In conversation with Mr Manan Shah: A 360-degree insight into real estate

1. Under your leadership, MICL has increasingly diversified its development-oriented portfolio into predominantly a real estate one. Real estate is now about 60 per cent of the business. Please describe your thoughts on the decision to diversify. How did you gauge the potential of the diversification?

While pursuing my graduation, I always had the vision to give back to the community. The thought process was to place MICL in a position where it creates, innovates and services the community in the most exquisite way. In 2010, after MICL was listed on NSE and BSE, we were eyeing a robust expansion to push further our presence in the construction business and serve our customer’s needs in a more tailored style. So, we took the next step: real estate, which helped us build our clientele in a more personal manner, understand their necessities, expectations design an action plan, which in turn promised us attractive profit margins.

Since 1964 we have been mastering the craft of Engineering, Procurement, and Construction (EPC) business in the construction and infrastructure sector; hence we have gained expertise by working with major developers. When it came towards the execution part, the platform was set for us, as we had built a robust network of major developers. As a result of this association, we had an insider view of the real estate business model. Moreover, the EPC side of the company, being a well-established vertical of MICL, had surplus liquidity. During my due diligence, it was observed the profit margins obtained from the real estate business were significantly higher. Considering all these factors and the organizational potential it was an ideal time for us as a group to embark on our diversification journey into an additional vertical and further enhance the financial performance of the company.

In 2013 when I joined the company, the objective was to venture into the real estate industry and build our brand into this sector by drawing reference from our long-standing EPC experience with other developers. Since then, the MICL has witnessed momentous growth, testifying to the success of the diversification. This diversification has not just benefitted us on monetary terms but also has given me satisfaction personally in serving the community in the best way possible.

2. What are the challenges you faced in the diversification process?

Since 1964, MICL has undertaken various EPC projects and has good expertise in pursuing them. While we had an insight into the real estate market, the team was still learning and growing in understanding the various subjects like architectural designing, finishing and liasonsing in real estate. In order to venture out into this new sector, my primary focus was to enhance my knowledge and skillset and also train and upskill the knowledge of my organizational team, setting new benchmarks for this journey. As a leader, it was important for me to carve the correct path for my team to guide them in the right direction while at the same time allowing them to think independently, which created room for innovation. Eventually, I did develop a small team and owing to the size of the team, the progress was slow but effective in the right direction.

The MICL Group back then was an established and recognized EPC Contractor. In 2013 when we ventured into the real estate industry, we thought people would take time to absorb MICL as a developer, but things went in a positive direction, and people appreciated an infra player becoming Developer too. But eventually, the market responded in a positive way, ‘the ship has been sailing pretty smoothly since then’. With every success, we aggressively expanded our operations and started setting new benchmarks in design and construction. So, in fact, the challenges that I faced were very well managed to turn them into learning opportunities for me as a leader and for my team as the innovators.

3. You have largely focused on luxury living across all the real estate projects. Does the company see potential in building projects targeting the middle class?

Yes, we believe a diversified portfolio is key to a profitable business. In order to capitalize and enhance the profit margins, my vision has always been to strategically customize the business plans with reference to the market’s needs. Hence, as the managing director of this group, I will always endeavour to our projects in all types of genres and locations to understand how the market perceives our product. The more diverse the consumer base we aim for and the more consumers we interact with, the more consistently and sustainably the company's growth and profit margins are observed.  For instance, along with luxury or boutique projects in affluent areas such as Juhu and Tardeo, MICL works on mass housing projects in Mira Bhayandar as well. Similarly, we also have projects in the central suburbs and Ghatkopar for middle-income and upper-middle-class buyers. 

4. With the advent of REIT (Real Estate Investment Trust), retail investors can finally make small-ticket investments in the industry. What are your thoughts on this? Has MICL, or does it plan to set up the investment option?

As such, we do not have any immediate plan to pursue this type of investment opportunity. In actuality, we're going about it a little bit differently. We have been concentrating on providing small-ticket investment options for a select group of people for a very long time. This gave us the opportunity to lower the risk associated with our enterprises by diluting the proportionate amount of shares, as well as to attract new investors, lower the risk associated with the company, and produce enough liquidity to support business expansion without taking on much debt.

5. Please share your thoughts on the future of real estate investing in India. What is your way of attracting the youth into real estate investing as opposed to the trending options such as cryptocurrency or NFTs?

“Crypto may pose the same problem as unregulated chit funds, which take money from people and go bust. A lot of people holding crypto assets are going to be aggrieved.”

