Building a fortune, brick by brick

The property market may be in the doldrums, but HNIs in real-estate business seem to be building their wealth. This is as per the recent GROHE Hurun India Real Estate Rich List 2017, which gives details of the richest real-estate entrepreneurs in the country.

Globally, real estate did not do too well, with wealth of HNIs dropping 10 per cent this year in this sector. It also fell from second place to fourth, as the source of wealth, accounting for over 9 per cent of billionaires. Wang Jianlin & family of Wanda, China, tops among real-estate billionaires globally, in rank 19. His wealth was estimated at $30 billion, after rising 15 per cent in 2017.

Among the richest in the country (cut off at ₹1,000 crore), those who made their wealth through real estate, more than doubled in 2017, as per the Hurun India Rich List 2017. The real-estate sector contributed 15 more individuals to the list. There was a 63 per cent increase in average wealth year-on-year for these HNIs. One reason is the gain in listed companies, clocking 36 per cent return year-to-date. Still, the sector makes up a mere 4 per cent of the overall list of rich. There are only 35 individuals in the real-estate list that also make the cut for the 617-entry-long Hurun India Rich List.

The average wealth of those in the real estate list is ₹1,969 crore and there are six billionaires. About 60 per cent of the wealthy are first-generation entrepreneurs. Most of them — about 62 per cent — focused on residential properties with commercial, hospitality and retail making up for the rest. The list has seven HNIs who are under 40 and four over 80. By State, Maharashtra tops the list with 38 real-estate entrepreneurs in the list, followed by Delhi with 19 individuals and Karnataka with 17. Bengaluru is home to most number of young entrepreneurs.

Topping the list of Indian property tycoons is Kushan Pal Singh of DLF. The 87-year old is estimated to have a wealth of ₹23,460 crore. He ranks 32nd on the India Rich List. Delhi Land Developers or DLF is the largest listed real-estate company and develops residential and commercial property. It has developed 27 million square feet (msf) till date. Singh has received India’s third highest civilian award, the Padma Bhushan.

Not far behind is the Mumbai-based Mangal Prabhat Lodha of the Lodha Group, with a wealth of ₹18,610 crore. He ranks 47th on the India Rich List 2017. Lodha is currently a Member of the Legislative Assembly in Maharashtra. Behind him is Bengaluru-based Jitendra Virwani from Embassy Property Developments. His wealth of ₹16,700 crore places him in the 50th place in the India Rich List.

While the top three are first-generation entrepreneurs who built their fortune brick by brick, there are others who rebuilt their family’s wealth to new heights. For instance, under Vikas Oberoi, 47, Oberoi Realty witnessed a massive nine-fold growth. Others include Atul Ruia, 46, who started the Phoenix brand of malls with the High Street Phoenix in Mumbai, by building over the family mill. The malls attract 12 million shoppers every year.

The property segment tends to be run by families in India and the Mendas of the RMZ Corp has the highest number of entrants in the list, with six of its family members. Kunal Menda, 23, is the youngest in the list, with a networth of ₹660 crore, followed by Sidharth Menda, 28. With five members, the Godrej family is second in terms of mention. Other notable families include Ashiana Housing (Gupta) and Prestige Estate Projects (Razack) with three members each.

The list includes some with interesting profiles. For instance, K V Satish, 40, of DS Max is also a film actor in Telugu, who starred in Yamaleela 2 . Smitha V Crishna of Godrej Properties is the richest woman, with a fortune of ₹2,210 crore.

While the list and wealth figures are interesting, it may not give a full picture. Hurun’s researchers acknowledge that ‘for every entrepreneur who we have found, we may have missed two ’. One reason for the difficulty is that developers are discreet. Two, real-estate holdings are scattered, and associated companies/subsidiaries may be missed. Three, when doing a valuation, the researchers had not included undeveloped land holdings.

Valuation, for the most part, was done based on multiples on reported sales figures. In cases, wealth of an individual may be under-stated and there are differences between the real-estate list and the overall country list. The case in point is Adi Godrej who is listed with a wealth of ₹37,800 crore in Hurun India Rich List 2017. However, considering only the valuation of Godrej Properties translates to just ₹2,210 crore for him in the real-estate list.

Not just in real estate, the number and networth of the wealthy in the country has been scaling new highs. The Hurun India Rich List 2017 saw the cut-off nearly triple to ₹1,000 crore compared with last year. The cut-off for the top 100 has more than doubled to ₹8,400 crore since 2013. On an average, the wealth of Hurun India Rich Listers has increased 17 per cent year-on-year in 2017.

There were 302 new faces in 2017, taking the list to 617 individuals. The number that make the cut has quadrupled from three years ago. The number of dollar billionaires has increased to 136, from 126 last year and 59 in 2012, when the list was being compiled. India has 100 billionaires in the global list of rich and ranks 4th among countries with most billionaires.

Mukesh Ambani, the richest Indian, saw a 58 per cent jump in wealth to ₹257,900 crore. This helped him climb to the Top 15 in the Hurun Global Rich List for the first time.

The blockbuster list of DMART saw a 320 per cent wealth increase for Radhakishan Damani to ₹29,700 crore. Among sectors, FMCG and pharma doubled the number of entrants — to 63 and 79 respectively. There were also a sizeable number of those under 40 who were self-made billionaires in the list. All of them derive their wealth from new technology business.

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