After taking over as senior partner at Allsop earlier this year, it was no doubt with a degree of relief that Scott Tyler was able to announce a flat set of results this week.
“In challenging times, the business has had a good year,” says Tyler. “The transactional departments have been remarkably resilient during a year that will always be remembered for its unexpected scenarios.”
In the year to March 2016, group turnover inched up to £49m from £48.7m in 2015. Profits ticked down to £19.6m from £21.2m last year.
Plenty of its top 20 rivals would take a performance like that in what has been a tumultuous period.
For Tyler, like so many in UK property, it has been a year of two halves; everything changed in the early hours of 24 June. For him it was all the more remarkable as the seismic shift delivered by the referendum vote happened less than three months into his new role leading the firm.
“As a business, we are quite fleet of foot,” he says. “Things have happened extremely quickly. You have to adapt accordingly. And we have.”
Tyler is a commercial agent in a business best known for auctions. Formerly managing partner of the commercial side of the business, in April he became senior partner, replacing Neil Mackilligin, who had held the position for a decade and remains a consultant to the business.
When his appointment was announced last year, Mackilligin described Tyler as playing “a pivotal role in expanding Allsop’s offer outside auctions”. Indeed, it was Tyler’s expansion of Allsop’s commercial business since he was poached from Savills in 2007 that helped drive record results in 2015. In terms of headline-grabbing deals, that continued in the last financial year with Allsop advising on the £280m sale of the Alphabeta building, EC2, to Indonesian investor Sinar Mas Land.
But for Tyler it is the breadth of advice Allsop can offer – from big ticket to small – that has driven that success. How many other property businesses can say that their largest sale was for £280m and their smallest £100?
“I think we proved, over the past five to seven years, that we can do that in light of the amount of the portfolio business we have done,” he says. “It is probably 10% or 11% of the portfolio market.”
But it is not the portfolio market that has driven the business in recent months. “For the last quarter and a bit, it has been all about the private investor,” he says. “Investment volumes are down by 37% to 38% overall. The smaller end of the market, which is invariably the private investor market, is trucking along very nicely.
“Now the next phase of our market, with the inflows coming back into the UK institutions and funds, may be that the institutions are going to start buying again. They might need to start buying again.
“But because of the size of the business and the fact that the historic part of the business is about private investors and auctions, we have had a very busy period. We have probably not had more sales in the market in the £3m-£20m bracket for a decade.”
Despite his commercial upbringing – he was at Savills for 17 years – Tyler is under no illusions about what drives the Allsop business. “Auctions, whether commercial or residential, will always be the heartbeat of our business. It pumps away regularly whether the market is good, bad or indifferent. I always look at businesses, and at the DNA of businesses. I think with Allsop, our DNA, what’s in all our blood, the tattoo on our arm, is that there is that auction pumping away. And I don’t see that changing, and I don’t want it to change, because for us, it is the heartbeat, the cash flow of the business.”
Tyler still takes on client work, acting for the likes of Blackrock, Land Securities and Workspace.
And as only the sixth senior partner in Allsop’s 110-year history, he stresses that much of the business’s strength lies in its continuity. “We had a vision as a partnership of what we wanted to achieve, to continue to selectively grow the Allsop business.”
That growth will come from a number of service lines, but each owes a debt of thanks to success in the ballroom. “We are in a fortunate position where we have this beating heart the whole time, which enables us to maybe take further risks by expanding investment teams by investing in build-to-rent, by investing in new homes online sales.”
To further that growth, the business will invest and hire selectively. “If we are sitting at 220 people now, over the next five to six years, if I am pushed on it, we may get to 275.
“But there would need to be a pretty good reason for that. We are not just going to grow for the sake of growing. I think a lot of people, our competitors, are very interested in increasing turnover for the sake of it. I am far more interested in making a profit, as will be most of my partners too, and the staff, as we share in that success.”
So as one of the few remaining partnerships – and a covetable one at that – might he and his colleagues look to capitalise on their success?
“We are absolutely not for sale,” he says emphatically. “The partners here enjoy being a partnership, and I don’t think you can put a price on that.”
Resi sales – from ballroom to laptop?
Now this week’s £117.8m commercial sale is under its belt, Allsop’s last residential sale of the year takes place next week (see Auctions, page 31). A 265-lot catalogue is bigger than the equivalent sale last year and, despite the challenges presented to the resi market by higher stamp duty, should ensure a confident finish to 2016 for the business. More than £1bn may have been raised by commercial auctioneers so far this year, but it is a sector still dwarfed by resi auctioneers, which have raised £3.1bn to date, according to figures from Essential Information Group.
And it is the residential auctions space where the impact of tech could be felt most sharply in 2017.
Online auctions have not taken off to the degree expected by some a few years ago, with the ballroom continuing to reign supreme. However, their adoption by auction houses is spreading and Allsop’s new homes online auctions service is at the vanguard of a quiet revolution.
The service enables developers to sell units off-plan, solely online and globally. Allsop will market sales for four weeks and on the auction day buyers will have a minimum of 24 hours to bid. An “immediate buy” option can also be incorporated.
“We piloted a scheme down in West Drayton last year,” says Tyler. “All 36 of them sold. Half of them sold on the day of that online sale, and the other half sold during the rest of the week. Simon Capp has joined us from Knight Frank to work alongside Gary Murphy (pictured below), to win more instructions on that as an alternative for the housebuilders, to sell in a different manner and a different way.
“We will be targeting and selling those units not only to UK investors, or owner-occupiers, but also to Middle East and Far Eastern investors. And I think with the currency as it is, we will see continued overseas interest in UK residential schemes.”
The next online sale is planned for early next year, and Tyler says: “I think a number of the housebuilders will look at it as a significant alternative and, rather than spending a huge amount on on-site marketing, with a marketing budget and a team on site, maybe use it for a first phase of a new scheme.”
Results
Group turnover
2016:£49.0m
2015: £48.7m
Profit before tax
2016: £19.6m
2015: £21.2m
Watch a tour of the Alphabeta Building
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