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Indians have owned homes in London for a long time: Knight Frank head Alistair Elliott

Alistair Elliott is helping Indian real estate developers buy prime property in London. "We helped the Lodha Group buy the Canadian High Commission building for 300 million pounds in 2013," he said.

, ET Bureau|
Updated: Jan 23, 2015, 06.28 AM IST
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Alistair Elliott is helping Indian real estate developers buy prime property in London. "We helped the Lodha Group buy the Canadian High Commission building for £300 million in 2013," he said.
Alistair Elliott is helping Indian real estate developers buy prime property in London. "We helped the Lodha Group buy the Canadian High Commission building for £300 million in 2013," he said.
It's a mild winter day and Alistair Elliott is going yachting later in the afternoon. In Mumbai for the Asia Pacific conference of Knight Frank (global revenues for 2013: $740 million), the Group Chairman is taking his troops far from land and out into the Arabian Sea, where there will be no real estate to distract them.

The last bit of business before he sails off is this exclusive interview with ET Corporate Dossier, where he talks about the global property market, how Indians are buying up housing in London and the changing ethics of the real estate sector.

Edited excerpts:

How are the global property markets faring?

I'm an optimist by nature but I must say the world is an unstable place at the moment. Having said that, global wealth is growing . There are pension funds, sovereign funds, corporate wealth, private wealth and they are all looking to invest in real estate. We need to respond by coming up with the right products.

Knight Frank is focused on prime city property and this segment has seen phenomenal growth. The pace of growth in Dubai, Shanghai, Mumbai has been stratospheric. And there are established places like New York and London, which continue to grow and remain the best performing property markets.

You have been helping Indians buy property in London?

It's not just Indians — the Chinese, Malaysians, are all investing in London property. Once they have completed local investments, they tend to diversify to London. We helped the Lodha Group buy the Canadian High Commission building for £300 million in 2013. London is considered to be a safe, transparent and stable market, where you know what you're buying.

When Singaporean developers buy up sites in London and build hundreds of homes, they will not only sell to Londoners, but also rope in Singaporeans. This process has just started in India, but it will grow. Indian citizens have owned homes in London for a long time and we expect the numbers to increase in the coming years.

Indians have owned homes in London for a long time: Knight Frank head Alistair Elliott

 


Why does real estate development have such a shady reputation all over the world?

There are sharp operators in every market, but it really depends on the stage of economic development you're in. Things have changed since the 60s and 70s. Today, the business is more ethical.

Real estate developers today want to be remembered for creating places to live and work in. When I was growing up, people were impressed if you could save money from the taxman. Today, those who make aggressive plans to avoid tax are not looked upon favorably.

In London, we make sure that the money coming in is authentic. If there are concerns, we have to report it to the authorities or else get into trouble. Mind you, I'm not much in favor of too much government interference.

In a market driven by demand and supply, government interference quite often cuts supply by making things risky for developers. Real estate development is already risky and you can lose a lot of cash if you get the product wrong.

What's your take on the Indian real estate market?

Overseas investors tend to look primarily at three cities: Mumbai, Delhi and Bangalore. The markets here, both residential and commercial, need to be more transparent.

On one hand, India has a legal system the West can relate to and it helps that English is the language of business. But do people investing in property here know exactly what there're buying? They're not certain right now.

Real estate is a very personal buying decision and perceptions count for a lot. Mr. Modi seems to be sending out the right signals to overseas investors. He has approved the creation of Real Estate Investment Trusts (REIT), which are the biggest vehicle for property investments around the world. They are tax efficient and a very transparent way of investing in real estate.

Most property investments in North America and the UK are through REITs. Today, private equity firms are big investors in real estate and for them, REITs serve as an exit route.

Has Knight Frank performed well in India?

We started 20 years ago with huge enthusiasm, but we lost our way in the noughties. We didn't have enough exceptional people in India. In the last two years, we have recruited some very good people and operations here have become much more collaborative with the rest of the world.

Everybody now takes what we're doing in India very seriously. India is our third biggest market, after the UK and Australia. Then come Singapore and Hong Kong. We employ 12,000 people world-wide, of which 2,000 are in the UK and we have 1,000 in India.

The number is relatively large in India because facilities management is an important component of the business here. Knight Frank India employs 500 people in facilities management.

Why has Knight Frank remained a partnership firm when most other companies in this sector are listed entities?

We are quite happy to be the world's only independent real estate firm. Knight Frank is a limited liability partnership in the UK but our subsidiaries around the world are structured as companies. Most of our profits are generated in the UK and these are distributed among the partners.

You've spent all your working life at Knight Frank. Is that a normal thing in the UK?

I'd say so. I joined the firm right after graduating from university, just when it was beginning to grow. My first job was in the mail room, which was good, because I got to know everyone and what they did. It's an incredibly friendly place to work and I saw no reason to leave. It's good to have a vibrant organisation and it would be dull if everybody stayed on forever. That said, we have a lot of people who have been here a very long time.

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