After Riding Bangalore’s Tech Boom, This Indian Property Magnate Stepped Out Of His Comfort Zone To Build A $6 Billion Fortune

Disproving skeptics, Irfan Razack’s Prestige Estates Projects, has gained a foothold in hyper-competitive Mumbai and is now expanding to other cities.

This story appears in the October 2024 issue of Forbes Asia. Subscribe to Forbes Asia Five years ago, Bangalore-based property magnate Irfan Razack, who gained prominence by riding the boom in India’s tech capital, decided to venture into Mumbai’s highly competitive property market. It seemed a long shot. Would his Prestige Estates Projects be able to replicate its south India success in the country’s financial hub against entrenched big names—all billionaire-owned—such as Lodha’s Macrotech Developers, Godrej Properties and Oberoi Realty? Defying skeptics, Prestige has since then made notable inroads in Mumbai and its signature logo of a flying falcon now adorns billboards showcasing a slew of upcoming residential and commercial projects. These extend all the way from tony South Mumbai to an office complex in midtown Mumbai to fast-growing middle-class suburban enclaves further north. It has 11 projects—six of them with partners—covering roughly 32 million square feet, with completion slated in stages, starting in 2025 until 2031. “We have the market, we have the buyers, we have the brand.”
Razack’s strategy? He saw a rare opportunity to gain a foothold by scooping up distressed projects from cash-strapped developers, while building a strong team with local knowledge and connections. “We have the market, we have the buyers, we have the brand and we have the management that’s capable of delivering the numbers,” says Razack, 70, who is Prestige’s chairman and managing director. ss Indeed, the numbers speak for themselves. In the fiscal year ended March 2024, Prestige notched up record sales of 210 billion rupees ($2.6 billion) with Mumbai accounting for 15%, up from nearly 7% two years earlier when annual sales were just under half that at 103 billion rupees. In the current fiscal year, Razack expects a 54% surge in Mumbai sales to 50 billion rupees, even as he’s plotting Prestige’s expansion into other cities beyond its southern stronghold, which includes a sizable presence in Hyderabad. Prestige sales The company’s stock has been on a tear, closing at 1,870 rupees in late September, up 58% in 2024 and more than triple its year-ago level. The rising share price boosted the wealth of Razack and his siblings to $6 billion, earning them a spot, after a decade-long hiatus, in the ranks of India’s 100 Richest, a list that features half a dozen other multibillion dollar property fortunes this year. Prestige’s growth has been fueled in part by India’s red-hot real estate market, which is benefiting from increasing urbanization, an infrastructure buildout and the trend to invest in property. The country’s property sector could potentially increase tenfold to $10 trillion in asset value and that of related services by 2047 from under $1 trillion today, according to a September report by real estate consultancy firm Colliers and the Confederation of Real Estate Developers’ Association of India. Razack had long harbored the dream of expanding into Mumbai. But it took a confluence of factors to pave the way for his entry. India’s real estate reforms of 2016 ushered in long-demanded transparency and accountability. The opportunity to pick up sites arose when rising funding costs precipitated a liquidity crunch and project delays, compelling distressed developers to undertake a fire sale of their land parcels. The auction of sites entangled in legal disputes and the growing trend of redevelopment, wherein older buildings are torn down and rebuilt, provided other openings, albeit with some element of risk. Prestige acquired certain prime land parcels from prominent developer DB Realty, whose two former billionaire cofounders were embroiled for years in a telecom scandal. While they were acquitted for lack of evidence after seven years, DB Realty’s projects stalled. “The sites that Prestige took on were available to everyone but Razack decided to take the risk and that’s what distinguished him from the rest,” says Anuj Puri, chairman of Mumbai-based Anarock Property Consultants. (It has Prestige as a client.) “He partnered with the right people on the ground to get approvals and land clearances,” adds Puri. Razack also worked hard to woo Mumbai’s brokers and their agents. In 2022, he flew 200 of them to Bangalore for a weekend primarily to showcase Prestige’s marquee projects and buildings. “We felt they would get a brand attachment only if they could see our products,” says Zayd Noaman, Prestige’s executive director and Razack’s nephew (he’s the