Bengaluru-based RMZ Corporation exploring real estate expansion opportunities in the US, EU and UK - Hindustan Times
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Bengaluru-based RMZ Corporation exploring real estate expansion opportunities in the US, EU and UK

Apr 23, 2024 07:43 AM IST

RMZ Corporation is planning to invest in real estate asset classes and geographies that “give better dollar returns.” These could be in Mumbai or Manhattan

Bengaluru-based RMZ Corporation is westward bound. The company wants to be an ‘Indian founded but a global alternative asset owner.’ It is actively pursuing real estate deals in the US, EU and the UK and is hoping to close a few within the next 12 to 15 months, said Mihir Menda, Supervisory Board Member, RMZ Corporation.

Bengaluru-based RMZ Corporation is actively pursuing real estate deals in the US, EU and the UK and is hoping to close a few within the next 12 to 15 months, Mihir Menda, 25, Supervisory Board Member, RMZ Corporation told HT Digital.
Bengaluru-based RMZ Corporation is actively pursuing real estate deals in the US, EU and the UK and is hoping to close a few within the next 12 to 15 months, Mihir Menda, 25, Supervisory Board Member, RMZ Corporation told HT Digital.

He told HT Digital that the company has plans to expand overseas. “It definitely comes from a place of just managing risk. The India story is fantastic… But, we want to be an Indian founded but global alternative asset owner,” he said.

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The company has been “actively looking at the EU, the UK. And I think that it's a great transition coming out of India. Going forward, I think the US is also something that's on our radar, specifically, considering that commercial real estate there is in a sort of depression. It’s an opportune time for someone to come in, with the capital-rich structure. There are plenty of opportunities where you can really recycle your capital really quickly. And, there are good opportunities where you can invest for the long term as well,” he told HT Digital.

As a second-generation leader and member of the supervisory board, Mihir Menda, who is currently based in the US, is involved in building strategic partnerships and evaluating new global markets.

RMZ is targeting to have $100 bn of assets under ownership in RMZ’s portfolio by 2032

Commenting on the company’s target, Menda said “it's ambitious but achievable.”

He said that the ‘next generation’ at RMZ “wants to invest in opportunities, but with a shorter investment horizon.” This may include brownfield developments “where a developer may have defaulted.”

“It's something that, you know, we could get into and complete by bringing our expertise. And what that does is it saves the first two to three years of excavation, foundation, permissions and all of those other risks that come with it… And again, it's three years to earn your first dollar versus seven years."

The Bengaluru-based company may also be "happy to consider the investment and acquisition of some core portfolio opportunities as well. And that could be Grade B plus grade A minus assets that we think can add further value.”

In December 2020, RMZ Corporation completed the sale of its large commercial portfolio to Brookfield for $2 billion, where it sold 18% of its commercial assets and co working business to Brookfield. The company has sold 12.8 million sq ft so far.

RMZ, which is privately owned by the Menda brothers, has been primarily in the development of Grade-A office complexes, and it has now decided to diversify into other segments of real estate. To expand business, RMZ Corporation in November 2023 announced a massive investment of $7 billion over the next five years to develop office, residential, warehousing, hospitality and mixed-use projects worth $25 billion across major cities.

RMZ plans to focus on asset classes that give better dollar returns

Mihir Menda said that the company’s focus is directed towards asset classes and geographies that “give better dollar returns.”

“It's as simple as that. That could be Mumbai, or that could be Manhattan, like if, today the residential prices are comparable, it could be, you know, one or the other, wherever the deal looks sweeter,” he added.

Also Read: Office buildings in Mumbai’s Bandra Kurla Complex command higher prices than Manhattan

RMZ also looking at distressed real estate assets

The Bengaluru-based company is also open to look at distressed assets.

“..we are looking at both green and brownfield project developments, assets and investments, on the whole, that could be a value add. It could be an opportunistic investment, it could sometimes even be core investment, because it could be that the current owner has, let's say, defaulted on the loan, but the asset in itself is rent yielding, and you're sort of able to invest 20 cents to the dollar. So, it's just, you're entering at the right time so that the investment itself will pay off,” he explained.

