“My philosophy in business has always been observe the masses and do the opposite,” says James Caan, sitting in the garden of 60 Grosvenor Street, one of his Mayfair properties.
Where most investors have become increasingly timid about real estate investment, Caan believes that there is still plenty of opportunity in the UK market. So confident is the serial entrepreneur that he launched a new property company, 90 North Real Estate Partners, last year, which focuses on Sharia-compliant real estate investment.
Caan, by his own admission, has never been busier. So what is it that’s keeping the Dragon’s Den star so occupied?
Caan was born Nazim Khan in Lahore, Pakistan, and moved to London at the age of two. His father, who ran a clothing business, was keen that his son should join his company, but Nazim had other ideas, leaving home at 17 to rent a flat in Kensington and setting up a recruitment agency – and changing his name to James Caan, allegedly a joke inspired by the name of the Hollywood actor.
He now owns a string of recruitment companies and private equity firm Hamilton Bradshaw, which has a real estate arm, HB Real Estate.
Caan may position himself as something of a maverick, but up until now his real estate empire suggests a man with distinctly establishment tastes; the entrepreneur has always had a penchant for prime central London property, and has embarked on a number of spending sprees in Mayfair in recent years.
His dream piece of UK real estate would be Knightsbridge Barracks, he tells me, (“I like a bit of greenery around me,” he says simply), and he is particularly content with the purchase of 60 Grosvenor Street, where both Hamilton Bradshaw and 90 North Real Estate Partners, are headquartered.
“Do you like this one? It’s quite a nice one isn’t it?” he says, gesturing around the leafy courtyard of the building, where, rather disconcertingly, the walls are covered with mirrors.
“We bought this because it’s got such a nice garden and I’m very used to sitting in my garden and working, and I just thought Mayfair was quite a nice place to be doing that”.
Sitting on the deep, plush sofa that Caan’s assistant has brought out into the garden for the photo shoot later is an apt metaphor for sinking money into the super-prime Mayfair real estate market; reassuring, comfortable but with a little flourish of ostentation. If any setting captures the essence of the Mayfair “safe haven” investment option, the garden of 60 Grosvenor is it. A true oasis in the middle of a turbulent property market.
So is this as exciting as the Dragon’s investment strategy gets?
Thankfully not. Caan’s property plans are characterised neither by collecting trophy properties in the manner of a conservative high-net-worth individual nor by swooping down on distressed assets, private-equity style. His approach involves a paradigm shift to see the UK real estate market through a different pair of eyes – those of the Middle Eastern real estate investor.
While flows of capital are constrained in Europe, the story in the Middle East is different, and Caan believes that the moment has come to take advantage of growing investor appetite from the region for UK property.
“The western market financing is incredibly challenging right now, and the banks are not very liquid, which means a lot less activity in the real estate market,” he says. “But if you look at the Middle East there is capital. So you’ve got a region that’s liquid, and you’ve got capital that recognises the UK as a desirable destination.”
Caan’s new venture, 90 North, was set up with the aim of catering to this profile of investor, although his colleagues at the advisory firm say that their services are very much for domestic and non-Islamic investors, too. The company seems to have gained momentum quickly, closing £75m worth of transactions within six months of its launch, with more deals in the pipeline.
“We’ve seen something like a billion pounds of real estate in terms of opportunities that have come through the door, so overall I would say it was a very smart decision at the right time. I think actually that timing has gone in our favour in this market, not against us,” he says.
One of the defining characteristics of the Middle Eastern investors that Caan is working with is their deep knowledge of the UK and its property market and their zeal for digging out value in off-beat locations and alternative asset classes.
One of 90 North’s first transactions was the 800-bed Parham Student Village in Canterbury, Kent, on behalf of a Gulf-based client. When I catch up with two of the firm’s partners after the interview, they fondly tell me stories of braving the snow to take a shivering but enthusiastic Middle Eastern investor around industrial sites in rural Lincolnshire.
Not for 90 North the obvious comforts of the prime central London market.
“I think student housing is a particular asset class which is very attractive to Middle Eastern investors. Simply because so many of the investors have their kids educated here in the UK, so they get the product. And I think when you’re marketing a product it’s very important that an investor has a real knowledge of what he’s buying. They recognise that in a lot of these strong university towns, demand is greater than supply,” Caan explains.
Islamic finance
Islamic finance, a system that forbids charging interest and making speculative investments, could have protected the world from some of the worst excesses of the banking system, Caan believes.
He is a vocal supporter of Islamic finance, not least because he thinks that it gives the property and banking communities a much-needed dose of “old-fashioned principles from the East”.
“In a nutshell,” he says, “Islamic finance provides a transparent mechanism where you can see the underlying investment and the principle of lending is much more robust.
“It also has a much better way of managing and assessing risk. The issue of governance and transparency are the fundamentals and, yes, I do think that the UK banking system could have done with more of these principles.”
While first appearances may be deceptive, in his 90 North venture, Caan really does seem to be following through on his strategy of finding value in a tough market by going in the opposite direction to the crowd.
As a real estate investor he is happy to venture outside his comfort zone, and seems to have found a solid group of investors who are willing to follow him.
Notwithstanding this, it is clear that even the most adventurous of investors enjoy a little bit of security, as evidenced by Caan’s obvious pleasure of having carved out his own little den in the heart of Mayfair.
