Tech Enabled Build to Rent with Rajesh Shah

Insights from this Episode

• One of the things we learned early days is a very strong focus on customers, be it the landlord’s at that point when we slowly sold the apartments or ultimately the customers who lived with us – Rajesh
• They’re really bringing neighbourhoods to life and creating communities, which I think that’s what a lot of us are all seeking, this new concept of living – Louisa
• I spent probably 12 months heavily researching and taking the foundation we had within Quintain, but looking very, very hard at what the customers really want as renters at large in London and beyond what our pain points were – Rajesh
• We want to make sure we stand uniquely for, is the whole strength and depth in customer service – Rajesh
• Rather than sector specific, what we’ve been testing very heavily in our recruitment is mindset. People really willing to go the extra mile are people really willing to put themselves into the customer shoes, willing to take every problem to its resolution – Rajesh
• But ultimately, the success with the data is really are we improving enhancing the customer enjoyment and benefits – Rajesh

Episode Transcript

Louisa

Hi, everyone, and welcome back to the Propcast. In today’s show we are focusing on build to rent space and specifically looking at tech enabled build to rent, and I thought who better to join me other than Rajesh, who is Executive Commercial Director of Quintain’s build to rent business. So welcome to Rajesh.

Rajesh

Thank you very much Louisa, looking forward to this.

Louisa

It’s pleasure to have you on the show. For those who are listening, Rajesh is responsible for all aspects of the Tipi business development, including new sites, products and services together with all the finance and commercial activities in order to position Tipi to become the UK’s largest build to rent platform. Now, he also leads on the design and pricing for future plots for Wembley and new business. Rajesh joined Quintain in 2008 as the Transactions Director, responsible for refinancing, acquisitions, disposals and joint ventures. Rajesh has worked in real estate for over 20 years across a range of sectors including commercial, residential, and retail, and prior to Quintain Rajesh spent 10 years at the well-known Land Securities business where he was Investment Strategy Director at its Trillium subsidiary. He led the pricing of Trillium’s new business transactions as well as portfolio management of existing assets, and prior to that he also worked at PwC as a management consultant.

Now, let’s also talk a little bit about Quintain to give a brief summary because it’s a pretty impressive site. Quintain is the 85-acre area by Wembley Park, and it’s one of large’s most exciting new neighbourhoods. And once complete, we’ll have I think, over nearly 8,500 homes Rajesh?

Rajesh

Yes, very difficult to count precisely but that’s a good number yes!

Louisa

And Quintain is also the third largest residential developer in Ireland with over 9,000 homes in the pipeline across 460 acres of prime development land. Now, the company has been going for 27 years and the team has transformed assets into places where people want to live. Companies want to grow and they’re really bringing neighbourhoods to life and creating communities, which I think that’s what a lot of us are all seeking, this new concept of living. And going from that, I’d love to hear a little bit more about how did Quintain, which I said to say and a lot of people see as a pioneer od build to rent in the UK, how did it come about initially?

Rajesh

Thank you, Louisa for the introduction. So I’ve been at Quintain for 12 years now and the story, the history starts all the way back in 2008. So, in the old world, we were developing some residential, we had 250 private units which completed in 2008 to 2010. And in those days, most of them was sold to private investors who put down a 10% deposit off plan. When the last big financial crisis came in 2008 -2010, unsurprisingly with the property values having fallen massively, most these investors handed back the keys to us, forgoing their 10% deposit. And then we were left with a big dilemma at Quintain, do we either flog those 250 apartments very cheaply into the market or recoup some money back? Alternatively the route we took was, why don’t we start operating these ourselves. And that’s really the start of our journey.

So we then hired a couple of people, set up an in-house business, and then on our own books started leasing these, operating these, managing these. And to a bit of surprise to us initially, but in hindsight not, these let up very quickly. And you follow the history of those of the next 2,3,4 years, we’re getting consistent rental growth, we’re getting occupancy at 98.5% and it’s a very strong, robust business. One of the things we learned early days is a very strong focus on customers, be that landlord’s at that point when we slowly sold the apartments or ultimately the customers who lived with us, so over the next four or five years we sold these down, but we still retained letting and management responsibility on behalf of people who bought these, mainly again investors as well.

