Starting with a share in a snooker club, then building a business that has encompassed student digs and a Liverpool landmark, George Downing now oversees a £1bn development pipeline that is branching out of its north-west heartland and heading for the capital. Louisa Clarence-Smith reports. Portrait by Louise Haywood-Schiefer
In 1981, George Downing made his first foray into the world of property. Aged 16, with a family loan, he bought a share in a Liverpool snooker club. Now, 35 years on, he controls a £1bn development pipeline and has built 3.5m sq ft of student accommodation across 11 Russell Group universities, and diversified his company, Downing Corporate, across office and retail investment to build an empire valued at £950m.
“There was nothing clever about it,” shrugs the 52-year-old, of his stratospheric success story. “It was really simple.”
It is a pretty major rags to riches tale to downplay. But Downing sticks firmly to his guns, insisting that his success was not rocket science but rather a lucky break back in the 1980s. After being bought out of the snooker club for £10,000 in 1984, Downing started buying terrace houses and calculated he could maximise his income by dividing them into student bedsits.
He got his “first big gig” when he realised that not only was he one of the only large-scale student landlords in Liverpool, but also that students were prepared to pay higher rents for better-quality rooms in the city centre. “Still, in those days most landlords were very old-fashioned and all the houses I did were brand new, so we completely refurbished them and rebuilt them and that was how I started.
“In this one building there were 40 students, and I just couldn’t believe how poverty-stricken the state of the building was and how they were living. So I thought, ‘Flippin ’eck, if we do a good job of this, it will be like a walk in the park.’ And it was.”
Traditionally a North West business, Downing Corporate has now entered the London market, where it has acquired four sites for student housing schemes in North Acton, W3, and Vauxhall, SE1, with a combined development value of £292m.
Here, Downing reveals what is next for the developer and discusses the impact his plans could have on the UK capital.
Competitive market
Following his big break, Downing spent the next decade diversifying as the sector became increasingly competitive.
He moved into offices and mixed-use developments, making the landmark acquisition of the Port of Liverpool building, one of the city’s Three Graces, in 2001 which was sold this year to a Kuwaiti private investor for £27.6m – a 116.5% profit on the purchase price.
Buying quality sites at the right price and time has been
a major part of Downing’s strategy. And so, between 2005 and 2008, Downing Corporate did not buy any major sites.
“We met a key London agent at that time and it was quite funny,” says Downing. “He was an Aussie guy. We were just trying to make sense of our appraisals, if we were doing something wrong. And we said, ‘Look, how did you get to that value?’ And he said, ‘Look guys, before we start, can I tell you quite honestly, we don’t know either.’”
After the crash, Downing’s appraisals started stacking up again, and its portfolio grew rapidly between 2009 and 2014 with an extra £350m of completed assets.
Future funding
So what is next for the company?
Downing has a £200m investment fund backed by HSBC Alternative Investments and is now setting up a new £500m fund with a major bank which it will shortly be bringing to market.
In the past it has sold its student housing developers to its competitors. But its future funding strategy is to find joint venture partners to realise some of the stock’s value while continuing to manage the assets. It hopes to secure co-investment but continue
to build (through its own construction company) and manage its stock, maintaining strong relationships with the universities.
“Over the last few years, we have had a bit of a headstart and it has flattered us because we’ve bought sites which have turned out to be very, very cheap,” says Downing.
“And the market has gone in our favour. But that is not really what we are about. We are an investor. And we look at things 10 years down the line and sometimes even more.”
Downing is now looking to open a formal office in London, as it expands its portfolio at a time when most developers are considering getting out of the capital and investing in the regions.
So long as it can find quality sites in good locations.
“At the moment, we probably would not bid on a high-end resi scheme, but we have come very close to buying a couple,” he says. “I am glad we don’t own them now, truth be known. Because since the stamp duty has gone up and the Russians have left town and possibly the Chinese are leaving town, I think the high end of London is possibly starting to be more difficult.”
He says that Downing is not abandoning the regional market. At the same time as
it has been investing in London, it has been buying sites in Edinburgh, Glasgow, Exeter, Cambridge and Coventry.
But there is no doubt it is shifting its focus away from the North West, and Downing is sceptical about Whitehall delivering its promise of a northern powerhouse.
“Do you think many London politicians, whatever party, will ever love and care about the North West? I don’t think so.
“Once you get outside of London, you are forgotten about,” he says.
He says Downing will keep its headquarters in Liverpool and thinks Peel’s regeneration of the Albert Docks will be a “northern powerhouse in itself”.
Downing, who is now based in Switzerland, has come a long way for someone who says he never had an end game or asset value target.
“Any major university town, we will have an interest in,” he says. “We have not got a specific requirement but we could buy quite a lot more.”
With 700 employees across the UK and plans to expand its construction business and portfolio, Downing looks set to become a powerhouse in the student market.
From the regions
- Port of Liverpool building: bought in 2001 for £12.8m; sold in 2015 for £27.6m.
- Scottish & Newcastle breweries: bought in 2003 for just over £10m; developed and sold between 2001 and 2016 for £180m.
- BBC site in Leeds: bought for £10.5m; developed out £170m
of student accommodation and university teaching space over the last decade. - Leicester City Football Club stadium: bought in 2002 for £3.8m; developed out 673 student beds and retained the balance of the site for residential.
To the capital
Holbrook House
- Victoria Road, W3
- 424 beds
- 160,000 sq ft
- GDV £80m
The Atlas
- 30-60 South Lambeth Road, SW8
- 570 beds
- 220,000 sq ft
GDV £145m
Lambeth Road
- 172 Lambeth Road, SE1
- 131 beds
- 50,000 sq ft
- GDV £32m
The Lyra
- Portal Way, Acton, W3
- 209 beds
- 80,000 sq ft
- GDV £35m
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