa Shankar
So that's the Ironman.
- NKNikhil Kamath
Ironman. Yeah, you did the full thing, right, or half?
- NSNirupa Shankar
I did the full Ironman.
- NKNikhil Kamath
Swimming, cycling-
- NSNirupa Shankar
Yeah
- NKNikhil Kamath
... and running.
- NSNirupa Shankar
Yeah.
- 2:10:52 – 2:14:04
Nirupa's Dreams and Ambitions
- NSNirupa Shankar
that.
- NKNikhil Kamath
Unfiltered, what do you dream about?
- NSNirupa Shankar
Ah.
- NKNikhil Kamath
You don't have to be so unfiltered. [chuckles]
- NSNirupa Shankar
Professionally? [chuckles]
- NKNikhil Kamath
Yeah, professionally. [chuckles]
- NSNirupa Shankar
[chuckles] I'll keep it across the sense of board. Um, I have two dreams, actually.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
You know, I have two dreams. One is, of course, on a professional side-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... I'll talk about it from a professional side. Um, one is, of course, taking this company to being-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... not just-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... you know, big.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
I don't know if biggest is my dream, but definitely the best and how we can go about doing that. But sometimes I, I also wonder-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... you know, at the end, there it is, you feel like you're on a hamster wheel. It's, it's quarter to quarter-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... year on year. It just never stops.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
You know, every, every day it just never stops. And I'm like, at the end of it, what is the purpose to all of this? You know, that getting a little philosophical is-
- NKNikhil Kamath
What is it? Mm. [chuckles]
- NSNirupa Shankar
So I have fou- I have thought about that a lot, too. And I've realized that the purpose of life is that there is no purpose. It is whatever you make of it-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... right? There is no purpose to life.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
Like-
- NKNikhil Kamath
Nihilistic.
- 2:14:04 – 2:22:54
Essentials of a Mall: Financials, Creativity & more
- NKNikhil Kamath
I wanted to ask you first about malls. You guys started Forum Mall, where I used to go in Koramangala back in the day, the only place with a PVR Theater. For somebody starting off in the real estate industry, can you explain the financials of a mall? Does it make sense? How important is a multiplex to a mall?
- IRIrfan Razack
See, uh, apart from the financial sense, as I said, the creativity is what gets us. I, in one of my holidays, traveled to South Africa, Durban, Cape Town, all these cities, and I saw these small-sized malls, where you s- you had the multiplex on top, even got the, uh, good fortune of even going to cinema there.
- IRIrfan Razack
... and overall look, feel, the entire size was looking to me as very doable in our country, in our cities, rather than what malls you used to see in the US. Of course, Dubai didn't exist at that time. So one thing led to the other. Came back to Bangalore. I had tied up this land next to my Prestige Acropolis, where I had signed up with them to do either an office space or to do one more residential development. And those days, we had what is called the Urban Land Ceiling Act.
- SPSpeaker
Mm. Can you explain what that is?
- IRIrfan Razack
That is promulgated by Madam Indira Gandhi those years, to say anybody who owns more than thousand square meters of land had to surrender that land to the government.
- SPSpeaker
Mm.
- IRIrfan Razack
That was excess land.
- SPSpeaker
Mm.