But because of that, when it came to about 2014-15, we said let’s start with the markets, improving the rest of residential development and per the old Quintain history we would have bought and sold like many housing developers, but we said actually with that knowledge and experience sitting in house, why don’t we look at retaining some of these buildings as build to rent on own books. And with the board being convinced that’s the right strategy to do, I spent probably 12 months heavily researching and taking the foundation we had within Quintain, but looking very, very hard at what the customers really want as renters at large in London and beyond what our pain points were. And throughout 2014-15 a ton of research took place looked at processes, our brand and the customer proposition, systems and software, and therein came the start of Tipi. So the first building opened in 2016 and one of my proudest moments is the whole lead up and opening off Tipi in 2016 and thereafter it’s been growing massively ever since.

Louisa

I remember when I first saw the branding on the tube, I was actually on a webinar and we were talking about the difference instead of branding of the build to rent space, and more traditional estate and developers, and it’s just a whole new level. It’s really impressive. So if we’re looking at choosing to invest into the build to rent, you obviously did a lot of market research. Was it following on from the growth in the US? Delving a little bit more into why specifically build to rent for you?

Rajesh

So a number of reasons. Firstly, a part of Quintain most people don’t realise is, we’ve got a long history in customer lead real estate businesses. So to give you the best example we have is student business called IQ, which we set up as Quintain way back in the day, we manage the whole thing and we grew it to about 3,500 units before we sold it on, but we’ve done the same in other sectors such as science parks, care homes as well. So there’s a long history about operations.

The example I gave earlier about our own residential management experience from 2008 onwards equally gave us the confidence to do it. But the ultimate driver really is if you think take a step back, what you learn from the US is residential in the long term, they’ve got 30-35 years of history, there is long term stable growing income streams. And from our perspective, our investors perspective that gave us a very strong economic driver to invest within this, but at the same time what we want to make sure we stand uniquely for, is the whole strength and depth in customer service. Those elements come together and help us get there, and what we also had at the same time is an investor Lone Star, who saw this as an opportunity to grow very rapidly a scale build to rent business in a single site in the UK in London, and if it wasn’t for Lonestar we would have been as a listed company on a balance sheet going very, very slowly along the journey, whereas if you stand a look at Wembley Park today from when Lonestar bought us in 2015 to what exists today, it’s a tremendous  transformation of a site which many people still remember in the old stadium related 8.17

Louisa

It’s entirely different. It’s so impressive, for those who are listening and are based in UK it’s definitely worth taking a trip to have a look around, or maybe even rent it who knows! We’ve seen more players coming into the build to rent space, whether it’s US players coming into the UK, traditional developers looking at a build to rent around investment or even a European investment development coming to UK, what are the couple main reasons why build to rent has really grown in the UK and will probably continue to grow?

Rajesh

So I mentioned US a couple of times, which has been established for a long time, but what many people don’t realise is, if you look at Europe, if you look at Germany, France, Netherlands, large scale rental has been existing for a long time there as well. The UK has been in a unique, isolated case where it hasn’t and a link to that is our long-standing desire to have home ownership as individuals. And that’s why it’s never caught cottoned on, but when the big downturn came in 2008-10, where institutions previously as such were shy of that, the whole point about what I said earlier, the long term stable growing income streams, suddenly they want a piece of the action because many other parts of the market weren’t delivering those, so there was that supply piece where the investment money was now suddenly wanting to find a home, and then developers were responding to it.

But the flip side is really on the demand side from our customers, and part of the research I did in the UK is consistently littered with stories of very, very poor landlord  customer service, badly managed properties, maintenance not taken care of. So you’re both parts supply and demand actually occurred, and it had all the right ingredients and it was the right time in economic cycles for those bits to come together. So hence why, from 2014 to 16 onwards, a lot of new start-ups in the build trend sector started coming together.

Louisa

Do you think when it comes down to tenants, or just the everyday man or woman, I feel like everything’s so accessible, whether it’s through tech or an app we use, we all have everything at the touch of the tip. We want good customer service, we want to know when we can book our yoga class, where we can have whatever, it could be restaurant, is this what the build to rent site is trying to set up, to create and make everything a lot easier and more efficient? To get a nice environment to be in?

