Knight Frank's eventful journey
The international property consultant (IPC), Knight Frank India, completed an eventful 25 years of journey in India in September this year. Despite the market challenges it was facing, Knight Frank was one of the first few IPCs to enter the Indian market, which was then opening up. Coming all the way from the UK, the company certainly was experiencing moments of great pride and satisfaction.
For Knight Frank, this expedition of two-and-a-half decades in India has become a special one, as it has managed to script a formidable success story for itself in a market which has primarily been ruled by IPCs from the US. These US-origin IPCs like JLL, CBRE and Cushman & Wakefield had been a privileged lot, since most of the global companies entering into the then booming Indian ITeS sector were from the US and, hence, they got a mandate from their global counterparts without much of an effort. On the other hand, for the London-headquartered Knight Frank, it was a building-from-scratch scenario, that too in a foreign territory like India.
Knight Frank has come a long way ever since it ventured into India by setting up its office in Mumbai in 1995. From a single office with a tiny team of a mere five employees (one of them was Kekoo Colah, currently the executive director of Shapoorji Pallonji) and a narrow offering primarily across a residential space, the IPC has travelled quite a long distance.
The IPC entered India in a joint venture with Mumbai-based property consultancy firm Praron Consultancy’s Pranay Vakil and Great Eastern Shipping (along with Sheth family). In that partnership, Knight Frank held 40 per cent, while other two partners had 20 per cent and 40 per cent, respectively. Later, Chandru Raheja-founded K Raheja Corp also joined the partnership in 1997, while somewhere in the 2000s Mahindra Realty also came on board, acquiring the demerged realty business (GESCO Corporation) of Great Eastern Shipping.
In 2007, Knight Frank LLP bought over the shares of all its Indian partners and became the solo owner of the Indian entity. Vakil played a big role in shaping up this venture in its initial years. He led the entity as its founder and chairman since its inception and continued at the helm of affairs till 2007 and thereafter till 2012 as its non-executive chairman.
“No doubt, I played my role in putting up this entity during the initial years,” says Vakil. “But the kind of support I received from my global partners was something really noteworthy. We truly worked as a team and they always trusted their Indian partners, like they always did in other parts of the world. My successors have done a fabulous job, in not only taking the whole business forward but also playing a major role in transforming this into a strong and matured business.”
“It has been a fantastic journey of more than two-and-a-half decades, where Knight Frank India has not only shown a great deal of grit and determination but also explored the emerging opportunities quite well,” Vakil adds. “As an IPC, Knight Frank has always been different from its peers. Its philosophy has been – to be not the biggest, but the best. I am personally quite satisfied and happy to see it emerge as a strong player in the Indian real estate consultancy business.”
Strong research team
Today, Knight Frank India has emerged as one of the leading IPCs in the Indian real estate market. Backed by over 1,400 experts/employees, the IPC, headquartered in Mumbai, has eight offices across Bengaluru, Delhi, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad. Armed with a strong research and analytics team, its experts offer a comprehensive range of real estate services across advisory, valuation and consulting, transactions (residential, commercial, retail, hospitality, land & capitals), facilities management and project management. The IPC serves 200 locations (50 cities) across India.
While the company has expanded its offering quite significantly, it has created a strong research capability to back its advisory, consultancy and other services. It boasts of a facility management portfolio of over 240 million sq feet, from just one million sq ft in 2006, while its project management portfolio currently stands at about 12 million sq ft. The IPC has witnessed an impressive CAGR of 35 per cent in its occupier services business. Its clientele includes marquee names like TCS, Siemens, ABB, Schlumberger, Mercedes-Benz, Samsung, World Bank, HSBC, Colgate-Palmolive, STT GDC, FedEx and several others.
“It has been a great journey spanning over 25 years,” reminisces Shishir Baijal, chairman & managing director, Knight Frank India. “We are proud of building up an organisation where we understand the needs of our valued customers and then come up with specific products and solutions that are aimed at not only addressing the requirements but also adding value to their business. Over the years, we have created a successful brand across the entire real estate value chain in India, where the market has evolved quite a bit. As an organisation we have also adjusted and adapted ourselves in that trajectory of evolution. Going forward, we will continue to serve the Indian market with the same spirit and vigour.” Baijal has been instrumental in shaping up the second phase of the business, where the IPC has not only strengthened its offering in a big way, but also created a distinct visibility and positioning for itself in the market which has become considerably competitive.
An economics graduate and an MBA, Baijal has over 40 years of experience across diverse industries that include real estate, hospitality, education and entertainment. He joined Knight Frank India in October 2012, as its country head and managing director, succeeding Pranab Datta, who was elevated to the post of chairman after being vice-chairman & managing director for about five years. Prior to Knight Frank, Datta was the managing director & CEO of Mahindra Gesco Developers.
