—
Bob Dhillon, President & CEO, Mainstreet Equity Corp.
Bob Dhillon, known as Canada's biggest Indian landlord, established
Mainstreet Equity Corp. over a decade ago. The real estate company, headquartered in
Calgary, Alberta, acquires and manages mid-market rental apartment buildings in major
markets across Canada. Mainstreet creates value by purchasing under-performing
properties, renovating them to a branded standard, improving operating efficiencies, and
repositioning them in the market for greater returns.
Prashant C. Trikannad interviewed
Bob Dhillon via email about Mainstreet's plans for India's realty sector.
Could you confirm whether
Mainstreet Equity Corp. is,
indeed, planning to enter the
Indian realty sector? If true when
and why at this point in time?
The Indian market is the
greatest market in the world,
from a real estate developer's
perspective. The reasons are:
a. Demographics: 50 per cent of
the population under the age
of 25, 65 per cent of the
population under the age of
35, over a billion people
b. In-migration from rural areas
to urban: while the majority of
the people live in rural
c. Family nucleus: fragmentation
of extended families to their
own single family dwellings,
as prosperity affects everyone
d. Scarcity of Indian land
forcing vertical development
requiring technology from
North America
e.Under-serviced sector
requiring an enormous
amount of capital
These are some of the
dynamics drivers which do not
exist in mature Western
economies; our real estate
economies have a declining
workforce, ageing population,
and an oversupply of
real estate.
So, for any institutional
investor India is a market that
you cannot overlook. If you are
an NRI or PIO, it is an
additional competitive
advantage. To answer your
question for Mainstreet Equity
Corp., whose founder is a PIO,
I see this as an opportunity to
bridge intuitional North
American capital to the
greatest real estate market in
the world.
Is it also true that Mainstreet
Equity is proposing a billiondollar
investment in the Indian
real estate market? Assuming
it is how and where will the
funds be deployed?
Too early to determine capital
allocation. We are doing
our due diligence on issues
such as capital repatriation,
foreign ownership rights,
ownership rights, landlord
tenancy act, bureaucracy/
corruption, and market
penetration, meaning which
markets to penetrate first.
What would be your company's
strategy vis-à-vis joint
ventures with Indian real
estate firms?
Our company's strategy is
opportunity driven. We are
open to joint ventures,
partnerships, and/or entering
any market on a standalone
basis. We would consider taking
stakes in any distressed real
estate companies today.
Post-slowdown, what is your
outlook on the current and
future situation in the Indian
real estate market?
We have a long-term vision on
the India real estate market, as
India is going to become a
global economic player and its
requirements for Class A real
estate is going to continue at an
accelerated pace. We are
hoping to be part of the growth.
I see this slowdown as an
opportunity to enter the market.
How can foreign companies
such as yours capitalise on the
many opportunities in the
Indian realty sector?
Foreign companies' number
one concern is the legal
system and the repatriation
of capital. Capitalisation on the
opportunities is a function of
market opportunities. Without
the right legal system, you
will not attract large sums
of capital.
Mainstreet Equity is focused
on acquiring, managing and
repositioning underperforming
properties. How
best can this unique concept be
applied in the Indian context?
Repositioning of existing assets
is a great business model in any
market where landlord tenancy
act is fair. My understanding of
the landlord tenancy act is that
it is a bureaucratic nightmare;
so for that reason, it would be
very difficult to reposition
existing assets.
Can you tell us something
about Mainstreet Equity Corp.?
Mainstreet Equity Corp. was
famously quoted "it is a car that
runs without gasoline" meaning
that we internally generate
capital by repositioning real
estate, increasing revenue, and
reinvesting the capital for
future growth. Our stock has
gone up 100 per cent in times of
recession in 2009.