PNC Menon’s Sobha Group will soon foray into the US, after having emerged as the third largest real estate player in Dubai. In India, after three decades, it wants a slice of the high-value Mumbai pie
At 76, Puthan Naduvakkatt Chenthamaraksha (PNC) Menon remains as inquisitive as perhaps a toddler. The hearing aid and the snow-white hair might suggest that the doting grandfather has other priorities, but underneath it all, Menon is still the razor-sharp and sagacious tycoon he has always been. The firm handshake is the best reminder of that at Inside Sobha Group’s ambitious plans: From Dubai to Mumbai and the US.
The inquisitiveness continues,” Menon, dressed in a sharp white linen suit, tells Forbes India at his office in Dubai, where his company, Sobha Realty, has emerged as the third largest real estate player in less than a decade. “I still want to learn because there are things I don’t know. Learning is never-ending and I learn something new every day,” says Menon, who has handed the day-to-day operations of the business (named after his wife) to son Ravi.
Ravi PNC Menon, unlike his father, is reserved, perhaps even nonchalant, even as Menon unveils his grand ambitions to take Sobha into the US, while also doubling down on its presence in India. “Currently, we do $5 billion, and the global dream is to do about $15 billion. The India business should be getting closer to $4 billion,” Menon explains. “So, in total, it should be about $20 billion.”
That’s some staggering ambition, particularly since it is a fourfold increase from its current numbers. Much of that, of course, hinges on the group’s ambitious foray into the US, where it is acquiring over 700 acres to set up both commercial and residential projects, including villas. The US expansion could give the group over $10 billion in revenue and is entirely Menon’s idea, driven largely by Sobha’s phenomenal run in Dubai where it stands behind Emaar and Damac in sales, after starting in 2013 at Inside Sobha Group’s ambitious plans: From Dubai to Mumbai and the US.
“Officially, I’m retiring at the end of this year and I’ll be chairman emeritus,” Menon says. His son Ravi is chairman of Sobha Limited, the India arm, and co-chairman of Sobha Realty, the Dubai-based business. “But I don’t want to retire. I will do that (chairman emeritus) plus we are expanding to other areas. There, I will be very hands-on.”
Menon’s new venture is something of a digression, and is in stark contrast to his current business—it will see him foray into the lucrative jewellery business. “We have a great brand, and we are very honest,” Menon says about this foray. “You need a lot of trust in that business. The plan is still in the works, but we are thinking of 17 shops in the beginning.” That entry will put Menon, an Omani citizen who is based in Dubai, in direct competition with some of his Malayali compatriots in the Middle East, including the likes of Joyalukkas, Malabar Gold and Kalyan Jewellers.
But Menon is known to take risks, and a transition into newer frontiers isn’t something he is a stranger to. Sobha started as an interior design and decoration firm in the 1970s in Oman, before diversifying into construction, and later into real estate in India. Today, Sobha has built a steely reputation for its construction quality and delivery timelines, both in India and Dubai. In the process, Menon has also built a personal fortune worth $3.1 billion, making him the richest Omani citizen in the world. at Inside Sobha Group’s ambitious plans: From Dubai to Mumbai and the US
To Mumbai, with Love
Even as he focuses on newer frontiers, it’s unlikely that Menon will step away from overseeing Sobha’s strategic growth. That’s even more crucial at a time when Sobha Limited, the Indian arm, is busy plotting its next moves, the biggest of which will be the foray into the lucrative housing market in Mumbai, where it has identified a 300,000-sq-ft plot, to target the ultra-rich in the country. It has taken three decades for the project, which is anticipated to be launched in the middle of next year, to start operating in the largest economy in the world with the fastest rate of growth. Menon states, “We have to show something that India has not seen.” “And that opportunity is there only in Mumbai. The reason is, we can afford to spend the money and the only place in India which can pay that back is Mumbai.”
The chairman of Sobha Limited, Ravi, states, “W e are looking at entering Mumbai because it has several micro-markets.” “As such, we have no preference. We are open to considering both outright alternatives and SRA (Slum Rehabilitation Authority) redevelopment. You’re accustomed to clearing land because you’ve worked on developments in Bengaluru and other locations. The challenge in Mumbai is very different. Thus, we continue to assess costs. Our goal is to comprehend at Inside Sobha Group’s ambitious plans: From Dubai to Mumbai and the US.
Mumbai is currently among the top 10 luxury residential markets in the world, ranking eighth in terms of price growth in luxury housing. Delhi is 37th and Bengaluru 59th, according to Knight Frank’s The Wealth Report 2024. “We believe this move will transform Sobha’s market dynamics and serve as a key trigger for a rerating, given Mumbai’s vast market potential and extensive infrastructure development,” research firm HDFC Securities said in a report in June. “This move positions Sobha to capitalise on premium pricing, leading to better margins at Inside Sobha Group’s ambitious plans: From Dubai to Mumbai and the US.”
“There are a few operators, pan-India, who are operating only from Mumbai and doing very large volumes,” Ravi says. “So we have a lot of hope. Hopefully, we can replicate the Dubai model using Mumbai as a city that has a market and can absorb that sort of price.”
The Dubai model will mean that the developer will also put strict curbs on altering the apartments, a practice many Indians are used to after purchase. “We have one rule,” Menon says. “If you want to buy my apartment, you cannot alter it. We fit it, we finish it and give it to you. You cannot touch it. Because you will spoil your own apartment and other apartments also.”
Building in the Desert
Menon forayed into Dubai in 2011 after setting up PNC Investments, and the company began by jointly developing a property in partnership with Meydan Group before venturing out to sell its own villas and apartments in a project known as Sobha Hartland, a $4 billion luxury mixed-use development spread over 183 acres.
