By Joseph Thavaraja
The Pioneer, Who Turned Lands To Prime Assets And Elevated A Landmark Business To Greater Heights talks to BMD
Mr. Brahmanage Premalal, the co-founder and visionary leader of Prime Group, is currently the Chairman of Prime Lands Pvt Ltd, Prime Lands Residencies Pvt Ltd, HNB Finance Ltd and a Director of Prime Finance PLC. His incredible success is all the more impressive considering the hard work he has put into building his real estate empire from scratch.
Under his strategic direction and guidance ‘Prime” has become the giant it is today in the industry – not only in real estate, but as a property developer and a financial service provider. He identifies business opportunities, involves himself in planning and implementation functions and contributes to the decision making process of Prime Group.
Premalal set out on his entrepreneurial journey as a result of a class assignment on entrepreneurship when he was reading for his MBA. Two decades of his leadership has finally paid off-today. Prime Group has projects in Australia (Melbourne), seeks projects from emerging markets and even won Sri Lanka’s first ever PropertyGuru Asia Property Awards in July 2018, a historic celebration for Sri Lanka’s real estate sector.
Premalal sat with BMD to highlight his entrepreneurial journey, the Prime brand, Sri Lanka’s real estate market outlook, and his tips for budding entrepreneurs.
Q: How did you enter the real estate sector?
Professionally I am a qualified accountant and while working at The Finance plc sometime back, I was the Accountant at their real estate division. Then briefly I became a manager for a year. That’s how I got my exposure to the Real Estate industry. I began my entrepreneurial journey as a result of a class assignment on Entrepreneurship when I was reading for my MBA.
Q: How did Prime Lands grow at such a fast pace?
We have not grown overnight. It’s a very systematic growth over a period of 22 years. Although we started with real estate development, we have extended our wings to housing and medium rise and high-rise apartments and financial services too.,
When it comes to the apartment sector, of course we have been rapidly growing over the years. We have launched 43 apartment projects within a very short span of time, out of which 20 projects have already been completed and handed over to customers. Another 10 projects will be completed within the next two months.
I am proud to say that we were the first company to introduce apartments outside of Colombo to other areas.
We have over 10 housing projects in the Colombo suburbs, Kandy & Galle ranging from Rs. 10 – 15 million per apartment which are selling fast. We have also embarkedon the high rise super luxury segment with our landmark project in Ward Place, Colombo 7. ‘Prime Grand’ is built on more than one acre of land in Colombo 7, with 316 apartment units in a 36 story complex.
Q: Challenges as a pioneer in this segment?
A challenge we successfully overcame was in turning around another company which was in the financial sector. The Central Bank at that time was looking for buyers to take over failed finance companies. Ceylinco Grameen Company which had over 1,000 employees but incurring losses of Rs 60 million per month and cumulative losses of over Rs 3 billion was taken over by us-We took upon the challenge, converting it to a profitable entity. Thereafter due to a consolidation process introduced by the Central Bank it was merged with HNB-and now it is re-branded as HNB Finance. Prime Group has over 40% equity in it. Turning it around was a major challenge for us and also cost Prime Lands considerably.
Q: Ceylinco Grameen was an outside challenge for Prime Lands and was not part of Prime Lands growth strategy. How did you synergize these two?
It was a huge challenge-but as entrepreneurs we should identify challenges as well as opportunities. Nobody wanted to take over the company due to its huge losses, 1,000 employees and burdened with unpaid salaries. But they also had 48 branches and the employees were experienced in micro-finance. It simply needed a strong leadership and capital. Even the other commercial banks did not support us. We were very confident that we could do it.Opportunities do not come on a platter but wrapped in challenges. It is upto us entrepreneurs to seize the challenge and take the opportunity.
Q: You had to bankroll an equity burden. Did you call for funding partners?
No. We invested in it fully by ourselves-at that time the financial crisis was taking place and we did not spend our money buying new lands. These reserves came in handy to buy this finance firm. The Central Bank asked us to invest only Rs 500 Million but we invested over Rs 1.2 Billion. Banks did not give us a single cent-they were worried about the acquisition and they were even worried about our Prime Lands Ltd itself. But with our excess finances we funded this acquisition. We proved to everyone that we could do it. Prime Lands started in Real Estate but increasingly moved into the financial sector.. Now our Group is basically in real estate and financeStill the bulk, about 75% is in real estate.
Q: About other challenges faced by Prime Lands..?
As entrepreneurs we have to face challenges… There was a boom in the construction industry and we were capitalizing from it and suddenly taxes were increased-VAT, NBT, Capital Gains taxes etc. Policy inconsistency is a big challenge. Because of this the Real Estate Market is in the doldrums and nobody is starting new projects, due to shortsighted policies which are unfortunate. We used to say that our buildings were built on land but now we say our building are built on taxes and interest. As a result increasingly our houses and apartments are beyond the reach of average people. A 10 – 15 per cent increase in costs were due to new taxes and increase of existing taxes-as well as exchange rate fluctuations.
