The smiling and easy-going property tycoon sat in his offices overlooking Hyde Park could be mistaken by the casual onlooker as yet another international developer hoping to establish himself in London’s hyper-competitive prime central market.
Air conditioning units whir, assistants stand around with phones clamped to their ears and a young receptionist quietly takes inbound calls.
This is a familiar scene. Many property developers have trodden a similar path trying but ultimately failing to gain a foothold in prime central London.
PNC Menon is different. His company Sobha Realty has parked its tanks on the lawns of the prime property industry with a prominent sales office within premises on Park Lane that used to be Foxtons’ flagship UK branch.
Its interior has been gutted and replaced with a marble and glass cocoon of luxury that’s extraordinary for a company that has yet to build, never mind sell, any property in the UK.
Resources will not be a problem. Sobha Realty has over 3,400 employees in its key markets of India and Dubai and turns over nearly £270 million a year.
As its founder and a major shareholder, this makes Menon one of India’s most high-profile dollar billionaires, although he calls himself an Omani resident after moving there when he was 26 years old from his home city of Kerala.
This week Dealmakerz was the first UK media organisation to conduct a face-to-face interview with the 70-year-old at his new London office from which it plans to begin selling its Dubai portfolio, and begin a UK development arm.
London is the commercial capital of the world and if you’re going to be an influential development player you cannot ignore it and there’s no city like it in the world and there won’t be even in the next 50 to 100 years.
We were also very lucky to get a space here. The beautiful thing about London is the democracy and the fact that there is no corruption. This is very important to us – being democratic and open.
I think it will take us two to three years to establish ourselves here but it’s a £300-£400 million turnover opportunity. We want to be a global company and to be one we need to have a presence in London.
I’m not worried about the downturn in London – prime property is always a cyclical business wherever you go. The only exception to this rule is the US where it’s been growing for at least ten years, which is very unusual. I think there is going to be some kind of correction there at some point. But overall if you offer a very high-quality product then any problems that might be created by a downturn are mitigated by the kind of homes you are selling.
We will concentrate on prime central and then maybe we will move further out into prime suburban areas. It’s possible because the transportation network is so good here – our receptionist Natalie commutes in every day 45 minutes each way. Initially we will be developing apartments in the mid to high-end market, but also later possibly lower-end, more affordable sector too.
All I will say is that we do things very differently to companies like Damac. This means we do all our design and engineering in-house and for example in Dubai we have 90 architects and engineers working for us; most of our competitors outsource this. We also control the sub-contracting ourselves so that we have total control of the build process including quality and time of delivery. We also have our own factories for metalwork and furniture provision.
But subcontractors in London are good so we may engage with them to work with us because, at the moment, London will be a growing operation starting from scratch – so I think demand won’t be high enough here to sustain a factory. But we will have our own architects working in the UK, maybe a dozen people.
I see it as a marketing strategy – if you list on the LSE then everyone gets to know who you are very quickly. We wouldn’t list on the New York exchange because it is looking to South America and we’re not interested in those markets yet. The advantage of London is that it has connections to both Asia and Africa.
But I have one rule – I don’t want to go into any more countries where corruption is prevalent. I’ve already experienced enough of that in one country, which is India. The biggest challenge for us as a company is that corruption creates delays.
As a company we are very happy to engage with the planning authorities because, however hard or complicated it may be, it is nothing compared with the challenges of dealing with a corrupt system, as we have done in other countries.
The most important thing about Dubai is its infrastructure, the efficiency of the government – which is run almost like a very lean private company – and its leader’s drive to make it better through a hands-on approach. It’s also one of the safest places I’ve ever been – I’ve lived there for 16 years – and it’s free of corruption.
British but also Indian, Pakistan and Arab citizens – remember that UK buyers are in the ‘top five’ in Dubai. It’s not a new thing – people think the British only live there for the short term but there is a large population of long-term residents there.
When the market is at its peak then you get huge expansion in supply and too many players and then prices begin to come down to a more realistic level and the more credible players come to the fore, and that’s where we are at the moment in Dubai. It also makes Dubai much more affordable than London – £165,000 buys a luxury one bedroom apartment in Dubai in the prime heart of the city. Many people are surprised when we say that the emirate is more affordable than Mumbai in India. And for British who are looking for second or third holiday homes, it’s the quality of the services in Dubai – restaurants, hotels, cost of maids and drivers and the shopping.
No, I used to have a share in the business that specialises in that market, but I am no longer involved in it. I’ve done enough of that, I think. It’s a very challenging sector.