Rajesh

Absolutely. And part of the research as I said before, is a very poor customer experience in the in the UK. So part of this is exactly what you said, the sectors is there to provide a very stable, strong base level of customer service, you make sure the buildings are operated really well, maintenance queries are taken care of, the places is clean, amenities are provided, there’s an inc events program. So there’s a strong core base, and then various different operators decide on what our top ups they want on top of that, to make their proposition as unique as possible. So where we want to go is just go down that journey, but from the success point of view, if you are a customer living in any of the build to rent in operators buildings, successful to be really that  once you ever had to move for whatever personal and other business reasons, you’d be hard pushed to go back to the traditional PRS sector for the reasons I explained earlier. And that’s really the base level property you want to get to, people feel very comfortable and that’s the minimum they desire and want to live in going forwards.

Louisa

I guess as also an investor, developer site owner, you want to really maintain that level of customer service and continue to build on that because if the market is getting slightly more saturated or more competitive, you want to keep these tenants as well and if they’re drawn to certain things, I’ve gone on websites and your site, and as you walk in it’s even the sofas or the walls and how everything’s designed, it’s just on another level. If we’re comparing, say, the UK to build to rent to US multi-family, is it at a similar level of design? Do we have more to learn from the US or can you not compare them?

Rajesh

I think you can compare them. I’ve done a number of trips myself to the US, and if you look at my similarities first. The very strong ethos in the US is the customer at the heart in everything they do, just the way they look after them and how the building’s been designed is really thinking about how the customer lives. So that’s one of the things, most of the peers in the build to rent sector in the UK are doing a similar journey. I remember my first trip to the US in 2014-15 can’t remember, every building I went to is like an amenity heaven, there’s so much choice to bring forwards and we should call it the amenities arms race and again you’re finding in the UK and everyone in their own unique way and we’re trying to do something like that, and every building at Wembley has a different look and feel and amenity provision, just to bring that choice to the customer. And really, about how they train their staff and the staff and deliver the customer, so it’s all of those things I think they’re quite similar to the way UK build to rent is growing.

Where the differences come, I think the most obvious one is scale where the biggest operators in the UK, ourselves included will have a couple of thousand units at the moment and growing, in the US that would be considered quite small. Tens of thousands is what most people talk about, if you go to people like Greystar I think they have half a million plus apartments under the management, so that’s one of the big differences out there. When it comes to the specifics of design in a way about how things are finished off to the flooring and walls and so on, I think we’re seeing a difference is actually in the UK and whether it’s cultural or mindset, there’s a lot more care and attention brought to that aspect of a building and one of the questions I hear a lot is are we in a possibly overthinking this in the UK, whereas our customers are they really noticing the very precise level of detail or they really after very homey, feel good furniture, good service? Debating what are the priorities from a customer. Then the other maybe cultural differences in the US is you often hear about big laundry previous in the basement, I heard more recently there’s a move towards in apartment laundry, COVID has been a driver, air conditioning is the other factor as well. But there’s a lot of nuances. But on the whole, the biggest difference I think is scale. In fact, the US has been running for a long time as well, so we have a long way to catch up and get to that level with the US.

Louisa

So for the US I’ve been looking at the people who work on those sites, will even be visiting them personally from doing a little bit of research on LMRE living side, when it comes down to the people working there, it seems like a lot more of them have all worked in hospitality or restaurants. Now over here just what I’ve seen from a hiring perspective if we’re looking at the operational side, a lot of people at first came from residential but now I’m seeing there’s a movement or people from others industries – hospitality, retail, and all the sudden it’s a lot more sexier, where I think straight hospitality is a slightly more glamorous area to be in rather than residential. Have you seen much of a change in the past few years of or even for you personally in the people you’ve hired for Wembley?

Rajesh

Definitely. So because early days, most of the people coming to the sector were from a more traditional real estate, estate management businesses. But over the last three or four years, we’ve deliberately gone for hospitality in its broadest sense. But rather than sector specific, what we’ve been testing very heavily in our recruitment is mindset. People really willing to go the extra mile are people really willing to put themselves into the customer shoes, willing to take every problem to its resolution. If you get the mindset and that is not just in a front facing client facing roles, all the way back to any back office function, whether it’s marketing or finance, that mentality means as team as a whole, the Tipi team, you’re strong and all drawing for the same end goal. That has been the biggest difference and i think organisers such as UKAA are playing a role, slowly and surely the whole career opportunity within the build to rent sector is coming out to the fore, and people are willing to jump in sectors to come and work in this sector, whatever the role or the job opportunity may be.

