Forgive the return to a topic covered on 20 October. But public clamour to buy property to safeguard old age grows stronger with each fresh set of weekend newspaper articles. Around 1,000 bidders besieged a Healey & Baker auction in London last week (p98). The sale-and-leaseback of 58 Lloyds TSB banks saw most of the lots banged out for sub-6% yields. The first lot, a bank in Cricklade high street, sold not for the £150,000 guide price but for £268,000 – a yield of 4.45%.
Silly? A bit. But not to a 60-year-old retiree with £250,000 in released pension to spend. The sums are simple. Buy a bank and enjoy 4.45% fixed “interest” – and have the pleasure of bequeathing the property. Or buy an annuity from the same bank – which will pay out far less – and, if you live long enough, leave your heirs empty handed.
Excitement is not confined to the auction room. There is also early evidence that pension providers are enjoying a surge of interest in property-backed funds. And there is even stronger evidence that the major life and pension providers are saying: “Hey, what’s going on in our retail business?” – and tiptoeing up the property weighting in their funds.
This good news is playing a modest part in stabilising sentiment in a market that seems to be recovering its nerve, if not its prosperity. The British Property Federation and its new director general (p40) might like to bring a touch more cheer by acting on the suggestion of six weeks ago: explore with the investment community ways of opening up more channels for the public to enjoy income based on rents rather than annuity rates.
Do more than leave dealmakers to dine with the clients
The market may be recovering its nerve – see above. But the shock of the past three months has got many an agent honestly worried over client relations. Take a look (p112) at how they compare with other professions: badly. Well, that’s not quite fair. At the tactical level – one-to-one – they are fine. Strategically? Oh dear, the 15 agents in the survey of 81 professional firms come right at the bottom of the class.
How does your firm score in this test: How meaningful is your way of measuring work in the pipeline? Do you have a review process or information systems that measure the efforts and rewards of new business development? Can you link marketing to the new business pitches you are getting? Do you have senior client relationship directors who keep in touch with clients – even if they have stopped doing business? Or is it still “Well, Fred does the deals with Charlie at Megafund plc. They have lunch once a quarter – that’s fine.” Er… it might not be – especially when Fred leaves and takes Megafund with him.