son of his younger sibling Noaman). That was a precursor to a pre-launch event held in May 2022 on the grounds of Mumbai’s racecourse for 2,500 realtors, giving them a sneak peak of Prestige’s upcoming projects followed by dinner. Prestige Ocean Towers in South Mumbai. Today, Prestige has its own team of 150 sales people in Mumbai and has expanded into the neighboring city of Pune, a rising tech hub, with a million square feet of commercial space, as it scouts for land for residential projects. Razack insists that Prestige has retained its focus on providing mid-income housing. “We operate in the 75 lakh rupees [$90,000] to the two crore rupees [$240,000] segment for Bangalore and the two crore rupees to three crore rupees [$360,000] segment for Mumbai,” says Razack. “That mid-income segment is our bread and butter.” Razack’s moves seem to have won over investors, with most analysts having a “buy” recommendation on Prestige’s stock. “They have been very aggressive in terms of growth and they have delivered very well,” says Pankaj Kumar, research analyst at Kotak Securities in Mumbai, which rates Prestige’s shares as an “add.” Says Kumar: “This is a company with a high sales velocity. They build quickly and they sell quickly.” Prestige faced a reality check in the quarter ended June, with sales falling 23% from a year earlier to 30.3 billion rupees even as debt piled up to nearly 82 billion rupees. Unfazed, Razack attributes the sales dip to a delay in securing approvals and a slowdown in project launches during the weeks-long national elections held earlier this year. Despite that, he noted in a statement announcing the quarterly results, “we still crossed a commendable sales figure of Rs 3,000 crore [$360 million].” For the current fiscal year, Razack has set the target of a 30% sales increase and is confident of meeting it. “I don’t have any doubts about this,” says Razack. “It’s very easily doable. But it requires a lot of focus.” With 300 completed projects under his belt, Razack believes that he’s poised for the biggest leap in his career with a $7.2 billion project pipeline. Prestige has 92 million square feet in ongoing projects, the most among listed peers. And it has 91 million square feet in planned projects for which approvals are pending, the second-largest among listed peers. Says Razack: “We’re pouring 65 million tonnes of concrete across different projects.” Prestige’s ongoing construction projects One consequence of Prestige’s blistering growth is the company’s ballooning debt, which is the highest among listed peers. While Razack says that a debt-equity ratio of 0.68 is manageable, he’s taken steps to shore up capital. The company raised 50 billion rupees in August from a private placement of equity to institutional investors, which will be used partly to pare debt. Earlier in April, Abu Dhabi Investment Authority and Kotak AIF, a fund under a subsidiary of Kotak Mahindra Bank, agreed to invest 20 billion rupees in four residential projects in Bangalore, Goa, Mumbai and the National Capital Region (NCR), which encompasses Delhi. Three years ago, Razack had reduced escalating debt by selling a portfolio of Prestige’s commercial assets to U.S. private equity giant Blackstone for over $1.2 billion. While Prestige is predominantly seen as a builder of homes and offices, it expanded into the hospitality sector in 2001 with a five-star resort and spa in Bangalore that is managed by Singapore’s Banyan Tree Hotels & Resorts. Since then, it has grown the portfolio to nine hotels with Marriott International managing five of them in Bangalore and Kochi. There are plans to add six more under various Marriott brands in Bangalore, Mumbai, NCR and Goa over the next five years. Razack is gearing up to list the hospitality business after securing board approval in June for an IPO. Another buzzing segment is malls—Prestige opened Bangalore’s first one, the Forum Mall, two decades ago. Razack successfully lobbied the local government to amend a law that required cinemas to be located at ground level, securing permission to place a cinema multiplex on parts of the third and fourth floors. In 2008, Prestige opened its first high-end mall, UB City in Bangalore. The company now operates five malls and is looking to build ten more, from Chennai to Goa. UB City in Bangalore was Prestige’s first high-end mall. “Prestige has a meaningful presence across all asset classes—be it residential or office or retail or hospitality,” says Zayd Noaman. “We also have the ability to execute across different regions.” Now Razack is working on Prestige’s next big expansion into the Delhi national capital region. The company is building an integrated township that includes residences, schools and hospitals with a gross development