- IRIrfan Razack
Okay, there were so many exemptions. Either you got exemption for group housing or pertinent land, so a lot of people got exemptions, but then it used to be a very, very difficult and very tough one to do any large or imaginative project. Just things being whatever, one day they decided that they, this was a draconian law and really did not lend itself for development. They abolished that act. So it was there from 1976 to about 1999, almost twenty years plus, the act was there, and then there is stunted growth. Cut to now, to that late '90s, the Urban Land Ceiling Act got abolished. Once that Urban Land Ceiling Act got abolished, suddenly we were like prisoners out of jail. We became- we could sort of imagine anything and work out something. [lips smack] So I went back to my landowners. I always had this desire, contrary to my, like you said, now, difference of opinion. My brother always was against it. "No, it won't work in India. Our people are very different. They won't know how to use it. I don't know whether revenues will come." And I was like, hell-bent on doing it. So in fact, he even brought a, uh, a real estate professional, CBRE, who said, "I'll, sir, I'll lease this. You build an office space here, I'll lease it out for you almost instantly." I said, "I've done many office spaces, but I don't want to do this. I want to do a mall." Fair enough. We deployed the architect, gave the briefing, and it some, sometimes, you know, when some, uh, good wins over or a good idea wins over, not such a good thing, so we went ahead. That's one great thing about us is there's no... Finally, if it's had to go on, there is support. So we got the architect, got him to design it, and then finally we discovered that you can't build a multiplex on the upper floors of a building. It had to be only on the ground floor. [chuckles] Then the next journey started. It was, I know, during Mr. Krishna's rule as a chief minister. We went to them, "Cinematographic Act has to change. The whole world has changed. There are multiplexes coming up everywhere, and you can't have the prime..." Because when my architect gave me the first design, the cinema was on the ground floor. I was aghast! I said, "How is it that you guys have put it on the ground floor? This is the most premium space." Then he said, "Sir, please read the act." When I read the act, the rules, I said, "Okay, we'll have to have this, the rules rewritten." So fortunately, we had a government that was a little proactive, that listened, and then they asked us to write down the rules, frame it the way... And today, the re- the rules in the Cinematographic Act, what is there, are the ones that is written by us. Except that when they brought the draft rule again, instead of writing multiplex, they had written IMAX. Then again, I had to beat my head on. I said, "No, it's not mul- uh, IMAX. It's IMAX is a projecting system, and multiplex is a group of cinemas." So got that also done. In the meanwhile, I had got my plan approved as auditoriums. The law did not sort of, uh, stop us from getting auditoriums done. An auditorium can be a place where you could have meetings, or you could have had, uh, weddings or whatever else, but you- the c- as far as cinema was concerned, you couldn't have it. So we went through that process, got those changed, changes done in the law, and then, of course, we got some external consultancy. We got an architect from the US who came and gave us the overall thing, and at that time, this PVR was chasing me. He came to know that Prestige is going to build a multiplex in Bangalore, and then he sent a missile to me, an emissary, and then we started talking. You asked me, what is the return? In a, in a, in a, in a mall, I think if you do it well, you'll get a eighteen, twenty percent return on your investment.
- SPSpeaker
Off the bat.
- IRIrfan Razack
Yeah.
- SPSpeaker
You'll be-
- IRIrfan Razack
And if you don't get that, there's no sense in doing it. And if you manage it well, you can probably do much better.
- SPSpeaker
Mm.
- IRIrfan Razack
But we honestly didn't know what was going to hit us. So, uh, we s- we, we, we opened this, uh, mall in the year 2004, uh, February 2004. Unfortunately, I would have been happier because I lost my dad in January 2004.
- SPSpeaker
Mm.
- IRIrfan Razack
So my dad would have been the happiest that day when I gave a speech also, I was, I said, "My dad is somewhere looking from top." But just about a month later, we opened that, uh, mall. The cinemas opened in August. We, uh, I honestly, we did not know what hit us. We used to get 100,000 people, 70,000 people in a day, footfall.
- SPSpeaker
Mm.
- IRIrfan Razack
It was madness-
- SPSpeaker
Mm.
- IRIrfan Razack
... because people hadn't seen-
- SPSpeaker
Mm
- IRIrfan Razack
... uh, this sort of, uh, organized retail.
- SPSpeaker
Mm.
- IRIrfan Razack
Because initially, they didn't know what a food court... You know, to do a food court, I had to convince internally. I gave that to my brother-in-law. I said, "Man, you take the space, you do the food court." But then he said, you know, he was comparing somewhere that, that business, some few thousand. I said, "Listen, it's something very different. You haven't understood it."
- SPSpeaker
Mm.
- IRIrfan Razack
So anyway, finally, we did it.... and there's no looking back. That was, and that, too, those days, it was just a 350,000 square feet, uh, uh-
- NKNikhil Kamath
Mm
- IRIrfan Razack
... uh, space. Uh, uh, that is the leasable space. The rest of it with car parking, because my first brief to my architect was, because I used to suffer, you go to a cinema, you never used to get parking.
- NKNikhil Kamath
Mm.
- 2:22:54 – 2:24:30
What made Brigade Group build a Mall
- NKNikhil Kamath
also is very crucial-
- IRIrfan Razack
Yeah
- NKNikhil Kamath
... to know, have that expertise of leasing and stuff.