Q: In which way does exchange rates affect you?
It affects construction material costs and increases our prices further; 30-40 per cent of our construction material are imported though cement and steel are sourced locally. Of course this varies from project to project. Another challenge is that we receive material from outside suppliers. However, no plans to create our own supply sources.
Q: What motivates you and how do you motivate your employees?
Our result forecasts and targets mainly-and then the competition. we have been receiving “A Great Place to Work” Award for the last four years. Before that we received other awards as well. As a result of our friendly organization culture, our employees stay in our office more than the normal working hours and continue their work. We too look after them well. Our employee turnover is low, and they take less holidays too.
Our focus is not only on customers, but on our staff too., We provide freedom and keep the doors open to new ideas. Always challenge the way staff work, yet be supportive and respond enthusiastically to all innovative thinking. That’s why we have been among the ‘Great Place to Work’ winners for the last four consecutive years. We have no hesitation in sharing our profits with them. Just this December they were rewarded with three months salary as the year end bonus. You have to manage a workforce from non-skilled to highly specialized levels…
We work across many disciplines-involving top engineers to manual laborers. You have to ask the right questions when you manage such a diverse workforce.
Q: How big you want to grow as a company?
Basically we have the four main firms-Prime Lands, Prime Residencies, Prime Finance (a listed finance firm) and HNB Finance of which we own 40% where we had a Rs one million profit after tax last year. We have to see what opportunities would come in the future for expansion. As for our presence regionally, I would say that property development work mainly takes place in the Western Province. We handle mainly lands in other provinces. Property purchase is also an investment. Therefore we are also an investment company that offers capital gains of an asset class. Even when there was the financial crisis and people did not have money we offered buy backs at good rates. We also have a branch in Australia doing houses in Melbourne. If we are to expand further overseas, then it has to be towards emerging markets-Africa, Myanmar …
Q: Australia is a major market?
We saw some opportunities and we entered-but not in a big way. Our unit prices are at one million dollar range. Since Australia keeps getting migrants, it is an expanding market.
Q: Will you list Prime Lands?
No – but we will list Prime Residencies and HNB Finance.
Q: The Sri Lanka property market is heating up-so much some say this is a property bubble that could burst anytime….?
I agree to some extent-partly due to brokers who are escalating set prices. When there is a land for sale many brokers canvass the owner and owners start to feel their land is more valuable and they increase the sale price-sometimes unrealistically. But this price increase is not sustainable in the long run. We are expecting a correction in the property market, especially in Colombo. There are foreign building construction firms increasingly coming to the Sri Lankan construction market.
Q: How do you see their arrival?
As a developer, we at Prime Lands see their arrival positively. There is new competition among construction companies in Sri Lanka–which is good for us. The foreign companies are also building at lower costs, faster and deliver on time since they do not have labour issues etc. Since we are not a construction firm, their presence is something that we can make use of for us. We might go for them for smaller projects.
Q: What makes Prime Lands a different real estate company from others?
With more than 22 years of experience, our projections, forecasts, and our value proposition “Realistic Prices”. This is our competitive advantage. Also we have financial resources. We do not rely on pre-sales and bank guarantees. Further, we are a known brand. Also we are totally geared for this business and other companies may not be so. We are genuinely committed to create a better place on earth and I can proudly say that our customers have placed their total trust on us because of the valuable customer service that we provide them. We are reliable and financially stable.
Q: About the PropertyGuru award?
We received the PropertyGuru Asia Property Awards for best Property Developer in Sri Lanka.This was also an historic celebration of Sri Lanka’s first ever PropertyGuru Asia Property awards night on 12 July 2018. This “Best Developer” award was the highest award presented at the ceremony out of 23 awards offered to 13 outstanding companies in the industry. We did not compete for an Asian Regional award since it is of a higher scale. The judges looked into many criteria and selected us. We are humbly proud of this achievement. We have been receiving many awards and once again we were awarded-this time in Thailand. This award certifies that we are the number one property developer in Sri Lanka. Readers can visit www.primelands.lk to find out more about us!
Q: How do you measure your own success?
Success is relative. Concepts of success vary from country to country, sector to sector, even person to person. Basically a successful person is a happy and contended person. People can be happy even without money. It is easy to measure success materialistically such as your bottom-line, but otherwise it’s a relative thing. Rather than worrying about everything we have to be free in mind, be simple and continue. A balanced approach..
Q: What are the traits an upcoming business leader should have?
Financial discipline and patience to succeed. For example, in IT, very fast results but real estate, it will be slow. Still, you will have to first know who you are and should know about yourself- above all.
Q: If you could start all over again, what industry or business would you pick?
Power and energy-especially alternative energy.
Q: What is the advice you give to a new entrepreneur?
Financial discipline, have patience to succeed and do the right thing-success will follow. bmd