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Rajas of real estate

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By Seetha checks out the property pashas who are suddenly figuring in the list of the wealthiest Indians
  • Published 25.11.07

A letter changed their lives. Some 30 years ago, the Hiranandanis were in the textile and property business. They did badly in both and decided to withdraw from one of the businesses.

Then “God sent me a trade union letter,” says Niranjan Hiranandani, chairman of the Mumbai-based Hiranandani Constructions. It was from their textile plant union in January, 1981 — when militant trade unionism was at a high — demanding a 100 per cent wage hike. “We decided to shut the plant and sold it.” Hiranandani Constructions got undivided attention.

For Kushal Pal Singh, providence came in the form of a rookie politician called Rajiv Gandhi. Today, the 76-year-old patriarch of the DLF group is the world’s richest real estate tycoon. In a recent list of the wealthiest Indians, Forbes magazine estimated Singh’s personal net worth at $35 billion, placing him after industrialists Lakshmi Mittal, Mukesh and Anil Ambani and just ahead of software czar Azim Premji.

Singh’s not alone in the real estate elite club. The industry has thrown up seven other billionaires (see box). Once known as a business awash with black money, the sector has undergone a makeover and is being wooed by the world’s biggest moneybags. “The potential of the sector is being seen only now,” says Hiranandani.

And this is just the beginning. The number of billionaires will double next year, asserts Pradeep Jain, chairman of the Delhi-based Parsvnath Developers. Analysts agree. “There are several others who should be on the list. People are just waiting for the market to discover them,” says Akshaya Kumar, managing director of Park Lane Property Advisors, a real estate consultancy firm.

The lifestyles of the tycoons show how they’re loaded. Many have farmhouses and fleets of upscale cars — from BMWs, Porsches and Mercedeses to Toyota Camrys, Prados and Range Rovers. Hiranandani, who started off in 1977 with a used Ambassador, now has son Darshan, who heads the Dubai arm of the company, Hircon, taking all decisions about his cars. “He emails the dealer to put in all kind of features I don’t ever use.”

The Delhi-based Omaxe’s chairman and managing director Rohtas Goel, who moved around on a Bajaj Super two-wheeler when he set up his construction business in 1987, now owns seven luxury cars, while his family has another seven. Starting with a one-room rented house in Jia Sarai, an urban village in south Delhi, he now lives in a farmhouse. Jain lives in central Delhi’s Bengali Market, an expensive location even if it doesn’t have snob value.

The Delhi-based Unitech’s Ramesh Chandra (the second richest after Singh) who also started with a second-hand Fiat bought in 1969, has been living in the same house in south Delhi’s Hauz Khas since 1973 — though it’s been expanded since. “I don’t have a farm house; my son does,” he chuckles. Vikas Oberoi, managing director of the Mumbai-based Oberoi Constructions and the youngest real estate billionaire at 38, has come a long way from the young boy who got his highs when he took joy rides in his father’s Maruti Esteem.

The real estate rajas comprise a motley bunch. They range from first generation professionals-turned entrepreneurs such as chartered accountant Hiranandani and civil engineer Chandra, whose first job was with construction company Bridge & Roof in Calcutta. The fathers of Jain and Goel were grain merchants in villages near Delhi who wanted to strike out on their own.

And there are the privileged inheritors such as Singh, who comes from a land-owning family and whose father- in-law set up DLF (Delhi Land & Finance) which developed South Delhi colonies in the 1950s, and Oberoi, whose father diversified from the family’s saffron trading business into property in 1980. Till he made it to the list, Oberoi got media space more as the husband of Swades actress Gayatri Joshi.

What binds them is ambition, drive, hard work and luck.

Singh’s story is a case in point. While trying to revive the fortunes of DLF, which had dipped after land development was nationalised in the late 1950s, he was dealing with car batteries and electrical motors. Singh had also bought land near Gurgaon hoping to replicate the Delhi development story. Unfortunately, permission to develop the area was withdrawn.

Top dogs

K.P. Singh
$ 35 billion

Ramesh Chandra
$ 11.6 billion

Rakesh Wadhawan
$ 2.35 billion

Rajan Raheja
$2.15 billion
Rajan Raheja Group

Niranjan Hiranandani
$ 2.1 billion
Hiranandani Constructions

Vikas Oberoi
$1.7 billion
Oberoi Constructions

Pradeep Jain
$ 1.25 billion
Parsvnath Developers

Rohtas Goel
$ 1.20 billion

Source: Forbes
Note: the net worth is as of
October 2007 and could have risen or fallen since then.

Singh’s luck turned when one day in 1981 Rajiv Gandhi stopped for water to cool the overheated engine of his jeep at a well near which Singh was resting. They got talking — and before you knew it, the Haryana government had liberalised regulations.

Most of the barons started in the 1980s. In 1984, Jain started as an agent for Delhi-based property development companies such as the Ansals, earning Rs 1 lakh from one deal. Two years later he had enough work to set up Parasnath Associates. In 1989, he got into property development with Parsvnath Developers. Unitech, which started in 1972 as a soil testing company formed by Chandra and his three friends, forayed into real estate in Gurgaon, financed by an initial public offer, in 1986.

The rise of Omaxe has perhaps been the most dizzying by far, as the company entered the real estate business only in 2001. Goel, with a diploma in civil engineering, started a construction business in 1987 with Rs 22,000, and incorporated Omaxe Builders in 1989. He had decided on the name (Om from his mother’s name, Omvati, and axe from pickaxe) and printed letterheads in 1985.

Oberoi may not have faced a struggle, but Oberoi Constructions began to set a scorching pace of growth after he joined the firm when he was all of 20 in 1990. By 28, he was the managing director. Under his father, the company built only three buildings in the first 10 years. Brimming with ideas from Harvard where he studied in 1997-98, Oberoi charted the company’s growth path, picking up prime Mumbai property being sold by multinationals and developing them.

Yet, the journey to the top hasn’t been easy. The policy environment was and remains hostile, with restrictions on land holdings, floor area and rents and high stamp duties and taxes. The industry picked up after the government began relaxing rules in 1991, but the good years didn’t last. Between 1996 and 1999, with a slowdown in the economy, Hiranandani lost half his wealth. Omaxe’s first foray into real estate, a Gurgaon residential project, suffered a setback when Haryana banned the registration of houses for violating policy guidelines.

The industry boomed after economic growth picked up in 2001. Real estate companies began hitting the stock market. Dozens of real estate firms went public to raise money: the biggest was DLF’s 2005 sale of 10 per cent of its shares to the public for Rs 9,625 crore.

Raising money, clearly, is no longer a problem for real estate companies, now that foreign firms can invest directly in the business. In January, Morgan Stanley picked up a 10 per cent stake in Oberoi Constructions for $152 million. Hiranandani has chosen to go public abroad, listing the company’s investment arm Hirco, headed by daughter Priya, in London.

All this has enabled their wealth to be estimated. The stock market boom has also sent the values of the companies skyrocketing, as in the case of Singh, who was valued at $10 billion in the Forbes list of world billionaires earlier this year. Singh ranked fourth then.

Experts warn that valuations could be exaggerated. “The valuations here are far higher than equivalent scrips in other countries,” notes Sanjay Bansal of the Mumbai-based investment banking firm Ambit Corporate Finance. Many believe that as more real estate companies get listed on the stock markets, more billionaires will emerge.

Predictably, today’s billionaires are charting out aggressive growth paths. Goel wants an Omaxe City in every town and is taking his company overseas. Parsvnath and Hiranandani have already done so. Expect India’s real estate barons only to grow richer and richer.