Since then, Sobha has completed the second phase, Sobha Hartland 2, spread over 183 acres comprising apartments and villas, in addition to other projects across the city that include Sea Haven Tower and Sobha Reserve. In the process, Sobha Realty, the Dubai-based company, has also become the third largest real estate player in the city, after Emaar and Damac, with annual revenues of $5 billion. Now, it’s awaiting the launch of its flagship project, The S, on the busy Sheikh Zayed Road, comprising four- and five-bedroom apartments for which prices start at a staggering $4.3 million.
Sobha’s success in Dubai in a relatively short period is also thanks to the backward integration model that the company pioneered in India in the early part of the millennium. The plan involves a group of associate arms operating independently and complementing the core business. That model removed outsourced vendors and began to build in-house services such as a design and engineering team, cost consultants, plumbing services, manufacturing units for civil engineering, landscaping and modular furniture, among others. In addition, the company also provides facility management.
“We are totally backward integrated,” Menon says. “When I say backward integrated, they teach backward integration in the real estate industry using us.” That’s precisely what’s also giving the group enough ammunition to test unchartered territories, particularly through its foray into the US market.
To the Land of Opportunities
Sobha’s big foray into the US will be something of a game-changer, with no Indian real estate player having set foot there. “In the US, we can do about ₹100,000 crore over 10 years,” Menon says. “We are entering hopefully next year. We have more or less finished our land buying. And we will be closing the deal before the end of the year. Then we have got to get the permission which takes about a year in America.” The company will largely focus on residential properties in Dallas and Austin and is currently negotiating for 700 acres. “At present, that is the hottest market in America. The potential is huge,” Menon says.
The US entry will also see the real estate major fall back on its tried-and-tested backward integration model, which means manufacturing everything from toilet fitments to aluminium for construction. The move, Menon says, gives the firm a distinct advantage in maintaining quality while also keeping cost under check. “For the next 15 years we don’t have to look at anything else. There will be enough opportunity,’ Menon says. “If you look at the US, it is nine million sq km, 330 million people and the per capita GDP is over $8,000. With all that, we can touch $15 billion in 15 years. Ravi is 40, and he has a lot of time.”
It’s a privilege that Menon didn’t have—his father passed away when he was 10, and he had to drop out of college for reasons he still holds close to his heart, before roughing it out in the Middle East. But even then, Menon’s keen eye for detail, the stress on quality and the relentless pursuit to offer value have helped build Sobha into a global luxury powerhouse. “I will say it’s God’s gift and nothing else,” Menon says.
He had moved to Oman in the late 1970s after a chance meeting with Brigadier General (Retired) Sulaiman Al Adawi, then a captain in the army of the Sultanate of Oman, at a hotel lobby in Kochi. Al Adawi, who was looking to buy a fishing boat, struck up a conversation with Menon, who then ran a small outfit making furniture. The duo soon began to discuss work opportunities in Oman.
“It was an accidental meeting,” Menon says. Menon soon moved to Oman to set up a furniture, interior, and fit-out company in partnership with Al Adawi, which would go on to build some of the palaces in Oman, Bahrain, Qatar and Brunei, among others. “I had only $7, and I came with a lot of dreams,” Menon says about his early days.
By 1995, Sobha decided to foray into the lucrative housing market in India, starting with a residential project, Sobha Sapphire, in Bengaluru that was completed in 1999. In 2000, the company took on a contractual project for Infosys to set up an office complex in Bengaluru followed by another project for the IT major in Mysuru. Since then, the company has built 206 real estate projects and 340 contractual projects, covering about 136.25 million sq mt of developable area. It has 69 ongoing residential projects in 24 cities and 13 states across India.
“Sobha has shown a decisive inclination towards green building practices and advanced construction technologies,” adds Puri of Anarock. “A consistent project pipeline is guaranteed by strategic acquisitions in prime locations. They are also focusing on their investment in brand development and customer relationship management to preserve their reputation for luxury and quality.”
Big Bets on India
Back home, Sobha is in the midst of a rights issue, where it plans to mop up ₹2,000 crore from the markets. Over the last 12 months, shares of Sobha have more than tripled, gaining as much as 280 percent with the market capitalisation crossing ₹20,000 crore. The rights issue will help Sobha increase its equity capital to ₹10,000 crore in five years, which, in turn, will help its expansion plans. In all, the group will have a development pipeline of 50 million sq ft.
“We have an equity of ₹2,500 crore. With the rights issue, it will increase by another ₹2,000 crore,” Menon says. “For five years, we should have ₹10,000 crore in equity. Equity is important because it’s a cyclical business.”
The company has set some targets for the next four years, including sales of ₹30,000 crore of which some ₹10,000 crore will come from Delhi, ₹6,000 crore from Bengaluru, and another ₹5,000 crore from other cities, including Pune, Chennai, Kerala. Hyderabad and Ahmedabad, among others. Mumbai is expected to bring over ₹10,000 crore.
“With the announcement of the rights issue, Sobha’s visibility on the non-South diversification has significantly improved,” HDFC Securities said in a June 15 report. “
“We started our story from the South,” Ravi says. “The land bank was there and we were developing projects based on those land banks. Today, we are able to invest and the rights issue will give us a lot more muscle to start investing in some of these newer markets.”
For Menon, all that means is that there are exciting times ahead. “Looking back is scary,” he says. “The future is in his (Ravi’s) hands. Now my game is over, but I participate because I want to be healthy. We are in the quality game. Wherever we go, it will be difficult to compete with us in terms of quality.”