Knight Frank is on a mission.
After years of seeing rival FPDSavills dominate the niche field of residential research – the analysis of market data and the offer of consultancy to public- and private-sector firms involved in residential development – the Hanover Square firm is fighting back.
There have been bids to topple FPDSavills in the past. London Residential Research (a consultancy linked to EG) is respected for its analysis of the capital’s markets; Colliers CRE has produced specialist research concerning the buy-to-let and residential development sectors for investors. But now Knight Frank has an ambitious team embarking on a wide range of national and international research with, perhaps for the first time, high-level backing from within the organisation.
“There’s a recognition that our research hadn’t been independent enough in the past. Now partners recognise the kudos and respect that’s gained from producing authoritative reports on the market,” explains Liam Bailey, the firm’s new head of residential research.
“If the lettings market is sagging or the sales market isn’t performing well, there’s no point denying it – you get found out. In future, we’ll be telling it as it is,” he insists.
Within Knight Frank, Bailey sees his team’s work split into a number of areas exploiting the firm’s strengths.
“Not many people can touch us at the top end of the market in London, country homes and the best international residential locations. Our body of knowledge is unique,” he insists. So the output from his team will include analytical studies of these markets along with new barometers such as an index tracing the location, distribution and price changes of the £1m-plus residential market.
Focus on urban areas
Additionally there will be more research into what Bailey calls “city living and new markets in urban centres around the UK”, a sector in which Knight Frank sales teams have been highly successful in recent years.
They have opened a number of dedicated residential development offices (or “res-dev”) – notably in Liverpool – while also locating more specialist res-dev experts in Knight Frank offices hitherto known only for secondhand country properties, in such areas as Exeter, Guildford and Winchester.
“Looking at activities such as residential development emerging markets on the outskirts of existing regional centres may well help us identify the evolving themes in the residential field and next big thing in terms of locations, tenures or property types. This is a key area of research,” explains Bailey.
A new recruit to Bailey’s team, Nick Barnes, formerly of DTZ, will concentrate on international residential markets, a new area for Knight Frank research. KF’s international offices from Shanghai to Prague already produce reports on local housing markets but Barnes’ London-based research into this sector will be more strategic.
“More individual and fund investors are looking outside of the UK. Plus there’s a lifestyle shift towards international second homes. We’ll also look at where other countries are investing. Where are Germans or Scandinavians going to be buying?” says Bailey.
But perhaps the most radical departure from the past is Bailey’s and Knight Frank’s overt identification of private client research as a major revenue-raising activity.
So far this year the fledgling research team has embarked on work for Taylor Woodrow, Blueroom Properties, Grosvenor Estates and local authorities in Bath and North East Somerset, Surrey and Rotherham.
“Residential research is no longer a support department within Knight Frank. I need to make money and justify my existence. Any work I do has to pay its way,” says Bailey. This new commercial attitude to work seems to have paid dividends so far with instructions for research work covering the country homes, affordable housing and development markets. As a result, he is now pitching for external clients (sometimes, for mixed-use pitches, alongside KF colleagues from the long-established seven-person commercial property research unit headed by Steve Mallen).
FPDSavills successfully raises its own profile and substantial sums of money by releasing information to journalists and potential clients based on research undertaken for a wide range of public and private property players. As a result, Savills and in particular Richard Donnell, its head of residential research, are regarded as industry experts on such diverse issues as social housing and pre-fabricated off-site construction as well as £1m-plus homes and the posh country market.
Knight Frank’s big thing
Liam Bailey makes no apology for saying he is targeting the same market. “My main objective in the year ahead is to expand this side of the work. It’s our big thing,” he says, promising to recruit more staff to pursue the venture, with the full support of his partners.
All this is a far cry from the “lightweight” image of Knight Frank’s residential research department in the past. That Bailey is the third person to hold the title of “Knight Frank head of residential research” in just 18 months reveals how difficult the firm has found it to recruit the right person, until now.
From September 1998 KF’s residential research consisted of analyst David Moulton, quickly joined by Paul Belson. In spring 2003 both defected to become portfolio advisors at Colliers CRE, not far from the Knight Frank HQ in Hanover Square. Then in late 2003 Fiona Sadek joined Knight Frank from London Residential Research but within a few months she, too, made a move – she now heads Colliers’ research.
Knight Frank remains tight-lipped about these recent departures but some property correspondents on national newspapers admit that until recently they discarded what little KF residential research they received because they felt its results invariably played to the firm’s top-end clients.
“Knight Frank would select research models that produced predictable results. They’d compare London with other cities but only when London top-end values had risen more than elsewhere, so as to suggest investors should buy into London. Then the research would disappear when, I suspect, it produced a contrary result,” says one editor, who chose not to be named.
Other journalists complain that KF documents labelled “research” used to be simply breakdowns of buyers or renters along with lengthy summaries quoting the heads of regional offices usually without any data to support their outlook of the market. Liam Bailey says those days are over because the company as a whole recognises the strategic significance of research.
One of the most significant internal supporters of the new research direction is Stephan Miles-Brown, who helps oversee the research effort on behalf of the KF board. As head of residential development at Knight Frank, he has been responsible for turning the firm into one of the most successful new-build consultants and sales agents in the UK, despite the firm’s previous perception as a rural specialist.
Can Knight Frank pull off the same success with residential research? The lead-in time to win business and produce data suggests it will take a year to tell. Watch this space.
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Three people who will direct KF’s attempt to dominate the residential research market ● Liam Bailey studied rural estate management at Cirencester; worked in London and the South East for nine years, mostly at King Sturge handling portfolio valuations and affordable housing; moved to Knight Frank in 2003, spearheading research and promotion of residential property as an asset class; May 2004 became head of residential research based 50:50 in London and Leeds. ● Nick Barnes joined Knight Frank recently from DTZ where he handled mainly international research. He is based in London and will cover the same research territory for Knight Frank with an investment-focused biannual International Review and an upcoming survey on the international second home market. Nick also concentrates on London research, including the monthly prime central London sales and lettings indices. ● Sarah Smith formerly at Allsop & Co, responsible for investment portfolios and development values; to spearhead country homes research including a quarterly prime country property index; she will also control the development of the Prime Property Index in the next 12 months; based in Leeds. ● The firm is expanding its London and Leeds teams, seeking a London market specialist and a regeneration/residential development analyst. |
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Knight Frank’s attempts to break into private residential consultancy marks a change from its previous operating method, according to the analyst recruited to set up its residential research team in September 1998 – but he predicts the move will be highly successful. “When I came, Knight Frank was producing two reports each year for the London residential sales team and two each year for the country sales team. By the time I left [in March 2003] there were 55 being produced for the individual offices, regions and activities of the firm’s sales side,” claims David Moulton, who led the research team for four-and-a-half years. “But inevitably, when those internal reports were the research team’s reason for being there, any separate attempt to get private clients was interpreted as detracting from the internal effort. “It tended to upset people. We tried to do it but we had one-and-a-half arms tied behind our back. There was an internal master to be served beyond fail,” according to Moulton, who recently resigned as head of Colliers CRE’s residential research team to establish his own residential fund management consultancy, Sterling Property Assets. He adds: “But Knight Frank will probably be very good if it delivers the resources to Liam Bailey. There’s a huge market out there and plenty of space for the likes of FPDSavills, Knight Frank and Colliers”. |
