Interview: Philip Harvey of Property Vision on the business of buying best-in-class

By PrimeResi Journal

The senior partner at the helm of one of the UK’s most successful buying agencies discusses the impact of Covid on the firm’s trading cycle, key trends amongst HNW clients, and why buying agents are a bit like English Sparkling Wine...

The senior partner at the helm of one of the UK’s most successful buying agencies discusses the impact of Covid on the firm’s trading cycle, key trends amongst HNW clients, and why buying agents are a bit like English Sparkling Wine…

How has the Covid crisis affected business this year, and have you been forced to make any changes to your company structure or plans as a result?

Royal Ag alumnus Harvey joined PV in 2001, and took over from Peter Mackie as Senior Partner in 2018

Being locked down for four months created a hole in our prime trading cycle that looked hard to make up, however the country house element of our business is giving it a good go, including rentals.

The prime London market is quieter through a lack of international buyers, however this is not to say appetite has changed – not one of Property Vision’s pre-Covid clients have changed their mind about buying in London.

As many country buyers are now expecting to spend less time in London and prepare to look further afield to find quality and value, we are expanding our area of operations and recruiting new team members.

Estate agents have been reporting huge surges of activity post-lockdown, citing years of pent-up demand as a key factor; is this also what you’re seeing on the ground, and where do you think the London and country markets are headed in H2 and beyond?

Not one of Property Vision’s pre-Covid clients have changed their mind about buying in London

As well as historic pent-up demand we are seeing many buyers bringing their five-year plans forward, looking to secure a long-term lifestyle investment early and lock in great mortgage deals by using pre-Covid earnings data.

We’ve been hearing reports of certain properties sparking bidding wars, while others struggle to get a viewing; what kind of stock is proving popular at the moment, and what’s tending to stick around?

In the country well-proportioned houses with spacious gardens, in good condition are transacting well. In London, outside space is key and those who have been renting airless boxes in central locations are stepping out to find greenery and fresher air. Tired property needing expensive work is struggling everywhere.

Property portals have seen a sharp rise in the number of buyers looking for country homes and green space since lockdown; what’s your advice to clients looking to escape the city as a reaction to Covid-19?

Do your homework and believe what credible property industry experts are telling you. There are no bargains and a dozen buyers for anything special.

Are there any under-the-radar locations offering particularly good value for money right now?

There are, but none without some compromise, and the main compromise is usually distance from London.

What proportion of PV’s deals are being done off-market at the moment?

In the country, the majority of the deals are being done off-market or pre-marketing, however, in London we are reassessing tired stock and taking advantage or vendor nervousness to secure good prices.

There has been a big increase in the number of buying agencies in recent years; is there enough business to go round, and are you finding yourselves involved in more beauty parades these days?

Buying agents are a bit like English Sparkling Wine, there are now many more vineyards than 40 years ago but the awareness this has created has allowed the best producer, Nyetimber, to have a larger slice of a much bigger pie, and so it is for Property Vision!

What are your clients’ main motivations for instructing a buying agent?

The number one reason clients come to us is that they simply cannot find the right house even though they know exists, and that they can afford it.

Do you think the pandemic will change how developers approach the design of new-build schemes?

Developers will undoubtedly shift their focus to schemes which give buyers more of what they want post-Covid. Gardens/terraces with good green spaces close-by, more of the market will shift to houses as buyers demand control of their own front door. Traditional flat development will still happen but pricing will change to reflect changes in demand.

How are your international clients feeling about London as a place to invest, as Brexit crunch-time approaches?

Residential investment in London from overseas buyers tends to be about finding a good store of wealth, and London remains strong for best in class residential real estate.

For pure income returning investments, post-Brexit international clients seem more perturbed by Covid than Brexit, no one is in a rush but all are happy to consider options with an angle, for example the buying of tax efficient portfolios.

Technology has and is transforming the way properties are marketed and deals are done; which innovations do you think will have the biggest lasting impact on your business in the next few years?

Technology in real estate marketing will not affect our business. We are paid to filter out the rubbish and get our clients through the doors of the great houses first. Technology cannot replace the relationships that are essential to making this happen.

You took the Senior Partner reins from Peter Mackie in 2018 after 17 years with the firm; how does the current downturn compare to previous market cycles in your career?

Life is experiential; no one really knows what it is like to be the leader of a team until you actually become the leader of a team, and those who have not lived through difficult times are only guessing at what will greet them on the other side.

Most underestimate the strength of top end real estate

What previous downturns have taught me is that most underestimate the strength of top end real estate. There are two things that I can guarantee at the beginning of any recession, the first is that various funds will knock on our door claiming to have hundreds of millions (or this time billions) of pounds to spend on distressed real estate asset. The second is that most of those funds will fail to invest 5% of their money.  The reason is simple they all want best in class but at a significant discount to market value, the trouble for them is that anything of quality will instantly attract enough buyers to compete the discount away!

PV was purchased by HSBC Private Bank in 2001 and bought back by the management in 2012; has independence been a particular benefit in the current climate?

True independence along with the scale and breadth of our business has undoubtedly allowed us to harvest more client opportunities than had we still been a part of the bank. However, we will always be grateful for the many benefits HSBC gave us such as access to international buyers and rigour-surrounding Compliance, which is so important in today’s trading environment.

We have seen a growing number of big-hitters leave major estate agencies to start their own property ventures or join boutique firms in recent years; as a buying agent, do you prefer dealing with big-brand selling agencies or with smaller operations?

We are incredibly lucky that there are so many high calibre professionals in our segment of the real estate industry and I really do not have a preference as long as the individuals working on the other side have the resources necessary to move a deal along quickly.

There are some significant headwinds facing the property market, including a global recession and Brexit: Is there anything that property brokers can do to mitigate the effects of a downturn on their business?

Time is the killer of deals

In all tough markets, we have to make every opportunity count. Time is the killer of deals and making sure vendors are fully prepared, with solicitors on board, before coming to the market will help minimise fall-throughs.

What’s the most challenging search brief you’ve ever taken on? And can you give us a flavour of the kind of top-end searches on PV’s books right now?

I suppose the hardest briefs are from people who already live in beautiful homes and simply want a smaller version. Almost impossible to achieve but we get there!

We are looking for a client with a very keen eye who wants a house of real architectural merit within an hour of London, and there is no limit on budget. Neo-Geo will simply not cut it.

What and where would you personally buy with a budget of £10m?

As I already live in the most beautiful part of West Sussex (and know that upgrading to a £10m house is nigh in impossible) I would probably take the opportunity of making all of my wife’s Christmases come at once and buy a weekend house in Chelsea.