-Raghu Ram Ranjan

(Former governor of India's central bank, the Reserve Bank of India (RBI))

In my perspective, NFTs and cryptocurrencies are far from surpassing real estate. First of all, these are unpredictable investments which are not regulated by the Indian Government. Secondly, the higher chances of somebody profiting from NFTs is if they are a renowned person who gets paid for endorsing the NFT. NFTs don't offer steady returns as they are volatile assets.

Similarly, cryptocurrencies are not completely regulated by the government. There are certain subjects of these digital currencies, which are a grey area for a lot of people. Hence can carry a potential risk of sinking overnight, which can incur huge losses for the investor. For instance, when an investor purchases gold, it stands as a physical asset one can sell this and make money as per the market trends; hence there is believability due to physical evidence. Hence it always overpowers digital currencies. It is slightly difficult to establish a trust factor when it comes to crypto and NFTs

Contrary to the new age investment routes, my belief is real estate is a tangible asset. It holds a physical value. The real estate industry has a set of procedures which are controlled by RERA, banking sectors and the government. For instance, if given an option to the middle-class person to choose between cryptocurrencies and real estate, he shall opt real estate as its classified asset, which serves as a possibility of passive wealth creation with rental revenues, tax benefits and many more attractive outcomes.

Moreover, with a real estate purchase, such as the ones in the premium MICL projects, the youth can enjoy amenities that they would otherwise have to pay for, such as gymkhanas and community spaces- apart from the amenities, these get-together places also offer networking opportunities for the exchange of ideas, creativity, startups etc. as they attract good crowds. 

6. Recently, MICL has ventured into international real estate development. Please describe how the international markets differ from the domestic real estate markets and whether there is a way a retail investor can begin investing in booming international projects.

We have started international projects with the U.S.A. focusing on the State of Florida and the city of Miami with the aim of expanding our brand abroad and generating robust revenues with global investors coming into the picture. But at the moment, retail investors have limited options to invest in such projects. As per RBI guidelines, under the automatic remittance route, there is a cap for remitting more than $250k in foreign countries. This makes it slightly less lucrative as the Indian investor has to seek permission from the RBI to remit more.

As opposed to the Indian markets, the international landscape is more system-oriented, and the consumers intervene less in the set process.  In the global market, in order to convince the consumer of the product aesthetics, details, location, PSF rates, and accessibility holds crucial significance. While comparing it with the Indian market, the needs and demands of the consumer keep changing as home buying in India is more of an emotional aspect rather than a commercial investment. Hence to cater to such a market, innovation is the key differentiator and demand puller. 

7. What is the vision for the next financial year, the next five years, and the decade?

“We have witnessed an increase in purchasing surge post-Covid. As soon as the economy saw a recovery post-pandemic, there was a scurry to buy luxury and big-ticket residential spaces. This kind of recovery-induced surge in growth is a new phenomenon. While we want to expand our revenue from the last financial year, the primary goal is to maintain a stable base and grow. 

After delivering ~5lakh sq. ft. of carpet area in the last 6 months, we are expecting to deliver another ~4 lakh sq. ft. of carpet area in the next few months vis-à-vis couples of our landmark projects - ‘Aaradhya one Earth’ at Ghatkopar location where we will be delivering 1st four towers out of the total 8 towers and remaining two towers of ‘AaradhyaHighpark’ near Dahisar location. 

We also have a lot of upcoming projects measuring 1.4 million sq. ft. of carpet area in Mumbai markets at premium locations, which are currently at an advanced stage and we are hopeful to launch them in the next financial year. In fact, we are poised to launch one of “India’s tallest towers” subject to receiving a height approval of 306m; as per our knowledge and civil aviation, it seems to be the tallest tower in South Mumbai at Tardeo spread over ~6 lakhs sq. ft. of carpet area. We expect to further strengthen our real estate presence in Mumbai post these launches. 

We have chalked a strategy to expand in international markets as well. We have already launched one of the marquee projects – ‘Edition residences’ - the first branded project of ‘Marriott International’ in Fort Lauderdale, Florida, USA. We will be launching other such luxury projects in due course of time. 

Further, in the next 5 years and the decade, we aim to become one of the top developers in the country with a great delivery record, class-apart quality and a curated lifestyle; owning a MICL property should be a status symbol: this is what we strive to be.”

8. You have worked extensively in the luxury living space. Please describe what the word luxury means for you and share with us the source of your inspiration.

My conception of luxury might be denoted in a seemingly contradictory manner: affordable, usable and implementable. These three principles make luxury adjustable for a person which is provided in MICL Group Project. With this principle definition, I want to deliberately send a message that while we go over and beyond to give a premium touch to our luxury projects and cater to a high-end lifestyle, we also ensure that the spaces we create are usable and durable.

