A decade ago Satinder Garcha, 41, gave up the rough and tumble of Silicon Valley to become a polo player and a property developer in Singapore. Since then his Elevation Development, founded on the spoils of a dot-com sale, has become a notable player in the tightly controlled market for detached garden residences in the island-state. Indian-born Garcha, who’s now a citizen of Singapore, enters the rich list with a net worth of $315 million at No. 37.
Son of retired colonel Kuldeep Singh Garcha, who was captain of India’s national polo team, Garcha grew up in a British, military-style boarding school at Sanawar, at the foothills of the Himalayas. “Life was about getting up at five in the morning every day and going for a run—wet or cold, windy or balmy.” It taught him discipline, hard work and work-play balance, he says. College was at the University ofTexas at Austin, from which he graduated in computer science before moving to California.
The year was 1995. Silicon Valley was convulsing with the birth pangs of the Internet. Companies like Cisco and HP were the rage. Together with an ex-roommate as a minority partner, Garcha launched People.com to help companies in the Valley find IT staff.
As an Indian Garcha knew there was plentiful engineering talent back home. Programmers and engineers could be had for dimes on the dollar. People.com set up development centers in New Delhi, Bangalore, Hyderabad, Pune and Chennai, with a staff of over 500.
In 2000 Garcha and his partner sold People.com to TMP Worldwide, parent of Monster.com, at twice its $55 million top line. Garcha was wealthy and not yet 30.
The next year Garcha decided—long before the more celebrated recent move of Facebook cofounder Eduardo Saverin—that he preferred the life of Singapore. “I wanted to start a family and to play polo,” he says. A clean, green, safe country where a nanny or cook could be hired for a month for the cost of an evening of fine dining in New York seemed just the right environment. And income tax rates that are capped at 20% with no capital gains appealed, too.
After a few years of polo playing around the world (he ultimately captained the Singapore national team to a silver cup at the Southeast Asian Games in 2007) Garcha looked around for a business that fit his new, more relaxed lifestyle.
“By its nature the property business is not transactional on a daily basis. There are no drop-dead deadlines or swift market turns, and it is ideal for work-life balance,” he says. As important, the business cycle was in a downturn. Post-SARS (the acute respiratory syndrome pandemic that killed 500 and sickened thousands in 2003) and the dot-com bubble burst, prices of homes were at a ten-year low.
But the challenge was a crowded market with big boys like Far East Organization, Capital Land and a dozen others in the fray. To carve a distinct identity Garcha launched Elevation with a three-pronged strategy. First, it would only deal in ground-level homes as opposed to high-rise condominiums. Second, it would not build and sell residential units but rather operate on a build-own-rent model. Third, it would aim upscale.
Elevation started buying worn properties in the prime areas designated as Good Class Bungalow, or GCB zones, in Singapore. Prices averaged US$350 to $380 per square foot then versus $1,180 to $1,460 today. There are only 39 such zones where the plot size must be a minimum of 1,400 square meters. And Singapore’s total stock of 2,400 GCBs makes them the most coveted form of housing.
Elevation tears down the existing structures and hires expensive designers and architects to create spiffy domiciles for an elite clientele for rents up to $35,000 monthly. (One of them, Jonathan Schloss, also designed Garcha’s town house in New York City’s Greenwich Village.)
Today its GCB portfolio of ten properties stands at over $200 million. Garcha will go outside that zone for special properties, as in 2007, when Elevation beat seven other bidders to pay $860 per square foot, or $62 million, for a 72,000-square-foot plot in Sentosa Cove. Designers are busy putting final touches to 20 villas there that are expected to be ready by September; they would sell for better than $2,000 per square foot and will rent for nearly $20,000 a month.
Garcha’s strategy of buying potentially undervalued land at competitive pricing and divesting only at what he deems full-value realization has worked—the rents are covering his costs. He has so far sold only two landed properties. One for $28 million in 2010 for what was the highest-ever Singapore sale price of $2,343 per square foot in Sentosa Cove was to a Chinese businessman; the other was to Sun Yu-Li, Singapore’s celebrated sculptor.
In less than eight years Elevation has amassed 44 exclusive homes with a potential yearly income of $14 million when fully rented. The business model is assisted by rising residential values and tenants willing to pay top dollar for luxury living, even provisionally. A typical client: Australian mining tycoon Nathan Tinkler, who recently moved to Singapore and rented two bungalows from Elevation.
Garcha says that new residents prefer to lease while they get familiar with the country. He believes that with the Western economies in a slump, Singapore’s relative attraction as a Switzerland of the East will only grow. “Our build-own-rent business model is geared to meet the future demand,” he says.
James McBride, president of YTL Hotels in Singapore, is a ten-year friend and polo mate. He points to Garcha’s work in the city’s reviving Little India district and offers, “He is a pioneer, has great taste, invests in the product and delivers great finishes.”
Says Garcha: “The money to be made is in the capital appreciation. Land is a long-duration asset. If you have to reap the full value from it, you must act like an owner.”
Of course, he will vary the formula as needed. On the drawing board is a boutique hotel in Singapore and—no doubt born of fond memories on the polo circuit—five-star luxury hotels in Santiago, Chile and Rio de Janeiro. “Latin America is where Asia was 30 years ago in the development index,” he says. He is positioning his pony for the next charge.
Source: Forbes.com, 25 Jul 2012