Salarpuria group emerges as a force to reckon with
In 1993, the Salarpuria Sattva group acquired a small plot of just 20,000 sq ft of land for construction in Bengaluru, thereby establishing a footprint there. The group, known for creating well-designed commercial/IT spaces, is today one of the most diversified developers, with a presence across commercial and residential spaces, office & IT parks, retail, hospitality, facility management, education, data centres, co-living and co-working spaces. Geographically, though it is primarily focussed on the Bengaluru and Hyderabad markets, it also has a presence in other markets like Pune, Goa, Coimbatore, Kolkata and Jaipur. And, more recently, the developer has also ventured into the country’s commercial capital, Mumbai, where it is putting up a project in the suburb of Chembur, in tandem with the Wadhwa group.
Journey from Kolkata to Bengaluru
Known for its track record of quality construction and delivery schedule, the Bengaluru-headquartered group has carved a distinct place for itself
in the commercial and office space with its well-designed and well-built properties. The group started its journey originally from Kolkata way back in 1986 as the Salarpuria group, founded by G.D. Salarpuria. It shifted its base to Bengaluru in the early 1990s and rebranded itself in 2008.
The group started its journey in 1993 with the building of a commercial building in Bengaluru called Money Chambers on a small plot it had purchased and this was followed by a 12,000 sq ft residential project in Indiranagar. Later, in 2003, it built an IT Park – GR Tech Park – in Whitefield, Bangaluru, which has been catering to MNCs like HP, Intel, SAP and Sapient even before the boom in the IT/ITeS sector started. The company has come a long way since then.
Over the years, the privately-held group has created a brand image for itself in the Indian real estate market which, in the last few years, has undergone a majortransition, led by RERA and other policy initiatives. Today, it has an established footprint across seven cities and is one of the preferred real estate brands in the country. From luxurious apartments to townhouses and villas with world-class features, the group has built up a select clientele for itself in the market.
With over 60 per cent space in office/ IT parks and the commercial segment, the company boasts of a rental portfolio of over 20 million sq ft (primarily across Bengaluru and Hyderabad). With over 90 per cent occupancy (at an average rental of about R70 per sq ft per month), it enjoys a clientele of global corporations like Google, Microsoft, Cisco, Oracle, Intel, Walmart, JP Morgan, TCS, Infosys, Siemens, Goldman Sachs, DBS, HSBC, American Express, Bank of America, SAP, KPMG, PwC, Bombardier and many others.
In the last three years, the group, sensing opportunities in new asset classes, has also ventured into co-living (student housing, accommodation for working professionals, etc) and co-working, as also data centres, which it builds for operators. In 2018, the
company acquired 50 per cent stake in the flexi-office space player, Simpliwork Offices of Bengaluru. Simpliwork’s current operational portfolio across Bengaluru, Delhi-NCR, Mumbai, Pune and Hyderabad is 2.8 million sq ft and it is also entering the Chennai market. With growing demand for flexi-space by corporates, the 2018-founded firm has added close to about two million sq ft in the last year alone, during the pandemic. Google has signed a total lease deal of about 1 million sq ft with the firm. Simpliwork now plans to raise $50-60 million as equity to expand its business in India and enter into overseas markets like Singapore and Hong Kong.
In April 2019, the group invested about Rs64 crore in the Bengaluru-based, technology-driven co-living space provider Colive, for a majority stake. Founded in 2016, the firm now has an inventory of 30,000 beds in Bengaluru, Hyderabad, Chennai and Pune.
As the demand for data centres has been picking up in the county, following growing digital consumption, real estate players are eyeing this opportunity to create a separate class of assets. The Salarpuria Sattva group too kicked off its data centre business around three years ago and now has a portfolio of around 140 megawatts in different stages of development. It has built two data centres – one in Mumbai for Sify and another in Bengaluru for STT GDC India – of 20 MW capacity each. The company is also in talks with other operators to build two-three data centres (built-to-suit) in cities like Mumbai and Chennai.
Value to customers
“Over the years, we have built a distinct place for ourselves in the market, backed by our vision of doing better than what we have done and deliver great value to our customers,” says Bijay Agarwal, 58, managing director, Salarpuria Sattva group. “We also have a mission of becoming a global brand in real estate and win over customer confidence through trust and innovation. While we have always tried to live up to our customers’ expectations, they have reciprocated quite well and reposed their trust in us. And, that is how we have positioned ourselves – as an organisation which conducts all its activities in a transparent and fair manner. Going forward, we want to replicate our success to a wider marketplace, serving a much larger number of customers.”