Often what the term “luxury” suggests is some sort of bling, something which is high in terms of monetary value. It is the very connotation of luxury that we want to avoid. Take, for example, a famous painting; for that matter, all you can do with it is preserve it and adore it, but you can’t use it. Whereas with a luxury watch or car, there is a functionality factor, which I also want to bring into the space we build.  

9. A huge part of luxury projects is the customizability factor. It is not difficult to imagine that large projects tend to have more generic features throughout. So how do you strike a balance between customizing and the practicality of building large-scale projects?

When I imagine large projects, what comes to mind often are generic features. In fact, consumers often complain that they can’t customize beyond a certain extent with most developers. This is where the speciality of MICL kicks in. 

We closely examine the kind of lifestyle the customer is looking at and tailor our efforts according to that.  On the other hand, while designing our project, we consider beforehand the usual needs of a regular retail buyer so that the work gets done practically without any hitch. 

What we pride ourselves on is striking a balance between the client who requires customizations and, in the process, pays a premium and the one who wants a smooth transaction on having found a well-built space that serves everyday needs. 

10. Which aspects of your personality are reflected in the projects? ( Hint at his hobbies etc.)

Being a fully active person in business, I often find myself involved in the end-to-end process, right from naming a project, designing a house, and designing the landscape amenities to sales. I put myself in the position of the consumer and try to design the spaces as I would personally like to live, with easy-to-use amenities and functional features which carry neat and cutting-edge designs. So far the majority find this approach appealing and inspiring. In addition to my direct inputs, I strongly believe in keeping strong morale of the team so that the team is inspired and they put their best foot forward towards a well-designed project.

I believe as a result of my meticulousness, personal involvement and timely execution of the team’s effort in the project, MICL's endeavours to attract goodwill, word-of-mouth publicity and strong sales.

11.  Many steps, such as using solar panels, ecological use of construction material, and use of low emission paints, were taken by MICL, with you at the helm. Could you please highlight a few steps that brought in a new technology or concept to enhance the project?

So every project was designed in a manner understanding the dynamics of the locality. Rather than the stereotypical job of replicating the designs, how I think MICL does is it identifies a particular location, identifies its particular need, and the product is designed accordingly. To name a few of the innovations, to start off from Ghatkopar, Ghatkopar is one of the central suburbs which is more clustered and in that clustered development, we got 14 buildings to come together and develop one complex in that 3-acre land parcel of approximately we got more than 1 acre of open spaces, the way the central park spaces were planned, the swimming pool was planned, that turned out to be the whole vision and the whole USP, because of which all the clients came immediately and they bought as it was one of a kind. With nearly 1 million sq. feet of the construction area and still being able to achieve 1 acre of open space, that was an innovation. So, this was first the biggest innovation which was not seen in Ghatkopar East. So, Ghatkopar’s innovation was having the majority of open spaces on such a small land parcel. 

The set practices usually focus on building the sales gallery and the vicinity, but in MICL, our primary focus is to construct the infrastructure, followed by the construction of the sales drivers. This procedure helps us in phenomenal success in sales and being sold out right on day 1 as the amenities and infrastructure creates physical evidence and enhances the trust of the client in the developer. The second thing was what we did in Dahisar is again planning the central courtyard, so the way we planned the central courtyard in Dahisar, it’s nearly around 40,000sq feet of open space. When you typically see any other development, it has spaces which are broken into multiple parts and multiple pieces, and these spaces, I usually would not use these, and it’s just for the aesthetics. What we did was we made the aesthetics look good and made the space more usable. So, now people can come over there, they can have a party, they can have a small wedding in fact. They can even play football and use the yoga lawn. So, multiple things can be planned and can be done over there without any hindrances. So, something innovative that we did over there was using the central space as a main zone and the whole garden revolved around that. 

In Dahisar, what we did was a swimming pool theatre. Now, back in 2017, when we were designing this thing, I wanted to give a lifestyle to Mira Bhayander because this is a middle-income and lower-middle-income group, people who are buying these apartments, and typically what happens is usually when these people are buying this house, they’ve never got this kind of lifestyle like a resort. So, I wanted to combine the world resort themes, and I wanted to combine the cruises, like, say, Caribbean cruise or star cruise, for example. When you go on these cruises, you basically get the lifestyle which is not found in this country in fact. So, what I did was I took inspiration from that, and I created a concept called a swimming pool theatre. Now, you can swim in it, and you can watch a movie in it, you can watch a world cup, you can watch a FIFA match, etc., whatever you feel like. And, at the same time, enjoy yourself with your family. 

To know more, visit –

https://www.micl.com/?utm_source=SRV&utm_medium=PRJan&utm_campaign=MICLPR 

Articles under 'Fortune India Exchange' are either advertorials or advertisements. Fortune India's edit team or journalists are not involved in writing or producing these pieces.