- NSNirupa Shankar
Um, I think my dad went to Japan, saw Roppongi Hills, and, you know, the whole mixed-use township concept.
- IRIrfan Razack
Yeah.
- NSNirupa Shankar
So I think he was quite... He, he thought that that was the future of cities, right? To create mixed-use townships. So when he had large parcels of land, like Brigade Gateway, which was close to 40 acres on CBD limits, um, he wanted to recreate like a city within a city.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
So it had the, mm, the office, the residential, the retail, the hospitality, a school, a hospital-
- NKNikhil Kamath
Mm-hmm
- NSNirupa Shankar
... lake, and, uh, you know, social amenities.
- IRIrfan Razack
Amazing.
- NSNirupa Shankar
And, uh, I think this concept of live, work, play within our cities is probably-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... the future. Because like you were talking about the infrastructure-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... there's so much of pressure on our infrastructure. Like, every two years, Bangalore adds about 800,000 people-
- IRIrfan Razack
Mm
- NSNirupa Shankar
... like, which is the size of, like, a Seattle or something.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
So there's no way our infrastructure can sort of keep up with the demands-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... of the people and the population. So I think the future is doing mixed-use townships, you know, like little Fountainhead, little idealistic townships.
- NKNikhil Kamath
Now that we have some more moving parts-
- IRIrfan Razack
Mm
- NKNikhil Kamath
... if I were to start a real estate business and I had an option between a JD apartment with a landowner, start a multiplex, a hotel, or a commercial real estate project, what would I do?
- IRIrfan Razack
I would still say please start with some residential for a start. [laughing]
- NSNirupa Shankar
[laughing] Get your money and-
- NKNikhil Kamath
Also-
- IRIrfan Razack
Or go into office.
- NKNikhil Kamath
Yeah.
- 2:24:30 – 2:24:59
Food Break
- IRIrfan Razack
on. [electronic music]
- NKNikhil Kamath
Okay, introductions. [laughing]
- NSNirupa Shankar
[laughing]
- NKNikhil Kamath
Who would like to go first?
- IRIrfan Razack
You can go first.
- NSNirupa Shankar
Anything. Sure, whoever.
- NKNikhil Kamath
Mm. Tell us a bit-
- NSNirupa Shankar
Age before beauty. [laughing]
- IRIrfan Razack
[laughing]
- NKNikhil Kamath
Tell us a bit about
- 2:24:59 – 2:32:04
Nirupa Shankar's Intro
- NKNikhil Kamath
childhood, life. How did you come to being who you are today?
- NSNirupa Shankar
So Bangalore girl, born and brought up here, although my mom is from Kerala, dad is from Chikmagalur, which is a coffee plantation place, North Karnataka. Did my schooling here, went to the US, uh, University of Virginia. Um, kind of just, I was given one option to go to UVA because my sister went there, so they were like, "This is where you're going." So applied to one college. Did, did economics there, because I feel like you do economics when you don't know what else you want to do in life. So economics is-
- IRIrfan Razack
[laughing]
- NSNirupa Shankar
... the major for the undecided. [laughing]
- NKNikhil Kamath
[laughing]
- NSNirupa Shankar
Yeah, it's got some math, it's got some analytical skills or whatever. So I did economics, and while I was-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... doing my undergrad, I did a bunch of internships, so PwC in Bangalore, in M&A.
- NKNikhil Kamath
Mm.
- NSNirupa Shankar
I did Leela Palace, Bangalore. I did some advertising agency. I was just exploring, like-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... what do I want to do in life, and what am I passionate about, and-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... all that. And then, uh, got a job out of college at, uh, with Ernst & Young.
- NKNikhil Kamath
Mm-hmm.