value of about 100 billion rupees, on a 25-hectare plot in Ghaziabad, a tier-2 city. Prestige is also building a residential complex, a trade center and two hotels in different Delhi neighborhoods. Another residential project has been earmarked for Noida, just outside Delhi. “Delhi NCR is challenging as a market because of the continued increases in property prices,” notes Ajay Sharma, managing director (valuations) of Colliers India in Mumbai. (Prestige is a Colliers client.). “New entrants need to be cautious given the cyclical nature of the market.” A looming question is whether the property market joyride is sustainable. “There’s nothing on the horizon to suggest a slowdown but we do need to see if the current growth will be sustained,” says Sharma of Colliers. “For Prestige, the next three or four years will be crucial to build self-sustaining cash flows,” says Parikshit Kandpal, senior analyst at Mumbai-based HDFC Securities. “It all depends on how much capital they can bring in.” Another challenge for Prestige, says Zayd Noaman, is to “ensure that we keep executing without faltering and without delays.” To make certain that deadlines are met, the company retains several functions in-house, from project and construction management to interior design and landscaping; it even manufactures doors. Irfan Razack. The family’s entrepreneurial roots date back to 1956 when Razack’s father, Sattar Razack, opened a men’s garments store, making bespoke shirts, trousers and business suits, in Bangalore. Razack and his two younger brothers joined the family retailing business after college. They veered to real estate in the 1980s when Razack sold the family house and started trading in real estate—buying and selling land. He also did a joint commercial development with his father-in-law. In 1986, the three brothers and their father set up Prestige Estates and Constructions with seed capital of 40,000 rupees (the equivalent of $3,250 at the time). The first project was a 10,000-square-foot office building, then larger projects followed. As Bangalore morphed from a sleepy town into India’s gleaming tech capital, Prestige flourished as it built homes and offices for the growing tech crowd. Kingfisher Towers in Bangalore. Razack says he chose the falcon as the company logo as it denotes agility, grace and speed. A statue of the bird adorns his office desk. And the company’s Bangalore headquarters is housed in a building called Prestige Falcon Towers. Razack went on to list Prestige in 2010, raising 12 billion rupees in an IPO oversubscribed 2.3 times. Over the next few years, the company constructed several iconic buildings in Bangalore’s luxury residential market, including Kingfisher Towers, where the city’s uber-rich own luxury pads. Razack prefers dealing with a few handpicked landowners on multiple projects. For example, Prestige is co-developing 20 million square feet in Bangalore with a single landlord. “We’ve never chased land,” asserts Razack. “Land has always chased us,” he says, referring to being courted by landlords looking for a development partner. “He is a great dealmaker,” says HDFC Securities’ Kandpal. “He has an eye for catching trends. His cost of land acquisition is also the lowest among peers.” Despite Prestige’s growing footprint, Razack maintains a firm grip on details. “In this business you have to be hands-on,” he says. “You can’t just sit in your air-conditioned office and expect things to happen. They won’t.” His weekly schedule includes two days of visiting Prestige’s construction sites. He’s usually accompanied by his brother Rezwan, who is joint managing director, and nephews, Zayd Noaman and Faiz Rezwan, an executive director in charge of contracts and projects. While Razack is making efforts to groom the next generation, it’s not yet clear who might eventually succeed him. Ten family members—five from the next generation, including his daughter Uzma—work in different parts of the business. For leisure, Razack prefers adrenaline-pumping activities. He’s bungee jumped and climbed glaciers. In 2017, he went skydiving near Las Vegas during a U.S. roadshow when he said to nephew Zayd: “Skydiving is on my bucket list—if you go, I’ll come.” Razack also enjoys long-distance driving—he’s driven through North America, South America, Europe and Australia as well as navigated India’s Atal Tunnel, the world’s longest high-altitude tunnel (9 km at 3,048 meters) in the Himalayas. The chairman says these drives give him time to ruminate. His philosophy? “You have to be open to everything…you must have a totally open mind.”

https://www.forbes.com/sites/anuraghunathan/2024/10/09/after-riding-bangalores-tech-boom-this-indian-property-magnate-stepped-out-of-his-comfort-zone-to-build-a-6-billion-fortune/