Rolling out INOX chain
Before Knight Frank, Baijal was with Everstone Capital Advisors as its managing partner for almost seven years and advised the deployment of about $690 million across different real estate asset classes. Under his leadership, Everstone Capital positioned itself as an investment advisor with end-to-end real estate development. Prior to that, Baijal was CEO, INOX Leisure, where he was instrumental in rolling out the INOX chain across India and also establishing INOX as a multiplex brand at a national scale. Baijal began his career with ITC Hotels Division, where he spent over 18 years in various roles from 1979-97.
“Since Knight Frank India was first established in 1995, the business has made amazing progress,” acknowledges Alistair Elliott, senior partner & group chairman, Knight Frank LLP. “As a consequence, the India business, whilst upholding all Knight Frank values, has done an exceptional job in becoming a keystone adviser across the country and a crucially important contributor to Knight Frank globally.” Elliott drives and implements the group’s global strategy across a network of over 20,000 people in 488 offices across 57 territories.
The £2.6-billion Knight Frank Group was founded in London by John Knight, Howard Frank and William Rutley way back in 1896. While most other IPCs are limited companies, Knight Frank continues to be a partnership firm with limited liabilities. Many observers believe that somehow this structure has helped Knight Frank to create a niche for itself in the market with a very customer-centric approach, even as other IPCs have to lay more emphasis on their financial outcomes.
“I have no doubt that India will play a significant role in our future,” affirms Elliott. “India’s diversity, developing economy, well-educated and flexible workforce means there is little doubt it will be central in many businesses plans as they develop across the globe. For these reasons, I have every confidence that under the strong leadership of Shishir Baijal and his team, Knight Frank India will go from strength to strength.”
Apart from its regular offering, Knight Frank has built up special expertise in facilitating large land transactions, even as it has also carved an edge for itself in dealing with infrastructure and government projects. The company has been roped in by the government to provide its services in India’s first (and one of the largest) greenfield smart city projects, Dholera Special Investment Region, Gujarat, planned on the Delhi-Mumbai Industrial Corridor (DMIC) as also in the case of the under-construction Rs46,000 crore Mumbai-Nagpur Expressway (also known as Maharashtra Samruddhi Mahamarg). Along with Crisil and Deloitte, Knight Frank is the only agency to be impanelled by the Union Urban Development Ministry for offering consultancy in the government’s Smart City projects.
The company has also been hired by the Department of Telecom in shaping up the revival package for Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd. Here the IPC along with a couple of others, has been engaged by the government in its process of monetising the land assets of these state-owned telecom entities. The IPC has been involved in the valuation of land and gauging the market appetite. Both state-run companies have land assets worth around Rs37,000 crore, which have to be monetised over a period of four years. The government had in October last year announced a revival package worth about Rs70,000 crore for BSNL and MTNL.
Edge over others
“We are probably the only IPC in the Indian real estate space to create dedicated expertise and skill to deal in large infrastructure projects as well as government works,” claims Gulam Zia, executive director, advisory, retail & hospitality, Knight Frank India. “Our successful engagement across these projects has given us a distinct edge over others. Our research-based, customer-centric approach has helped us build up a sizeable portfolio in this segment. We will continue to drive such initiatives, going forward. We believe in providing personalised, clear and considered advice towards build long-term relationships with our customers.”
A construction engineer, Zia has over 26 years of experience across the entire gamut of real estate services and has been advising some of the biggest developers, banks, private equity funds, corporate houses, governments and administrative bodies over the last 18 years of his stay with Knight Frank. Prior to the IPC, he was with Tata Housing for eight years.
Amidst the pandemic, Knight Frank was engaged by e-commerce giant Flipkart in October this year to undertake a 140-acre land deal. Under this deal, Walmart-owned Flipkart has acquired 140 acres of land to set up their largest fulfilling centre in Asia, in Manesar, Gurgaon. The executive empowered committee of Haryana State Industrial and Infrastructure Development Corporation has approved the allotment at a cost of Rs432 crore. The e-commerce major will set up a logistic park in the land parcel over the next three to five years, which has a potential of a total built-up area of 5 million sq ft at a cost of Rs3,500 crore.
While the residential segment has been its forte all through, in the last five years, Knight Frank has ramped up its skills and capabilities in the commercial real estate space in a big way. The IPC has been engaged in some major deals, something that even the seasoned players in the commercial segment will envy.
While the industry was still struggling to get back on track in a staggered manner, the IPC facilitated a large lease deal in September, where the ride-hailing company Ola will occupy a 425,000-sq ft office space at the Prestige RMZ’s Startech project in Bengaluru. Ola is looking to consolidate its multiple offices in Bengaluru to a single property where 4,000-5,000 people can be seated.
