Be it real estate or any business, one should be very careful when it comes to equity, says Shobha Realty founder PNC Menon. He was speaking at the NatCon 2022 conference organised by CREDAI National in Abu Dhabi. Here is more from him…
“To speak about my journey, I have to go back 47 years in time. I have been staying in the Gulf for the last 47 years. Before I came here, I once met a man named Suleiman in a hotel lobby in Kochi. He had come to Kerala to buy a fishing boat. That was the beginning of my Gulf journey. Actually at that time, I didn’t have any plans on what to do after leaving India. I came to Muscat two or three months after applying for the passport. I could see only the desert when travelling in the plane to Muscat and felt very sad. My journey was very difficult in the early days. But there is not much time to dwell in the past. Let us talk about future.
It is true that no business can be done without equity. Lack of proper equity is the reason for failure of many entrepreneurs. In fact, in any business, debt is inevitable. Even the real estate cannot survive without loans. However, debt should not exceed 40 percent of the total investment. If your equity is 65 percent and debt is 35 percent, that is the correct calculation. One should be careful while procuring land.
Many people keep buying the land just because they like it here and elsewhere. There should be a lot of discipline in this issue. Taking Dubai as an example, one should not hold to land for more than four years. By December 31 this year, we will have completed sales of $2.13 billion. I believe we have achieved what we set out to do in Dubai.
How did we survive competition in Dubai?
Emarus is a very big brand. We had clear idea on what they were doing and what we should do. Accordingly, we have set a benchmark target and felt that reaching 30 percent of it would be enough. But our company’s capacity turns out to be different. When I started real estate business in Dubai, there was a crisis. First I bought 183 acres of land and many termed it as a bad decision. However, for me, Dubai is different and unbeatable by all means. Administration and bureaucracy are all excellent. If anyone wants to start their business in Dubai, I gladly invite them. There is no corruption or none needs to pay any bribe to get work done. Anyone can come to Dubai and establish their business.
I never compromise on quality of constructions and will not tolerate, any lapses. Sometimes, my staff tell me that customer agreed to compromise on certain aspect or quality of product. But, the customer doesn’t know, right? We have to tell them that it is wrong. We have a studio in Dubai. At any given time, nearly 30 activities pertaining to the construction works, are carried out simultaneously. Around 150 architects and about 14,000 people are working in our company.
By 2024, our company will be the largest contract company in Dubai. We do not work for other contractors and companies, while we handle the entire wood work within our organisation. We also have a factory in India for this wood work. We executed everything – from start to finish, in a project. We are also known to deliver before the scheduled date. I can firmly say that no one can compete with us in terms of quality. We are building according to international standards,” he explained.