The company’s IT park, Salarpuria Sattva Knowledge City in Hyderabad, is a well-designed property of 11 million sq ft and is touted as being one of Asia’s largest and most futuristic IT complexes, with a leasable area of over 7 million sq ft. The $1-billion project, where US PE major Blackstone has picked up 50 per cent equity, hosts global majors like Apple, Goldman Sachs, JP Morgan Chase, Intel, Oracle, Synchrony Financial, Microsoft, EPAM, Xilinx and KPMG.
The project started in 2013 and has been implemented (apart from 500,000 sq ft) in a phased manner, is fully occupied and commands a higher average rental of about Rs75 per sq ft per month, as compared to neighbourhood properties, where rentals hover at about Rs55-60. The project is one of the biggest IGBC-certified, platinum-rated green buildings in the country.
The Blackstone Group, which created the equity platform (50:50) with the company in 2015, further extended its association, as it decided to participate in two more of the company’s IT projects in Hyderabad in 2018. With these two ongoing projects: Salarpuria Sattva Knowledge Park (leasable area: 3.3 million sq ft) and Salarpuria Sattva Knowledge Capital (2.3 million sq ft), the total leasable area under the Salarpuria Sattva-Blackstone platform in Hyderabad has gone up to over 13 million sq ft.
This apart, the platform is also putting up a major commercial tower (leasable area: 2.5 million) for the animation, multimedia, gaming and entertainment sector, in collaboration with the Telangana government, in PPP mode. Across these four projects (completed and under construction) in Hyderabad, Blackstone has infused a total equity of up to Rs1,200 crore, while the overall debt and equity exposure is to the tune of Rs3,000 crore.
More recently, just before the pandemic in March last year, the Salarpuria Sattva group and the Blackstone Group jointly acquired a 3.3-million sq ft office space, the Global Village Tech Park, in Bengaluru, owned by Coffee Day Enterprises, for Rs2,500 crore. In this project, the PE major holds a majority stake.
In 2016, the Salarpuria Sattva group and Apollo Asia RE Singapore (Apollo Asia Fund) set up a development platform (50:50) to acquire 100 per cent stake from a group of offshore investors in two real estate projects at Bengaluru and Vadodara. In the Bengaluru plot, the platform is building a 1.8-million sq ft IT park, which is expected to be operational by 2022.
The fact that PE players like Blackstone and Apollo picked up stakes and joined hands with the Bengaluru group is a distinct validation of the developer’s credential and the track record it enjoys in the market. Over the years, the company has carved a niche for itself with its capability and built up and delivered differentiated projects in the office and commercial space.
“It is always a privilege to get associated with partners like Blackstone and Apollo,” says Mahesh Khaitan, director, Salarpuria Sattva group. “Over the years, we have built up our capabilities and put up a portfolio that speaks volumes about what we are doing in the industry. Our customer-centricity, where we serve them with the best products and services, has been well-recognised and we would like to continue and maintain this effort going ahead also.”
The group, backed by 1,600 employees, has more than 114 projects (commercial & residential) under its belt, with about 54 million sq ft of development across India. With commercial space showing promising prospects against the backdrop of emerging opportunities in the new-age sectors like e-commerce, fintech and others, the company’s focus has remained on commercial spaces and IT parks.
Apart from the 32 million sq ft in the pipeline, it has 34 million sq ft more of development in progress, of which more than 60 per cent is commercial/office development, to be completed over the next three to four years. However, the pandemic forced it to revisit its strategy and it is now looking to expand the share of residential development to about 50 per cent from 40 per cent, going ahead.
“The pandemic is setting up more than one ‘new normal’ and we all are trying to get ourselves adjusted to that,” remarks Agarwal. “At Salarpuria Sattva also, we are proactively looking to evaluate the ongoing conditions. While the whole landscape of traditional office and commercial space is expected to see a transition, the demand for residential space has witnessed a good deal of traction, with people preferring to buy their own homes. We are going to expand our portfolio in favour of residential development going forward, in our quest to put up a well-balanced offering.”
Foray into business
A first-generation entrepreneur, Agarwal comes from a humble family, which migrated from what is today Bangladesh to Kishanganj in Bihar during the partition. He was one of 10 siblings. The sight of his father toiling hard to provide for his loved ones instilled in him values of perseverance and determination, the hallmarks of his enterprise today. In 1980, at the age of 14, Agarwal moved to the small town of Raniganj in West Bengal to pursue his education. He lived with his sister and her family and started helping out his brother-in-law in their novelty store. This is where the young Agarwal’s foray into business started.
