Who are Quintain and what is your role?
Quintain develops and invests in property and is currently best known for its 85-acre site at Wembley Park. We apply the extensive experience of a high calibre team to transform unappreciated property and places into highly attractive assets
Quintain was a listed developer but now is owned 100% by Lone Star funds. I was working at Lone Star when they took the company private in 2015 and moved over to become Chief Executive six months after the acquisition. Since then, we have transformed Quintain into a developer specialising in mixed-use projects with an emphasis on build-to-rent residential. 95% of our people and resources are now focused on Wembley Park.
We certainly have aspirations and a strategy to expand beyond Wembley Park. Dublin is our number one target after the London boroughs, but we are also looking at other UK cities.
What’s the history of Wembley Park?
Quintain bought the land in 2002 from the then owners of Wembley Stadium. Until 2015, development was ad hoc and piecemeal. Quintain was constrained by cash and, I think, constrained by confidence and commitment. As a public company, they were nervous about having all their eggs in one basket, whatever the quality of that basket.
We sold off non-core assets and reinvested human and cash resources into Wembley Park. At the same time, a wholesale change in strategy in respect of our residential assets was made from for-sale to for-rent. This has put Wembley Park on course to become the biggest single BtR development in the UK. The scale of the project is a remarkable opportunity – single ownership of 85 acres of freehold land in London is comparable to the big historical great estates of the city.
Full ownership is a hugely powerful driver of value in the long-term and gives us the opportunity to properly create a new neighbourhood. Placemaking is an over-used expression now but we have that opportunity with this project. Wembley was previously all car parks and tertiary commercial space. To build out an area almost from scratch in London is a unique opportunity and a huge privilege.
Wembley Park has seen over GBP 2bn invested, is home to 3,500 residents and welcomed over 14 million visitors last year. There are approximately 3,100 homes currently under construction and between now and 2022 we expect to invest a further GBP 1bn. We have GBP 1bn worth of construction contracts, which are running on time and to budget and a team of first-class contractors that are experienced and get the job done.
What I like about the build-to-rent model, in the context of mixed-use development, is that there is an economic driver for us to make this place interesting, attractive and entertaining for people, to live, work and play. We’re in this for the long run and if people don’t like the place, they won’t want to live here.
Does Brexit concern you?
Of course it does, it’s an insane, ludicrous project. But we are aware of the issues Brexit creates for us. We talk to our contractors all the time. We, and they, have been stockpiling some materials. Brexit might cause labour shortages – but we pride ourselves on the high percentage of locally recruited labour who work for our main contractor framework of Wates, John Sisk & Son, McAleer & Rushe and McLaren. Anything that restricts the supply of materials and movement within the supply chain would be bad for us. I can’t see any upside to Brexit at all.
We haven’t seen any slackening in demand for our flats. Perhaps one driver is that people are wary of buying at the moment so are choosing to rent instead and waiting to see what happens in the near future. We signed over 100 leases in July.
Why is everyone rushing into BtR?
A confluence of reasons. Number one, in London the whole affordability metric of 13/14 times income is a real barrier to people buying. Prices would have to drop 30 to 50 per cent to make them affordable and that is very unlikely.
Number two, there is, what you could call, the millennial factor, i.e. there is a societal demographic change – people are happy to rent and it is more acceptable than it once was. We use Uber, watch Netflix, you rent both home and furniture, all for flexibility. There is a lifestyle thing going on.
Thirdly, there is a real demand from institutional investors for long-term broadly inflation-linked income and this is supporting the creation of this product.
What does the future hold for the type of asset?
I think it will gradually establish itself in the UK and there will be winners and losers in the market. My view is that it has to be a scalable business; it does not work at small scale. We have a lot to learn from the hotel sector on the challenge of managing low-margin businesses at scale.
Once you have created scale, meaning reaching an initial target of, say, 10,000 units under management then operationally, you will have the income to invest in all the IT, the infrastructure and training you need. There are opportunities for dominant players to emerge. No one has yet become the Hilton of the BtR industry.