We have around 3.5 billion dollars in assets
Q ‘n’ A with Mr. Ash Israni, Chairman of Pacifica Group of Companies
It has been a long journey for you since the inception of your company. Please tell us how was the transition from East to West for you?
I was a student at USC in Los Angeles and was pursuing my Master’s Degree but I was always wanted to be an entrepreneur. All the people I knew back in Ahmedabad were into their own business and Gujarat is a good place to learn tricks of the trade as well since Gujarati’s are good at it. So, when some of my friends started a car wash business way back in 1978, I invested in it as well but it was a wrong move and we lost a lot of money in it and I guess we learnt a lot from it too at that time about how a business should work and what can happen when things go wrong. So, I went back to pursue my education and then for 10 years I worked in the computer industry working as an engineer and then went on to be the managing engineer for 5 different groups. However, I was investing in property since 1978. I was investing in land, homes, etc as a modest investment and then I got into it full time and in 1983 I set up a small full time office and there has been no looking back ever since. Today, we have a base in 38 states across the US and we have grown through 3 different recessions.
So, how has the recession affected your business?
Recession, in fact, helps us. We buy a lot of assets during this time We have around 3.5 billion dollars in assets and we have different groups. We are spread across apartments, hotels, senior housing, leasing portfolios, etc. We have diversified in asset class perspective as well as geographically. For instance in Mexico we are building a 2 million sq ft of mixed use project, which has retail, commercial and hotel under one roof. The market there is more similar to the one in India.
How did you venture into the world of real estate?
I started with investing in houses, land and then building homes. Later on we moved to hotels and shopping centres. We have our family members handling many operations.
How is the hotel industry market in the US?
The hotel industry is always fluctuating and these are the hay days now but sometimes it takes a nose dive and that is the time we invest in these hotels. Although vacation rental sites are affecting the business, we too have invested in a vacation rental company to learn and adapt to the new changes. The culture is changing in the hotel industry with time and we are working on it with time.
How is the real estate market in the US today?
These are the good days of the industry. Everything is doing well now and prices have surpassed the 2006 peak and prices are higher by 16 to 18 per cent today. It is a good market today. Low interest rates have helped and there are also zero interest rates and projects that did not make sense earlier are making a lot more sense now. The dynamics have changed due to low interest rates. Housing is slowly picking up now. It took a huge dive a few years back during the recession. However, US have come out of it and slowly other countries are also coming out of it as well. The housing industry has bifurcated but the upper segment is doing very well. Banks have tightened up a lot but if you qualify it is a good buy for you. The higher segment has money and banks are offering loans to this segment as well so a place like New York is on fire. The rental market is doing well in the lower segment of the market. I don’t see that the market will slow down now.
If one wants to invest which state in the US is a good place?
Markets i.e. the gateway markets like New York, Miami, LA, San Francisco, Boston and Seattle have done really well. People want to be here and many have relatives living here and similar factors have helped these markets a lot. Chicago has slowed down if you compare to these states. Today, senior housing is a good market in the US as far as investments are concerned.
What is your plan for the senior housing community?
In the US they are very important projects for Pacifica Companies The market is segmented in this as well
What about the rental industry
In USA we build 300,000 to 400,000 units for rentals each year alone. In fact, we own 8,000 apartments across the US and we are big in Florida. This is the darling of the real estate market. People who are starting into their career take up rentals and Indians are very high in this segment. They have good credits and high incomes so all that helps the industry and is the fastest growing segment as well.
How do you feel about Indians who go to the US now?
I feel very happy and proud. They are doing so well and have a great reputation as well. There is a whole segment that is well respected in the IT industry. In fact after my advice the University of San Diego also went to India to meet new students and invite them to study there.
What about the Indian market?
India is a great market. China is slowing down finally and globally India is doing well and is a good market. A lot of young people and the right policies, India will do very well. Modi becoming the PM has sent positive vibes across the globe and we are all very excited.
What is your advice to the young generation?
Buy a home before you buy stocks! You will enjoy living in it and you will feel happy as well.