Some say slowdown, others call it maturity and growth
Early last month, Vipul Bansal, the joint managing director of Mumbai-based Indiabulls Real Estate, who spent seven years with Indiabulls group, joined another developer DB Realty in Mumbai as its chief executive. This week, Rajesh Jaggi, managing director of Ashok Piramal Group company Peninsula Land who was with the group for 14 years, moved to Everstone Capital, a fund management company promoted by Sameer Sain, as managing partner of the real estate business.
Among the real estate funds, Ramesh Jogani, managing director and chief executive of Ajay Piramal group’s Indiareit, quit the firm to set up a venture. Jogani was a property developer before joining the fund manager.
Earlier this month, Shishir Baijal, partner, Everstone Capital, joined Indian arm of global real estate consultant Knight Frank as country head and managing director after its chairman Pranay Vakil retired and its vice chairman Pranab Dutta was made the chairman.
Even consultants have seen top level changes. In May, Sanjay Dutt, the chief executive at property consultancy Jones Lang LaSalle (JLL) quit to join another consultancy Cushman & Wakefield as executive managing director. In June, JLL announced it had hired Cushman’s Anurag Mathur as its new CEO, project and development services and head, emgering businesses.
Why so much churn in a sector where top level changes are far and few in between?
E Balaji, chief executive and managing director at human resources company Randstad India, links the churn with the slowdown in the sector.
“One broad inference is that when a sector is going through difficult times, when sales are down and profitability is under pressure, companies make managements accountable for that. They expect quick turnaround and such churn could be a result of that,” Balaji adds.
According to realty research firm PropEquity, NCR has seen a drop of 30 per cent and 50 per cent in absorption of residential units in June and July of 2012 compared to corresponding months of the previous year. Mumbai Metropolitan Region has seen a dip of 28 per cent and 30 per cent in June and July 2012 respectively.
Some others say the growth and maturity in the sector is responsible for the churn.
“The industry is getting deeper and wider. It has really developed over the last seven years. Earlier talent used to come from outside. Now it has grown large enough that talent within is moving around,” says Dhanpal Jhaveri, parter and chief executive at Everstone Capital.
At least half-a-dozen big realty companies, namely DLF, Oberoi Realty, HDIL, Godrej Properties among others have tapped capital markets in the last six years and listed on the exchanges.
According to Pranay Vakil, former chairman of Knight Frank India: “Though I do not have an answer for the sudden churn in the sector, I believe the sector has matured now and enough talent with adequate experience is available now.”
V Hari Krishna, director, Kotak Realty Fund, refers to the churn in the property funds as a “seven year itch”. “Since lives of most funds are coming to an end after their 7 to 8 year fund life and most of the guys had been there for that long, churning is bound to happen,” Krishna adds.
Why then are top executives hopping from realty companies to private equity and from PEs to consultancies?
Says Vakil: “developers, funds and consultants are very well related and it depends on what side of the table you sit. If you sit on one side of the table, you can understand how the other party reacts.”
The crunch-hit real estate sector is experiencing top-level churn, after long.
The managing directors of at least two real estate companies -- Indiabulls Real Estate and Peninsula Land -- quit recently. So did the real estate heads of two property funds, Indiareit and Everstone Capital. They are either moving to other realty companies, starting their own ventures or shifting streams to join consultancies.
Among the real estate funds, Ramesh Jogani, managing director and chief executive of Ajay Piramal group’s Indiareit, quit the firm to set up a venture. Jogani was a property developer before joining the fund manager.
Earlier this month, Shishir Baijal, partner, Everstone Capital, joined Indian arm of global real estate consultant Knight Frank as country head and managing director after its chairman Pranay Vakil retired and its vice chairman Pranab Dutta was made the chairman.
Even consultants have seen top level changes. In May, Sanjay Dutt, the chief executive at property consultancy Jones Lang LaSalle (JLL) quit to join another consultancy Cushman & Wakefield as executive managing director. In June, JLL announced it had hired Cushman’s Anurag Mathur as its new CEO, project and development services and head, emgering businesses.
Why so much churn in a sector where top level changes are far and few in between?
E Balaji, chief executive and managing director at human resources company Randstad India, links the churn with the slowdown in the sector.
“One broad inference is that when a sector is going through difficult times, when sales are down and profitability is under pressure, companies make managements accountable for that. They expect quick turnaround and such churn could be a result of that,” Balaji adds.
According to realty research firm PropEquity, NCR has seen a drop of 30 per cent and 50 per cent in absorption of residential units in June and July of 2012 compared to corresponding months of the previous year. Mumbai Metropolitan Region has seen a dip of 28 per cent and 30 per cent in June and July 2012 respectively.
Some others say the growth and maturity in the sector is responsible for the churn.
“The industry is getting deeper and wider. It has really developed over the last seven years. Earlier talent used to come from outside. Now it has grown large enough that talent within is moving around,” says Dhanpal Jhaveri, parter and chief executive at Everstone Capital.
At least half-a-dozen big realty companies, namely DLF, Oberoi Realty, HDIL, Godrej Properties among others have tapped capital markets in the last six years and listed on the exchanges.
According to Pranay Vakil, former chairman of Knight Frank India: “Though I do not have an answer for the sudden churn in the sector, I believe the sector has matured now and enough talent with adequate experience is available now.”
V Hari Krishna, director, Kotak Realty Fund, refers to the churn in the property funds as a “seven year itch”. “Since lives of most funds are coming to an end after their 7 to 8 year fund life and most of the guys had been there for that long, churning is bound to happen,” Krishna adds.
Why then are top executives hopping from realty companies to private equity and from PEs to consultancies?
Says Vakil: “developers, funds and consultants are very well related and it depends on what side of the table you sit. If you sit on one side of the table, you can understand how the other party reacts.”
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