- NSNirupa Shankar
So in the risk advisory business. So w- spent about three and a half years there in the New York office, DC office, North Carolina office. And while I was doing that, I worked on... You know, as a consultant, you work on different projects-
- NKNikhil Kamath
Mm
- NSNirupa Shankar
... and I worked on this really cool leveraged buyout. Apollo was buying out Harrah's Entertainment, which was like a huge casino group, and loved the whole space while I was working on that deal. So I said, "Okay, let me explore hospitality a little more." I took some evening classes at, uh, NYU's, uh, Continuing School of Education and Hospitality. Loved it. Decided to apply to Cornell for my master's in hospitality. Uh, did that, and at that time when I graduated, it was 2009. I also did a study abroad in Singapore, because I think Asian hospitality is something, uh, very different from Western hospitality. So, um, 2009, I think there was a financial crisis happening. I think hospitality everywhere was doing-... not well-
- SPSpeaker
Mm-hmm
- NSNirupa Shankar
- except maybe India, China, and Africa. And, uh, 2009 was the year that we were also setting up our first hotel, and it was very coincidental. My dad didn't say, "Go do hospitality," or... It just so organically happened, uh, because I think as a family, we always discussed buildings. You go to a hotel, you discuss the building. You go to a, uh, on our travels, et cetera. So I just used to think about hotels all the time. So I came back in 2009 to set up the hospitality practice, and I did that for a few years. Um, just took one portion of the business. First it was marketing, then it was legal and contracts, then it was data analytics. So organically just grew my skill set in hospitality for about five, six years. Then had my first child, so took maternity leave for six months or so, or maybe four months, and during that time, I was like, "Okay, how do I reinvent myself?" Because I delegated all my responsibilities. And then I came up with this concept. That time, you know, housing.com was-
- SPSpeaker
Mm.
- NSNirupa Shankar
- at some $300 million valuation. I think a lot of e-commerce, uh, companies were doing... were having these crazy valuations, and brick-and-mortar businesses like ours were, with tangible assets and profit-making, had lower valuations.
- SPSpeaker
Mm.
- NSNirupa Shankar
So I realized at that point of time, you know, we need a play in tech, because tech is gonna help you grow exponentially. Um, so that's when I set up Brigade REIT.
- SPSpeaker
Mm-hmm.
- NSNirupa Shankar
It was Asia's first real estate accelerator program.
- SPSpeaker
What year was this?
- NSNirupa Shankar
2016.
- SPSpeaker
Mm.
- NSNirupa Shankar
So 20- I joined the business in 2009.
- 2:32:04 – 2:37:06
Karan Virwani's Intro
- NSNirupa Shankar
Yes. [chuckles]
- KVKaran Virwani
You want me to start from the, from the start?
- SPSpeaker
Yeah, yeah, start from the beginning.
- KVKaran Virwani
Um, born and brought up-
- SPSpeaker
Throws, throws the biggest Diwali parties in Bangalore.
- KVKaran Virwani
[chuckles]
- NSNirupa Shankar
Yeah.
- SPSpeaker
By a mile. [laughing]
- KVKaran Virwani
[chuckles] Uh-
- SPSpeaker
2,000 people.
- KVKaran Virwani
At least. [laugh]
- SPSpeaker
[chuckles]
- KVKaran Virwani
At least invited. I don't know how many finally show up. But yeah, it's grown. It's actually become a tradition over time, I think, in the city.
- SPSpeaker
Mm. So where did you grow up?
- KVKaran Virwani
I'm born and brought up and bred in Bangalore.
- SPSpeaker
Mm.
- KVKaran Virwani
So I've lived here, you know, pretty much my whole life. Studied, um, studied here across two schools, Vidyashilp Aditi.
- SPSpeaker
Mm.
- KVKaran Virwani
Um, grew up riding-
- SPSpeaker
All the spoiled brats are from Aditi, right?
- KVKaran Virwani
[chuckles] I only went there later in life, but-
- NSNirupa Shankar
No, no, same, same. I went to St. Clare's, yeah. Went to a typical convent school-
- KVKaran Virwani
Mm
- NSNirupa Shankar
... and I love that convent education.
- KVKaran Virwani
[chuckles]
- NSNirupa Shankar
Uh, but yeah, I went to Aditi, too, 11 and 12.
- SPSpeaker
Yeah.
- KVKaran Virwani
So studied here. Actually, a lot of our childhood, at least me and my brother, you know, we spent riding, so outdoors and, like, around horses, and-
- NSNirupa Shankar
Mm
- KVKaran Virwani
... all of that stuff. As we, as we kind of grew up, we had this, the Embassy Riding School, you know, which was, like, a huge bit of, like, a stud farm that my dad had bought-... you know, in the, the '96 or something-
Episode duration: 3:16:29
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