Louisa

I think also from what I gather, not only if you’re a tenant and live on the Wembley Park as a community there, after speaking to the community leasing managers, people are also attracted to work in these sites because it’s like a family. If everyone’s striving to make the place  a nice environment with good customer service, it’s surely quite a nice job to have, it should be quite a nice place to work while rather than your traditional restaurant job, or say working in an office. So I can completely see a lot of draw factors, whether its culture, environment day to day which also if you’re working in build to rent is no longer your traditional property management or leasing job. It’s literally a whole 360 job where you’re wearing many hats, so I think a lot of people be quite attracted because you’re permanently upskilling yourself.

Rajesh

Two things come in play, so from our perspective, being owner, developer and operator, there’s amazing synergies across the business. So, what we found and it’s taken a while to get there, is if you are in the development business, looking at next resi-opportunity or Wembley or elsewhere, every piece of thinking going on culturally now is really about what it means to you living there. Are we designing it fit for purpose? From where you position concierge and lifts and apartment layouts, all the way to instores and the like. So, that cultural shift is much different to old days 5-6 years ago at Quintain or any other housing developer, where you were building more to get a quickest capital gain from a sale, whereas now as we are developing and operating very, very important to us  materials we choose that will last in the long term. So that’s been a big change to us going forwards.

Louisa

And if you’re also working out how to connect with your tenants or just the people on the site and making it a better customer experience, tech is one way of making our lives easier. It’s not perfect yet, but that’s a good start and I’m seeing more tech being put into all sorts of sites. Looking specifically at Wembley, how has PropTech affected it over the past few years?

Rajesh

So, early days, so when we set up Tipi the most important thing to us was to get our basic operations stabilised as quickly as possible. And right from the early days, when I set up Tipi I was getting new start-ups in the UK, PropTech, FinTech,  tech broadly, coming talk to us all the time and I’m personally a sucker for new tech ideas all the time. So I’m always willing to give for these people an ear, because within them there’s always a gem you want to work with. Our priorities in those days were really to stabilising. As time has gone by we slowly introduced more and more, and the biggest acceleration from us was last year where we set up an in house tech Smart Cities Initiative group where we meet as a team across all of Quintain – operation development, finance, everyone. And not only do we look at how tech can help us holistically, not just in the residential piece, also, we are inviting people from the PropTech/FinTech industry come and present new ideas to us.

Loads of people came and pitched and I fell in love with virtually all of them. The challenge we had was never having had an in-house focus tech team to take these forward and deliver against them. And that’s where we turned a corner back end of the last year. We’ve hired an interim CTO, we got a set of core permanent people within that and loads of contractors, and now I think within last nine to 12 months, we’ve seen a massive acceleration on the use of tech across the piece from every aspect of the customer journey – I can go through all these in more detail in a minute – to the way we operate buildings and our customers, to the way the buildings themselves are managed. And actually even going further back in time to the way we are constructing in the first place. And that finally means actually, we are rather than just listening eagerly like I was to people coming pitch, actually signing the other way around, what is that we need to keep growing as a business? What is that we need to keep doing to make our customers lives better? And then go and find the right tech which fits that mould.

Louisa

It must be quite hard to find the right tech, a lot of products are still being developed, there’s a few good case studies out there. Have you got any success stories of any products you’re using currently?

Rajesh

So I’ll give you an example – referencing, so there are many, many companies out there who provide digital online referencing services with soft banking needs, so you can get your credit rating checked online etc. To us what was really important was speed, it was important that it was accurately done and consistently and fairly done. So we went out on a tender process to find many people. So prior to that as a segue, we were using the more traditional manual process referencing, which was taking anything up to two weeks. In this sector growing as quickly that just isn’t good enough. We want something that has been done in minutes. So long story short, we picked a company called Homeppl, who needed a bit of configuration, but they work very well with us and actually is a great success story for us. It’s made not only a customer’s life very easy, but from our own leasing team actually, rather than having to chase for more information on a regular basis, rather than having to chase the old referencing company to make sure they are on track to deliver the output, actually its done in a matter of minutes and the control then sits with the customer rather than with us.

