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An interview with Manoj Menda, Corporate Chairman and Co-Owner of RMZ Corp, India’s largest privately-owned real estate owner, investor and developer.
Could you discuss your zero-debt status since it is so unique in the real estate sector? Was it a conscious goal? What was the rationale?
Today’s uncertain global landscape is characterized by emerging public health risks, technological disruption, geopolitical threats, and negative interest rates that present investors with no shortage of difﬁculties as they make decisions about how to allocate capital. In the face of these challenges, we are truly proud of our role as a critical solutions provider for our clients–institutions and individuals alike–as they seek to meet their obligations over the long term. Our remarkable knowledge base, track record and capability to invest anywhere in the country gives us great conﬁdence in the ﬁrm’s future.
In the landmark year that was 2020, the ﬁrm achieved one of its most important milestones–our successful conversion to a near debt-free ﬁrm.
Our journey began in 2002 and since that time we’ve grown Assets Under Management (AUM) over 10-fold to a record, and generated ﬁnancial performance that ranks us among the world’s top real estate companies.
Our ﬁrm is widely recognized as one of the leading franchises across the commercial sector. Despite these successes, however, it became increasingly clear to us over time we need to divest a portion of our holdings to achieve this zero-debt status.
What is your five-year plan in terms of growth, expansion and geographies?
Eighteen years and growing rapidly, we have over 200+ enterprise customers in six Indian cities and 67 million sq. feet of real estate assets that are owned and developed by us. With a hyper-growth strategy and the use of exponential technologies, we plan to build a quantiﬁed community across 800+ enterprise customers across 85 million sq. feet of real estate assets. We are present in six major markets in India and continue to rapidly grow within those markets.
Let’s talk about RMZ 2.0–how do you plan to incorporate technology, sustainability and well-being in your developments?
We are reshaping cities with a vision. Our massive transformative purpose is to disrupt the way people view work. Our deeply unifying agenda is to leverage integrated digital platforms to build smart, engaged, and quantiﬁed communities.
We pioneer new sustainability, technology and well-being solutions, and shape the future of how we live, work, learn and play. We are designing offices that meet the needs of today’s knowledge workers. Our passion for urban life could not be any stronger. We are committed to moving our communities forward and enriching people’s lives.
RMZ strives towards delightful and innovative social experiences like inspiring arts, social hubs, wellness, entertainment and culinary experiences. Through data lakes and real-time analytics, we are focusing on a shift to data-driven decisions. Cutting-edge construction technology for the future is being adopted in the form of smart, integrated buildings with best-in-class amenities that enhance efficiency, flexibility and ease of maintenance for buildings and tenants. RMZ has also adopted an operational model for the future by on-boarding top talent, creating a culture of excellence, governance and processes.
Manoj Menda, Corporate Chairman and Co-Owner, RMZ Corp
Can you tell us more about your ‘Future of Space’ concept?
From single properties to city-defining mixed-use developments, we’re reimagining places with a focus on people. At RMZ, we work to bring state-of-the-art office spaces, inspiring the arts, wellness and fitness, as well as entertainment and food to create memorable moments. We have leveraged technology to blur the lines between our offline and online experiences. The ‘Future of Space’ as we see it is an integrated community of tenants, clients and members who live, work, eat and play at our spaces.
How is RMZ contributing towards the development of smart cities?
At RMZ we are setting a benchmark when it comes to excellence in design, sustainability, wellness, optimum construction methods and of course the integration of technology. We are building smart spaces where our communities are connected, and convenience is key. In normal times an employee spends a major share of his/her day working in an office. We would like to redefine this in a manner that blends the elements of work, living and wellness at one place.
What to your mind are the top three priorities for RMZ as a company?
The top three priorities for RMZ as I see it are:
-Our Hyper-growth strategy
-Transformation through technology integration at every stage of our business.
What are the top three challenges for Indian real estate in general and RMZ in particular?
The Indian real estate sector has seen many ups and downs, so as an industry we are aware of the volatile nature of growth. We are still in the middle of a global pandemic, which led to nationwide lockdowns in the initial months, which further led to empty office spaces and an uncertain future for corporate real estate. But I would like to say that more than challenges, an array of opportunities lie ahead for the sector. Here’s why I say this:
One, the Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform, which will allow all kinds of investors to invest in Indian real estate. It is likely to create an opportunity worth Rs 1.25 trillion ($19.65 billion) in the coming years.
Two, responding to an increasingly well-informed consumer base and bearing in mind the aspect of globalisation, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change in this sector has been the shift from family-owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralised processes to source material and organise manpower and hiring qualified professionals in areas like project management, architecture and engineering.
And finally, the growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards. Furthermore, India’s real estate market is currently witnessing a steady increase in technology integration and tech-enabled developments that are contributing further to its growth. This is also something that RMZ is heavily investing in because this is the direction in which we want RMZ to grow and become a leader.
Could you talk about how you have created profitable exits for previous investors like the QIA?
We have always invested thematically in high-quality assets, focusing on outsized growth potential, driven by global economic and demographic trends. While real estate is complicated, we believe that transparency, honesty and simplicity are the underpinnings of great business relationships. 18 years as an owner-operator of real estate assets allows us to bring deep operational expertise to the table.
We never stop looking for ways to create value for our members, properties and partners. Our philosophy is to own the whole development lifecycle of a real estate asset. RMZ has demonstrated operational expertise on how to build, operate, own, mature and exit. We build scale in nascent sectors or regions, secure operational control and generate premium exit value. Our business seeks to acquire undermanaged, well-located assets across the country. In connection with these acquisitions, we build businesses that are set up to manage the underlying properties and ultimately maximize their value by instituting best-in-class management. Post-acquisition, we also invest in the properties to improve them before selling the assets and returning capital to our shareholder savings.
What changes has the pandemic brought about in the real estate industry? How has it impacted RMZ and will the work from home trend hurt commercial real estate?
Covid-19 has reminded us all of the unpredictability of events in an increasingly interconnected world. In times like these, the health and safety of our people, investors and members was our top priority. With our office portfolio 96% occupied and collections at virtually 100%, income from our core office business was largely unaffected by the shutdown this year. With our assets being 97% leased on a long-term basis with a remaining average lease term of almost 7-8 years, our portfolio remains well-positioned to absorb any challenges to office fundamentals in the near term. In typical real estate cycles, our high-quality assets outperform their markets as tenants gravitate toward the best assets in order to upgrade their workspace.
It is our belief that the corporate office represents much more than a place for employees to sit every day; companies utilize their offices as incubators for collaboration and innovation, which is not easy to enable remotely or over conference calls. As time goes on, we think the loss of innovation and collaboration will become even more apparent and companies will shift the emphasis back to having employees in the office. In the long run however, we do not think remote working represents as a threat to the office as we know it. In fact, concerns around social distancing and density ratios are very likely to drive additional office demand in the future and may prove to reverse the trend of increased densification we have witnessed over the past 18 years.