Chris Dale, the co-founder and CEO of Investa, tells us why he launched an interior design brand especially for the investment market.
We launched Investa in 2019, after recognising the demand from property developers, investors and estate agents who had come to us at Vesta, our first interior design brand.
This group of clients were looking for interior solutions specifically geared to their individual business requirements. They needed interior collections, show homes and dress-to-sell units to separate themselves from the competition in their areas.
In 98% of cases, the end goal when buying an investment property is to maximise the return on investment in the most risk-averse way. With Brexit uncertainty and the volatile currency markets, every investor is spending more time on ensuring the decisions they make reduce risk as far as possible.
The way a property’s interior is designed and furnished plays a fundamental part in supporting and protecting that investment and we have seen a growing demand for furnishing properties from investors and developers. Offering furniture package incentives is a cost effective way for FTBs and investors to buy a property and have fewer costs upon completion, which is very attractive. We have seen a 60% increase in furniture packs being included in the past 18 months.
Landlords are looking to ensure their investment rents out as quickly and as smoothly as possible, with the lowest possible void periods. Developers understand that in a buyer’s market they need to entice every possible potential buyer.
The percentage of furnished properties in the new-build property market varies widely but in most areas, the percentage of furnished dwellings for tenants is above 80%, with some locations such as Canary Wharf and Nine Elms running at more than 95%.
Given that statistic, the obvious question is why wouldn’t you furnish?
If you have spent between £600,000 and £2 million on an apartment, we believe it is wise to further invest between £5,000-£15,000 to ensure you achieve the highest and safest return.
Survival of the fittest
Put simply, the best developers will sell the most units and the best units in those developments will sell first. The units that rent the quickest will be the ones that appeal to their target demographic.
If a tenant searches on a platform such as Rightmove or Zoopla for a one-bedroom property in Canary Wharf, they will probably receive 100+ hits, even after filtering by price and location. It is possible that within a single development which has recently completed, this number of units could be available for rental at the same time.
Tenants choose which apartment they want to view by judging its immediate lifestyle appeal. Where personal taste is a factor, a tenant may opt for another landlord’s property, but a property that boasts professional interior design and styling will be one of the small percentage of apartments which rent early.
In a particularly competitive part of Nine Elms, we have seen a seven to nine week difference between two bedroom properties renting at the same price. The deciding factor was how well-dressed the apartments were and how well they catered to the furnished market or the part-furnished equivalent.
Without well-planned appealing interiors, a developer doesn’t have a unique selling point on property portals.
In terms of tenants, a lot of our clients have a High Net Worth individual (HNWI) in mind, ideally a reliable tenant who is low maintenance, eats out, socialises regularly and is likely to travel substantially for work and at weekends. This tenant makes light use of the property and its internal resources, which consequently ensures the property stays looking as fresh as possible for as long as possible.
What many investors might not appreciate is that this calibre of tenant demands that their rental property is finished to the highest specification, reflecting their lifestyle.
In order to secure these tenants in the first place, it is essential to present your property furnished to a level which meets their exacting expectations and to secure this on first impression. Likewise, for a developer, the end goal is to create a home that is both aspirational and achievable to potential buyers.
Remember what tenants are paying for
People choosing to rent a new-build property in preference to an older apartment or house are paying primarily for one thing – convenience.
Many professionals like the provision of 24-hour concierge – to greet visitors, supervise tradesmen, and take deliveries as well as offering other personal services. Whatever the reason, they are prepared to pay a premium for it.
New-build properties, both to purchase and to rent, are generally 15%-30% more expensive than an older, standard equivalent property in the same area. Tenants are paying extra for the perks afforded by a ‘new-build lifestyle’.
Landlords who fail to embrace the fact that this applies to furnishings and interior design will see coveted potential tenants move elsewhere. Why would they pay for convenience and then be expected to take the time to source, buy, transport, take delivery and assemble furniture of their own?
Avoid the void
Investors need to be willing to commit to all the elements needed to make a property development a success. Whilst interiors and furnishings are crucial, the marketing and estate agency choice is as well.
In a tough market, buyers will visit many potential new homes to gauge both the look and price of each development. The best developers create fully designed marketing suites so potential buyers have a clear vision of what is available. Buyers want to feel special and top of the list when it comes to buying a home.
Void periods are nothing but a loss of profit.
*Chris Dale is the co-founder and CEO of Investa