The Exchanges

Q Can you explain, Uncle, briefly what is redevelopment?

A Redevelopment is an existing old building. Where the building has become old, the existing people who are the owners of that particular development, they call it society in Mumbai, they want a newer place with that much more bigger facilities, and probably since the FSI has changed, they'll get that much more built up area extra. So that's how the redevelopment starts. So, more, more apartments, more square footage, and most importantly is better plumbing, better lighting system, better vertical transportation, and better parking. So, of course, they, the quality of life improves, better facilities also, and by being there as the old society, they get that incrementally higher square footage, which either they can sell back to the developer or Keep it for themselves. They get a slightly larger home. Like when we did that redevelopment, we wouldn't buy. I'm not giving one for one, then there's nobody's really. So it has to be one, four into .3 or .4 or .5 times more. So if I've got a hundred square meter house, if I get a 130 or 140 square meter house, my house is going to become a little larger. It's going to become newer with better finishes and better fittings. And obviously what happens is the other, the, the sweetener is while this is going to get built, I get my rental. I move into another alternate accommodation. The builder pays the, the, the rental and the rehabilitatio…

AI assessment note: “Redevelopment is an existing old building. Where the building has become old”

Q So why did you think of starting a real estate company from?

A Quirk of fate, destiny. This happened in the year, 1980, 81. We sold a family property. So I was maybe as old as Karan here. My parents, my dad, and my two uncles wanted to sell that. They put me and said, you know, you do the entire transaction. So that was way back in 80. So they said some Bombay developer wanted to buy it. In fact, there were several people, somebody from Delhi, somebody from Bombay. Finally, we chose someone. And then that entire process of doing the agreement of sale, getting the entire money out from the developer, and then again, the reinvestment. The reinvestment, that was what made it all very attractive, you see. Once the money came in, of course, my two uncles took their share, and we had to reinvest for ourselves and did something, and that in that quest of selling and buying, we got this Little bit of taste of real estate where, you know, we, we did some quick profits in some flipping over.

AI assessment note: “in that quest of selling and buying, we got this Little bit of taste”

Q And this is the industry, right? Buying FSI and selling it.

A All that is in Mumbai. It's a big industry. Not only TDR, it's, it's, it's, it's also the, the, the, the municipality gets huge. This is what I was trying to tell our authorities here. You do this premium. What happens is you're not doing it for yourself. You're doing it for the city because when you're selling premium FSI, what happens is the, the local body gets a whole lot of money. Today, the Mumbai municipality is the richest. They get tens of thousands of rupees as fees, and that is plowed back into the infrastructure. Today, if you've got a, uh, see a C-Link road or the, uh, the, the other Expressways, and everything else, and that so many X amount of flyovers. It's not that they've gone, okay, they may be having a certain proportion of loans, but the rest of it is all coming from the, the money that is generated from all these approvals. Here they have not learned the game. This is a golden opportunity for you. You make it viable. You will get crores of rupees as money for your municipal body, local body. Then you don't have to go with the begging bowl, and you do apply that money sincerely onto Infra. So it becomes a win-win.

AI assessment note: “All that is in Mumbai. It's a big industry.”

Q What defines the value of land, uncle? If today somebody says the value of land, let's say on this road is 30,040 thousand per square feet. Is it the monetization capacity of the land that attributes that value to it?

A See now very different from what it was way back. Way back it was affordability and how can I, uh, you know, do I can afford that and everything else. I know in 1973, my father bought a piece of land in Aliyaskar Road Cross. You know, what happened was, 73. See, what happened was, that time we got the Urban Land Sailing Act. 76 or 73, the act came in. So all the big landlords who had these huge houses, they had to quickly dispose of the excess land. So they converted them into plots. In, that's how these layouts came into Bangalore. That's the advent. I mean, that's the historical thing about layouts in Bangalore. Now what defines today, what it defines is, it's depending on what's the selling. It's all about FSI on that road. It all depends on what's the selling price of the product would be, and the construction cost. So that the entire way of calculating is very different now than back then. It's very different.

AI assessment note: “It's all about FSI on that road. It all depends on what's the selling price”

Q The one thing everybody does say about you is, In social interactions and conversations, whenever a lot of people talk about real estate, they say Irfan is a man of his word, and that story has really permeated society at large. Where does that come from?

A No, no, see, it's not, see, you, if you have the right intent, everything will go well. Now, otherwise, if you've got a wrong intent, you get the world's best lawyer to do a document, and you want to somehow do something wrong, it'll go wrong. And it's always, I've seen, if you keep up to your word, even if it hurts you, long term, it's a benefit. Short term, there may be a loss, or the, I would call a perceived loss, or a, Uh, you know, something that you feel that, but then in the long term, what really happens is, it's that you build goodwill. And I think more, all the developers in Bangalore for that matter, that's why they are all sort of respected. There is that respect. So that is, I would say worth any money in the world. And once that respect develops, business grows, everything grows. And, uh, there is a sense of, uh, you know, sort of.

AI assessment note: “if you keep up to your word, even if it hurts you, long term”

Q Okay, we're back. Okay. Started? So Irfan, uncle, I wanted to ask you first about malls. You guys started Forum Mall where I used to go in Kormangla back in the day, the only place with a PVR theater. For somebody starting off in the real estate industry, can you explain the financials of a mall? Does it make sense? How important is a multiplex to a mall?

A See, apart from the financial sense, as I said, the creativity is what gets us. I, in one of my holidays, Travel to South Africa, Durban, Cape Town, all these cities, and I saw these small size malls. Where you had the multiplex on top, even got the good fortune of even going to cinema there. And overall look, feel, the entire size was looking to me as very doable in our country, in our cities, rather than what malls you used to see in the US. Of course, Dubai didn't exist at that time. So one thing led to the other. Came back to Bangalore. I had tied up this land next to my prestige, Acropolis, where I had signed up with them to do either an office space or to do one more residential development. And those days we had what is called the Urban Land Ceiling Act.

AI assessment note: “apart from the financial sense, as I said, the creativity is what gets us”