In January, just before the pandemic, GMR Hyderabad Aerotropolis formed a joint venture with ESR Hyderabad 1, a subsidiary under the Hong Kong-headquartered ESR Cayman, to develop a 66-acre logistics and industrial park at Hyderabad airport city with an outlay of Rs550 crore. Here, Knight Frank India was a transaction manager of the joint venture, which proposes to develop a flagship airport centric logistics and industrial park providing modern facilities for warehousing, distribution centres and non-polluting industrial such as light assembly.
Recently, Knight Frank facilitated two deals, where data centre major STT GDC India has leased/purchased 400,000 sq ft built-to-suit space each from DLF, Noida and Salarpuria, Bengaluru. Last year, the IPC was also a part of a 600,000-sq ft transaction between Philips (Innovation Complex) and Embassy group in Bengaluru.
“As part of our growth plan, we work with reputable international property consultants in selecting sites for new builds,” explains Sumit Mukhija, CEO, STT GDC India. “Knight Frank is amongst one of our trusted IPCs, whom we rely upon for clear and considered advice on areas of real estate in key cities. We appreciate the value they bring to the table and on the occasion of their silver jubilee, we wish them all the best and look forward to continue partnering with them for our expansion needs.” STT GDC India is a market-leading data centre service provider, with a large data centre footprint in India, spanning 16 facilities in eight cities. The company is well on track to double its capacity every two to three years over the next decade.
“In the last decade or so, we have aggressively built up our capabilities in the commercial transaction space,” Viral Desai, national director, occupier solutions, Knight Frank India, says. “What makes our company different from others in this space is our ability to devise unique structures and solutions, backed by our strong research and consultancy capability. While focussing on quality turnaround, we have consciously decided to give prominence to large deals, something that has gone quite well in our favour.”
“Our achievement in the commercial office brokerage segment is exceptional, because 90 per cent of these businesses are locally owned,” adds Desai. “As against this, our peers have been heavily depending on their global portfolio of MNCs.” Desai has been with the company, handling the commercial office transaction business, for the last 11 years. During his stint in Knight Frank, he has handled over 400 transactions amounting to over 20-million sq ft of space. Leading a team of 70 brokers, he has been engaged in some key deals for Knight Frank, which includes the leasing of 3.8 million sq ft of space for Tata Consultancy Services, India’s largest single commercial real estate deal, and managing the buy and sale of property worth $50 million for Bayer.
In facilities management, Knight Frank has built up quite an impressive massive portfolio for its facilities management business. The IPC has been involved in providing services to Bengaluru City Railway Station; the high-tech illumination project for the Golden Temple and the Jaipur Walled City illumination project.
“Over the years, we have evolved into a strong business in India and are well placed to explore the opportunities in the market,” contends Baijal. “We offer end-to-end services across the real estate life cycle. We have responded quite well to the changing Indian market which has emerged as one of the key growth markets for our global business. Going forward, we are going to keep up this momentum intact.”
Four major services
Knight Franks’ offerings cover four major services. Under advisory, it does valuation, development & strategic consultancy, management and monitoring of infrastructure and government projects for clients like developers, PE players, financial institutions as also government and public sector enterprises. Under capital markets, it gets engaged in fund raising activities as also land transaction and core asset sales for clients involving fund houses, HNIs, corporates and developers.
In the case of the office agency business, it offers services for space acquisition/disposal, lease administration, renewal management and workspace consulting for corporates, landlords and investors. In the residential agency business, the IPC offers a whole range of services including leasing and sale for investors, as also individual and corporate clients.
With these offerings and capabilities, Knight Frank India has exhibited a remarkable growth trajectory. During the last 10 years, the IPC’s revenue has grown at a CAGR of 16.5 per cent and is aiming to maintain this growth momentum going ahead.
“The IPCs have played a big role in organising the Indian real estate market which, in the last decade or so, has undergone a big transition, following multiple policies and regulations led by RERA,” says Ashok Kumar, managing director, Gennex Partners (formerly Cresa India), a property consultancy. “The Indian real estate market is likely to move in a more structured and transparent manner where IPCs will continue to lend their support on a much larger canvas.”
“India is a hugely important market for Knight Frank Asia Pacific,” points out Kevin Coppel, managing director, Knight Frank Asia Pacific. “It is one of our largest businesses in the region and a key contributor to our other markets in terms of expertise, resources and innovation, particularly on occupier related issues.”
“Despite the current challenges of Covid-19, we remain optimistic about the outlook for India,” adds Coppel. “The country has a young and well-educated population, particularly in engineering-related disciplines, and this strength in technology will underpin future growth. As a result, we continue to look for opportunities to invest for the long term in our business in India.”
Backed with all these developments and capabilities, Knight Frank India has positioned itself quite well in the Indian realty market. From being a small entity in 1995, it has emerged as a well-established IPC in the Indian market.