We have had two days of planning here, working out what we are going to do here next in India.
“Real estate is in my blood,” says Alistair Elliott, partner and group chairman at Knight Frank, the world’s largest global consultancy firm. On a recent visit to review the Knight Frank India business and roll-out of the expansion plan for the next three years, targeting double-digit growth, he spoke to Manisha Singhal. Excerpts:
The realty industry has been in turmoil with Brexit in the UK and structural reforms in India… Do you see the industry adjusting to this?
There is a lot of hesitancy, particularity in Europe, because we have made a decision to leave the European Union (EU) but we are still not sure what it is going to look like. We need clarity around the nature of Brexit — that is — hard, soft or medium. If I am honest, that’s going to be a five-year process, and it will be interesting to see how real estate reacts. If you were to go back to the last couple of years and write down the events that have happened in the world — Donald Trump becoming the US President, UK taking a decision to leave EU, and then say what would be the consequences of those two events on the investment sentiment in real estate, I think most commentators would have got it completely wrong.
This was evidenced also by your own country on demonetisation, which when it came was a shock, but is probably building a better and more stable platform from which to grow an economy. Real estate has proved to be very resilient and I believe the more that is done within the economies to stabilise them and make them transparent, the more the real estate environment will improve.
What about Knight Frank’s India business?
We made a call in 1995 to begin to build a real estate advisory business in India and the only thing I can say, without any doubt, is that it has been more difficult than we anticipated. But we do not have a single regret. Because of the scale of the country and because of lack of real estate infrastructure, the ups and downs of the economic cycles — all those things combined made it more difficult to develop our platform as quickly as we would have liked. But I am delighted that now we have. We have got our eight offices and we have got a 1,000 people. I believe our brand penetration is increasing year on year.
India is pushing affordable housing, not a segment you have expertise in. What makes you optimistic about your business?
Two things. Our residential brand is very geared towards the prime markets around the world and even if that is only 1% of the Indian market, it still is a very significant volume for us to be involved in, so we are not about to start opening a lot of branches, estate agents in India or anywhere else in the world. We intend to focus on where we believe that our brand can add value, which is in prime residential, and 1% of the Indian market is plenty for us to operate within. We just need to find how to do it more effectively. And that is still work in progress.
In terms of growth will you look at Tier II and Tier III cities?
We have had two days of planning here, working out what we are going to do here next in India. And we are very ambitious and we have got an awful lot to do in Mumbai, in Delhi, in Bengaluru, and the other cities we are already in. I don’t anticipate you will see us adding many more city locations.
There’s churn among developers in India. How do you view this?
With a market that is growing as quickly as yours has and at the same time will experience the bumps on the way, there are bound to be companies which are unable to respond to the changes, that also impacts our business in India only in the way so far as we engage with our clients and we got to be very agile when it comes to refocusing our attention.
Which segment do you think will grow the fastest in India?
I would back logistics and distribution without any doubt. I think it is going to be exponential because of the growth in the cities, as the infrastructure investment develops. Also, affordable and mid-range residential in every city has got to find a market — it’s had an unsettling period for a few years but I hope over the next five to 10 years, it would rebalance growth.
There is a debate around ethical business. How does realty marry the two?
Its a big and pertinent question in today’s world, isn’t it? I have been in property and in Knight Frank since 1983 and I can absolutely say without any hesitation, we have regarded ourselves as a professional business; the corporate social agenda has changed dramatically in the last decade and we are determined to make our contribution to that debate and make changes in our organisation to ensure everybody inside and outside the business is properly respected. So, when it comes to gender and ethnicity and professional approach to doing business, those matters are in the uppermost mind of our executive board.
By: Manisha Singhal