Louisa

Also if you have sites with thousands of people on it, the last thing you want to do is chase those references. My first job was a lettings negotiator of Foxtons, and I absolutely hated that part of the job. And no one makes any money when we can’t get the referencing back! We’ve spoken quite a bit about the positives of technology. Are there any negatives you see in it?

Rajesh

So one of the things if I look back on the journey I said to before of people come in to pitch to us, one of the things we’ve learned very quickly and it’s a lesson for this conversation, is about being very, very clear in our minds what we want, what the business need is or what’s the customer driver economic driver, try and write it down in a very clear brief and actually then you’re much better off better suited find the right person and make sure you get the right modification in the software or the terms and condition and use of the software coming away. So one of the downsides is when you rush into things, tech can actually end up being a lot more expensive than the initial pitch ever tells you it’s going to be, and it can take a long time to get it fit for purpose for you. So that the lesson there is by not thinking hard up front, actually you end up spending a lot of time and effort and money, and not necessarily getting the right product for you. And what ends up happening is a lot of frustration all the way through the journey. So that that’s one of the biggest lessons we’ve taken away and having that dedicated team in house it brings that discipline your way, because honestly as a business, whether it’s Quintain or Tipi or any part of us, we are all really eager bunnies, we always want to do better and differently and  want to keep forging ahead. We need that discipline in house to make sure you’re making the decisions as best as well as you can.

Louisa

Yeah, we’re seeing a lot of companies actually hiring for CTOs now as everyone’s trying to work out exactly what tech they need in their assets, just across the board no matter what space you’re in, especially since COVID, and increasingly what tenants are now after. But on that topic, is there any product that you’re looking for in the market?  Is there something which tenants are crying out for post COVID? Or a certain amenity which they’re now looking for?

Rajesh

Yes so COVID for obvious reasons has driven most people to work at home, and that in itself has driven a number of design considerations on our side. So if I go from firstly the tech type answer, we have massively increased our communications with our residents. And that in itself when you’re in the full lockdown period, isolated into your apartment, actually you can feel quite lonely. So communicating any which way whether it’s in a phone call, whether it’s an online communication through our portal or any other way, just to make sure they feel like we care. And actually if you look at some of the outputs coming from any survey, safety and security has come up pretty high amongst the build to rent sector, because that communication of caring landlord has come up pretty strongly.

But getting back to non-tech type aspects, working at home means if we’ve had to think much harder about design of the apartments, now that’s not an overnight job. But we can do and are doing is our amenity spaces which are wide and varied. And where people are working at home and where you’ll have your breakfast, lunch, dinner on the table and work at the same time, there’s actually need and desire to get out of the apartment. There’s a bit of the coffee shop type atmosphere, people want a bit of a buzz and life around them subject to social distancing. So we’re looking at modifying number of amenity spaces to make sure one its fit for purpose, but very basic things like chairs and tables, and  the noise levels, partitioning etc, are fit for purpose because we want our residents to come out and use the spaces rather than them lie empty. So that’s a lot of work we actively doing at the moment. We are then also looking furthermore into more specific work at home areas. So if you again live in a small apartment, or if you’re a couple and both of you are working at home, or if you have your own business and need space and privacy, we’re looking at even more private spaces to give people access to an environment and this is literally not a short term thing, medium long term this is going to be more and more so the case people. There’ll be massive blurring between home and work in a physical sense as well as in the past your phone being available means you’re on contact 24/7. It’s also physically how you work as well will be blurred completely.

Louisa

That leads me on to the next question I’d love to pick your brains over. If we’re looking at predictions for the future of build to rent, where do you see changes? Is it further advancement in tech, is that change to leases, whether it’s how long they are? Is it change in what tenants are looking for? Is there anything which you’d like to the share of us?

Rajesh

I’s a hard question, like a crystal ball question! I think we can look at this in a few different ways. As a sector grows, we survey many people, renters on a regular basis and the awareness of your build to rent as a sector and offering is gradually growing. There’s still a long way to go, and as a sectorit’s still very small in relation to the whole private rented sector. So one of the things that I could see growing very quickly is how your build to rent gets much better recognised and understood by renters, which will then translate further into the brands themselves. So if you go into the hotel world where you might go and stay one night or a few nights, the brand means a lot to most people even though you’re doing this only two or three times a year. In the build to rent sector you might live someplace 12 months and beyond and yet traditionally the sector hasn’t existed, but the brands will start meaning something to individuals.