It is not surprising that the young lad understood exactly what his customers needed and travelled 200-odd km to and from Kolkata to pick up merchandise for them. Nor is it surprising that his innovative sense and keen marketing abilities catapulted the store to one of the sought-after stores in Raniganj.
In 1984, Agarwal completed his B Com and moved from Raniganj to Kolkata. In 1986, he forayed into the construction space, thanks to a job he picked up at Vaishali Finance Corporation. Even today, Agarwal’s eyes sparkle with pride and nostalgia as he speaks of joining the company headed by his mentor GD Salarpuria who, till his demise in 2003 at the age of 74, was the chairman of the group. As a mentor, he was tough, yet kind-hearted and generous. He was fond of young Bijay and treated him like a son.
Salarpuria trod the path of progress and he was exemplary. His journey was marked by compassion and discipline towards value-based sustainable growth. “Live a high moral life and not a high material one,” he would say, “because it might become difficult to step down someday”.
Under Salarpuria’s tutelage, opportunity came knocking for Agarwal, when the company needed help to retrieve funds that had been invested with a promoter, who was in the business of construction. The task was to complete a half-finished building. The company did fund construction projects but it did not have any practical experience in the field. Agarwal was chosen to lead the project. Unsure, nervous, yet determined to excel, he took on the task.
The Kolkata-based project involved development of a sizeable 300,000 sq ft. But Agarwal took the plunge and emerged successful. After this success, he became the company’s Man Friday for every real estate venture. From farmhouses and buildings in Delhi to developmental projects in Nagpur and Hyderabad – he oversaw all construction activities of the company.
In 1993, Agarwal married Niru,, Salarpuria’s niece. Around this time, he also visited Bengaluru to assess a plot available for sale and developed it into a 20,000 sq ft commercial building that is known today as Money Chambers. The city grew on him and he moved there and set up a construction company successfully.
With success come great associations. In 2002, the foundation Agarwal had been laying down attracted large international organisations such as Lucent, Intel, Ocwen, Hewlett Packard and India’s own Big Bazaar. They wanted him to recreate the magic that had become synonymous with the Salarpuria Sattva group.
A whole new world opened up for the group from 2003 onwards, when the technology boom changed the city of Bengaluru. In the same year, under Agarwal’s leadership, the company launched GR Techpark, which covered an impressive 1.5 million sq ft. During 2004-07, his company concentrated on developing IT parks and commercial properties, even as they kept on building select residential projects.
With marquee projects across various segments of real estate, his vision for the realty business saw Salarpuria Sattva maintaining the highest standards of construction quality and delivery. Today, he is acknowledged as a ‘trendsetter and leader’ in the real estate industry. The recently-released Grohe Hurun India Real Estate List 2020 counts Agarwal as a fast riser, with 290 per cent increase in wealth year on year and a net worth of Rs4,170 crore.
Impeccable trackrecord
Also passionate about education, he is chairman, Greenwood International chain of schools, Bengaluru. One of the most prestigious institutions of its kind, the school chain has won several accolades. The school is managed by his wife Niru Agarwal, who is its managing trustee. Daughter Adrija and son Shivam joined the business and playing a role in shaping it.
“Agarwal has spearheaded the company’s growth and scale from day one,” says Khaitan, who has been associated with the company from the very early days of its inception. “He has come from a humble background and has always kept his values and integrity as the utmost priority and the pillars of the business. He has built a rock-solid empire through ethical business practices. Today, he stands tall as the driving force behind the success of the brand, which is a front runner in the realty space, scripting its success story, with unwavering commitments.”
Backed by its agility and impeccable track record, the company pulled off an impressive performance even during this pandemic afflicted market. During 2020-21, the company’s residential sales were 40 per cent higher than what it had achieved in the previous year. In fact, ready-to-move properties, which constituted about 50 per cent of the total sales, saw a phenomenal surge of over 70 per cent.
Last year, when many of its peers were struggling, the company went on to launch three residential projects in Bengaluru, which include two residential projects of about 1,000 units each and the development of over 400 plots. Buoyed by the market response, the company is looking to launch seven to eight projects during the current financial year.
“Despite this challenging scenario, we have been able to generate a phenomenal response for our properties,” says Karishmah Singh, vice-president, sales, marketing & CRM, Salarpuria Sattva. “Our brand image and our customer-centric approach to serve our buyers with quality products and services have paid a rich dividend in a market where buyers are keen to be associated with reputed names like ours. We sold our entire inventory of ready-to-move projects in record time. In quite a few of the cases, buyers have purchased our properties fully online without much physical interventions and this gives us immense satisfaction, as we have built up our image in the market.”
