“Good management. Keeping the right proportions of creative and diligent people. Giving young managers their chance, with older ones to keep their eyes on them.”
— Sandor Demjan about his management style, in The Financial Times
Hungarians, the joke went, were the luckiest among the Soviet satellites as they were allowed to have meat in their stew, while others were only fed stories about the shortage of the food staple. Still, while growing up, youngster Sandor Demjan would have nothing of these “perks.” Enduring a childhood spent partly in an orphanage, these painful memories still haunt Demjan, now the chairman of the TriGranit Development Corp., the largest real estate company in central Europe.
Actually, Hungarians were relatively lucky. They did not feel the cold grip of the Soviet Union on their shoulders as much as their neighbors in Poland and the Czechoslovakia. Instead, Hungarians were allowed to travel and could see for themselves how people beyond the Soviet block conducted their lives and businesses in foreign lands. Travelling outside their homeland, Hungarians often felt that they were “the happiest barrack in the socialist camp”, able to enjoy the highest standard of living in Eastern Europe. Goulash communism, as it came to be called, was still an unfortunate lot in life, but Hungarians at least were allowed a whiff of free market economics.
This would eventually foster the spirit of entrepreneurialism in ambitious individuals like Demjan.
The co-operative movement that had its roots in rural Hungary proved to be the first playground for the young Demjan, who took up a job after graduating from the College of Commerce and Catering, thanks to a scholarship. If circumstances did not favor Demjan as a child, everything seemed to fall in place for him in his business career. Appointed the president of the troubled Gorsium Co-operative at the age of 24, Demjan turned around the loss-making entity into a roaring success. This prompted the head of the co-operative movement in Hungary to entrust Demjan with the responsibility of establishing an urban, well-stocked department store in Budapest, then a rarity in the rationed socialist system.
The department store, christened Skala – the Hungarian word for variety — offered just that: people were allowed to pick and choose from the shop shelves directly instead of having to queue up in front of a government-run ration shop. In the end, consumers benefited from lower prices, the cornerstone of supermarket-based modern retailing, but a novelty in 1960s Hungary. Skala’s triumph, growing into a chain of 67 stores spread across the country, was also a personal achievement for Demjan, earning him the TIME Man of the Year prize in 1980 for being the most successful businessman among the Iron Curtain nations.
Demjan dabbled in the banking space during the late 1980s when he was asked to establish Hungary’s first commercial bank, Hungarian Credit Bank. Under his leadership, the bank helped successfully channel into the country investments of almost $1 billion by Western companies. Later in his career, Demjan founded Granit Bank Zrt, and with this, helped Hungary take one more step down the path toward becoming a free market economy, following the collapse of the Soviet Union. Demjan earned his stripes the hard way in a transitional economy, having established both modern supermarket and banks, but he also made investments in the print media along with Rupert Murdoch. After the fall of communism, Demjan joined hands with an expat Hungarian and some U.S. and Canadian entrepreneurs to launch Central European Development Corp., a financial institution formed to make investments in Eastern European countries. Now, Demjan received a taste of business beyond his home market.
While the business climate in Hungary may have helped entrepreneurs like Demjan, only a keen eye could spot future opportunities. Thinking ahead, Demjan knew that eastern and central Europe would need to build houses, offices, and hotels to keep pace with the fast-paced economic growth in the region. The result was TriGranit, a property development firm established in 1997 with help from the European Bank for Reconstruction and Development, Trizec Hahn Group, and Canadian-Hungarian businessman Peter Munk.
The company’s rapid growth over the last decade, beginning with its development of the Bank Center in Hungary to Bonarka City Center in Krakow to projects in the Seychelles Islands, stand testimony to Demjan’s business philosophy of being “in the right place at the right time.” Himself an excellent football player, Demjan often likes to draw an analogy from the game to explain his management style, seeing himself more in the role of a coach to the soccer team. Demjan’s associations with foreign investors opened up his mind to new ideas, and TriGranit draws upon the expertise of a host of professionals from various countries around the world, which gives a transnational feel to the Hungarian entrepreneur’s real estate business.
Still bent on expanding his real estate portfolio further, Demjan entered the Russian market in 2007 through a joint venture with Gazprombank-Invest, a unit of the Russian natural gas company. Currently, he has a project in the initial planning phase to build a Las Vegas-style place in southern Slovakia near the Austrian border, which potentially could create 50-70 thousand new jobs, Demjan explained in an interview to the Krakow Post.
Demjan, who has turned 70, is not one to forget the road he has travelled, and is keen to give back. Among his contributions to society are the establishment of the Sandor Demjan Foundation and a graduate management school in Budapest in cooperation with well-known investor George Soros, a Hungarian himself. Demjan has also gone on record saying he will give away a substantial part of his wealth to charity.
True to his business philosophy, Sandor Demjan was born in the right place and at the right time.
And now, Hungary’s richest man is making sure that the first rule of real estate, “location, location”, translates well in Eastern Europe and perhaps beyond.
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© Thomas White International, Ltd. 2019