With the sector growing at the pace it is at the moment, I think the most important thing to me is the massive increasing choice for the customer, whether it’s a location to live, in the style of the building, the product itself or the service provider provisioning you get with that, the price point itself. So that’s one of the biggest changes coming. Also as a sector matures, where most of us in the UK have grown in the build to rent in sector grown independently and have set up as our own processes and systems, I think what we will start getting rapidly now is standardization. And there’s already a lot of communication across the business, we all talk to each other as peers. But things such as lease terms, operating protocols, recruitment training, which touched on before, I think that will start getting more standardised. So, from an employee’s perspective, there’s a lot more choice, you can seamlessly move from one to the other. But also about how a customer gets in standardisation coming through. But probably the most radical thing I can see which most people now are just touching on is how data is going to be used. And I think we probably all of us are at the forefront, so that we all are collecting it in different ways, in different systems, but very few of us are making proper use of it. So as an example, we moved on and developed our own customer CRM system through Salesforce couple of years ago. And we capturing a lot of data, but really now we’re starting to really get into the depth of what this data is telling us and it’s really about how our customers are living what’s important to them, how to build is performing, how we are operating. And the better we understand these things in in the we will start building and continue building better and better products. But ultimately, the success with the data is really are we improving enhancing the customer enjoyment and benefits.

Louisa

Every single podcast I’ve done so far, at the end of the podcast we all go back to the importance of data and how we’re using it and cleaning it, and it makes me shudder to think that data’s on so many different CRM systems and how do you merge them together to make it most efficient? But we’re getting there, everyone’s recognising the importance of that. Outside of investment, build to rent to development, if you hadn’t gone into this space, is it any other industry or career path you would have gone into?

Rajesh

Oh, that’s such a difficult one to answer. So out of all these questions, this is the most difficult. I think you might have heard earlier, I’m a big fan of start-ups – FinTech, PropTech, any other customer driven start-up. So, if I was not where I am at the moment, I set up in a quintain for 12 years and loving every minute of it, I would love to dedicate time to start-ups, and I’d love to see them nurture and grow. And usually there’s a key person who has a great vision and really, how do we support and supplement that person to grow their business. So that that would be even today a great alternative to what I’m doing at the moment. And if I’m being slightly crazy and the fact I do love a challenge, I like lots of change although that may sound really stupid, the retail sector at the moment is going through amazing amount of pain. But the fact that  retail remains a really key driver, everyone needs to purchase whatever they need to run and live their lives, the whole massive impact of COVID, massive impact are going online, it’s there’s so much change and transformation going in there. So that would be today maybe a crazy idea and a possible challenge – I’m not saying I’m definitely looking at that or indeed even considering it, but it could be something wild and wacky like that as an alternative.

Louisa

Yeah, well, it’s never too late Rajesh! There’s always time to pursue new paths. Okay, awesome. Well look, this is bringing us to the to the end of the show, but before we go, is there anything you’d like to share with our audience and listeners the best way for them to connect with you at Quintain or Tipi or to find out any information?

Rajesh

Just probably the main thing I want to say is the whole sector industry of build to rent, it’s a massively growing opportunity for anyone, in any way, shape and form you might want to be involved in it. So whether you are creating a new product or service, whether you want to work within the sector, design, architect or whatever you happen to be, it’s a sector to take seriously. It’s growing rapidly now, but every underlying fundamental statistic with this demographic or economics or whatever is showing you this will continue growing going forward. So it’s a huge opportunity. I welcome anyone who wants to find out more, and if you do want to contact me, my email is Rajesh@Tipi.london, feel free to drop me an email if I cannot answer it I will be in touch with one of my many colleagues at Tipi or Quintain.

Louisa

Awesome. And if you’re a start-up, you now know the Rajesh’s sweet spot. No hounding! Thank you so much for coming on the Propcast and we’ll catch up soon.

Thank you for joining us this week on the Propcast and a big thanks to our special guests. Make sure you visit our website www.lmre.co.uk where you can subscribe to our show, or you’ll find us on iTunes and Spotify where good content is found. While you’re at it, if you found value in the show, we’d appreciate it if you could rate and review us on iTunes, or if you simply spread the word he shows tune in next Tuesday, and I’ll catch you later.