“As a developer, Salarpuria Sattva has built a distinct place for itself in the market,” acknowledges Sachin Kumar, founder, PROPEve Realty, based in Bengaluru. “Apart from quality and other aspects, it has always put an extra emphasis on the location. Most of its properties are located in prime locations and that has given it a distinct edge. Besides, the buyers also like them for their services post sales.” PROPEve Realty is into broking and digital marketing of properties and has been working as a channel partner for many big developers in that market. The firm was involved in transaction of properties worth about Rs200 crore in 2020-21.
“The real estate market is consolidating in a big way,” observes Ambar Maheshwari, CEO, Indiabulls Asset Management. “The pandemic has accentuated the whole process further. The share of organised builders with proven track records is on the rise. Buyers, on the other hand, are consciously looking out for players who can deliver homes on time even as they have to pay some premium. With the WFH concept getting established even on a longer term and residents preferring to buy their own homes, the demand for quality homes will get a good traction, going ahead.”
According to Knight Frank India’s latest market assessment report, India real estate, residential: January-June 2021, the sales volume across top Indian markets surged by 67 per cent to 99,416 residential units during the first half of 2021, over what was achieved in H1 2020. New launches in H1 2021, at 103,238 units, were higher by 71 per cent y-o-y.
“The last four quarters marked by the pandemic have given rise to different sets of considerations for home buyers, which has led to a renewal of buyer interest,” says Shishir Baijal, chairman & managing director, Knight Frank. “Be it for want of larger homes or housing security or indeed for the purpose of long-term investment, there has been a strong revival. We expect the residential segment to remain buoyant due to the attitudinal shift in mindsets of potential buyers and as and when normality returns, we expect the sales volumes to pick up pace.”
Bullish outlook
The future of housing remains bullish in the light of optimistic economic growth, new project launch pipelines, rising GDP, improved core sectors indicators, credit availability to branded developers and growing employment rate, coupled with an attractive investment climate, resulting in a positive developer future sentiment score,” remarked Niranjan Hiranandani, national president, NAREDCO & MD, Hiranandani group, while launching the 29th edition of the Knight Frank-FICCI-NAREDCO Sentiment Index Report recently.
The outlook for the commercial office market has also been progressive in Q2 2021, for both leasing and rentals. The demand for office or dispersed commercial portfolios will expand on the back of the consolidation trend and expansion of satellite offices following the hub and spoke model.
Meanwhile, in a recent report, Colliers International has said that first half of 2021 has already recorded a 33 per cent increase y-o-y in investment in emerging asset classes, such as data centres, flexible workspaces and co-living which, because of globalisation, higher disposable incomes and greater digital penetration, are transforming lifestyles and have given rise to a shared economy in India.
Over the last three years, these new asset classes had started emerging, but the pandemic had somewhat dented demand of flexible workspaces and co-living assets. However, it further boosted demand for data centres due to increasing dependence on the internet and increasing digitisation, which is estimated to still increase exponentially over the next few years. Post-Covid-19, Colliers expect to see growth in all these asset classes, hinging upon the re-opening of offices and educational institutes.
With all these developments in place, the Salarpuria Sattva group has positioned itself quite strongly in the real estate market. The company, primarily known for its marquee office/IT space, has, in the last few years, consciously built up a well-diversified portfolio, where it has also ventured into new asset classes like co-working, co-living and data centres. Moreover, it has also tried to get into multiple locations too, looking for opportunities in a market which is undergoing consolidation.
In a strategic move recently, it has also decided to tweak its portfolio, and is looking to have an equal share of residential and commercial space. This kind of mix will help it in reducing its exposure to commercial office space, which is in a transition phase, following pandemic-related challenges. On the other hand, the residential sector is not only on the revival path, but is also witnessing a great deal of traction as buyers in the ‘new normal’ scenario are looking to own their own house, and that too, of larger configurations.
Backed by a diversified portfolio, the company is looking more prepared to leverage the opportunities in the market, where it already has built up a strong brand for itself. The partnerships with Blackstone and Apollo have already validated the company’s track record of construction quality and timely delivery. The association with global PE players will further reinforce its capability and help it maintain its trajectory in its next growth phase. The company, which might go for IPO in future, seems to be expanding rapidly in the market, which is turning quite favourable for reputed players.