Asked if the company would be making global investments through a subsidiary, he said that the real estate firm is not looking at investing through different companies.

“…what we want to do is to have RMZ, the Indian funded but global alternative asset owner. And what that really means is, it is going to be RMZ doing it, there is no sort of quantum of capital defined per se,” he said.

The company is actively considering an “international foray’ but it’s also looking at Manhattan versus Mumbai. “We just compare where we get better returns and then we'd be happy to invest …we haven't really set aside any quantum or we are not pooling together any distinct sources for this,” he said.

Timelines

The company is “aggressively pursuing” global expansion opportunities and is expected to sign a few deals probably “within the next 12 to 15 months,” he said.

Indian real estate market versus global markets

Commercial real estate in India, unlike other parts of the world, is somewhat insulated from real estate troubles being experienced in other parts of the world, said Menda.

In Manhattan, for example, you see, Class A commercial assets being traded at 25 to 30 cents to the dollar, just because of the rising finance costs, people being unable to refinance assets, and mismanagement of cash flows, he said.

“But all of this isn't really happening in India. And the beauty of India is that, you know, while nearly becoming the third largest economy in the world, it still is somewhat insulated from all of these real estate troubles that are going on in, you know, most of the other economies that we talk about, specifically in Europe and the UK, and the US as well,” he said.

On Bengaluru’s water crisis

Mihir Menda is of the view that the water crisis in Bengaluru “is rather unfortunate” especially considering the fact that it’s a city with the maximum number of lakes in the country.

Bengaluru can look at channeling harvested water back into those lakes, “to further enrich our water tables. That could be a way in which at least we have water reserves. Another big thing that we need to look into is investments in water purification.”

Also Read: Bengaluru water crisis: Has it impacted real estate sales?

“We need to do a far better job in treating wastewater … water from the lakes could otherwise be purified and used for commercial use,” he told HT Digital.

As far as use of water for construction is concerned, he said companies should now focus on regeneration. “Everything from the soil that's being excavated should be used back in the construction process, and it should almost be as though it's like a little circular economy in itself within a site. So, the excavated soil goes back into the process where instead of creating pure cement, we create soil cement blocks, and soil cement bricks,” he said.

On millennial real estate buyers and fractional ownership

Menda feels that a lot of people of his generation (he recently turned 25) “are happy to not lock into something long-term. And, they're not treating real estate today as an investment as much as something that is needed. They consider real estate as something that is transitory. They take a house on rent in Bandra because the restaurants there are good but tomorrow if the food scene moves to Worli, they too would want to shift,” he said.

Also Read: Office market surges to 16.2 mn sq ft transactions in Q1 2024; Residential sector keeps pace with sale of 86,345 units

Having said that, with fractional investments in real estate now being permitted, “I think people can now look at real estate as an investment product, just like equities, and other instruments. If this enables a millennial to invest in real estate as they would in equity, I think it’s great,” he said.

On the company’s plans to enter into the fractional ownership segment, Menda said that “where we treat fractional owners as sources of retail capital, I think it would be something we would definitely consider.”

Also Read: Fractional ownership market in India predicted to grow over 10x to surpass $5 billion by 2030: JLL-PropShare analysis

On artificial intelligence in real estate

The use of artificial intelligence in real estate is inevitable because buildings will get a lot smarter. “There needs to be an additional layer of digital infrastructure where occupiers around the world prioritize things like, are my buildings safe from a cyber security standpoint," he said.

Today, "we prioritize convenience and seamlessness and I think tech has really made our lives more efficient," he said.

Tech also plays a big role in the entire development and investment process. "If we save time, we save money, and we save on costs. We become more efficient," he added.

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  • ABOUT THE AUTHOR
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    Vandana Ramnani is editor, real estate, HT Digital. She has reported extensively on residential and commercial real estate. She can be reached at vandana.ramnani@htdigital.in

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