Odyssey Partners offers Asian investors development opportunities in Greater London
By Cecilia Chow
/ EdgeProp |
In 2013, Andrew Bygrave, managing director of Odyssey Partners, which specialises in corporate advisory and capital raising services, found three private high net worth investors on behalf of his client, a property developer in the UK. The developer assured that the investors could double their money in two years. However, the deal imploded. “Had the investors gone ahead with the deal, they would have made three times their initial investment,” he recounts. “At that time, there was so much liquidity in Asia.”
Having lived in Asia for the past 15 years, of which the first three were spent in Hong Kong, followed by Singapore, UK-born Bygrave watched a stream of UK developers exhibiting their projects in these cities at weekend exhibitions. Initially, the projects launched in Asia were predominantly London residential developments, but in recent years, they were projects in second-tier cities, mainly Birmingham, Manchester, Liverpool and Leeds. “People prefer to buy in London, but prices have risen so much in recent years,” says Bygrave. “I wrote a paper in 2014 on the need to build more affordable housing for the local London market, but funded by capital raised in Asia.”
Bygrave, who founded Odyssey Partners in 2010, saw the opportunity to do just that in 2015 in partnership with Sonny Gowans, managing director of Unique Property Group. Their new business venture specialised in creating special-purpose vehicles that enabled Asian-based investors to participate in the development of London residential projects.
“We raise money on a project-by-project basis,” explains Bygrave. A special-purpose vehicle is set up to buy a project or site with planning approval for residential development. Capital raised for each project generally ranges from £6 million ($10.7 million) to £8 million. Once the project is built, sold and delivered to the individual home buyers, the investors in the SPV will be given their returns, and the vehicle closed. Investors in the SPV will typically be looking at a two-year investment cycle, he adds.
Source: Odyssey Partners
This mixed-use development on Staines Road in Hounslow Town Centre, next to Heathrow Airport, is due for completion at end-2018
Boutique residential developments
The focus is on boutique residential developments of fewer than 100 units, where the final selling price to homebuyers will not exceed £800 psf. One-bedroom units in London average 500 to 550 sq ft in size. To be affordable, they should be capped at absolute prices of about £450,000, says Bygrave. Depending on the location, some projects have one-bedroom units priced at £500 to £550 psf, which translate into absolute prices of £250,000 to £300,000, he adds.
“The whole strategy is centred on affordability,” says Bygrave. “Developments will be in areas that have good infrastructure in regeneration schemes, where people want to live, and priced at a discount relative to more expensive suburbs in the vicinity.”
So far, Odyssey has seven projects in Greater London with a total gross development value of £63.6 million, with returns of around 25%. Three projects have already been completed so far. One was a pub called Scarborough Arms on St Mark Street in Whitechapel, which was converted into six flats. Another was Colefax Building on Plumbers Road, also in Whitechapel, which was a conversion into eight flats and completed in June 2012. The third project was a newbuild with eight apartments at Bridport Place in Shoreditch, East London and completed in September 2014.
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Pipeline of ongoing projects
The four ongoing developments are bigger and include a freehold development with 73 one- and two-bedroom apartments at Brickfield Court, Slough. The property is less than a 10-minute walk to Slough Station, which will be linked to the Crossrail in 2019. This means Bond Street will be just a 32-minute ride and Canary Wharf, 46 minutes away. The project was completed in August, and the investors are about to get their money back, says Bygrave.
Another freehold project due for completion by December is The Printworks in Crouch End. The mixed-use scheme contains six apartments, three mews houses and a commercial unit on the ground floor. To the west of Crouch End is Highgate, a trendy neighbourhood in North London.
Source: Odyssey Partners
The Printworks in Crouch End — with six apartments, three mews houses and a commercial unit on the ground floor — is due for completion by December
Two other developments are also freehold mixed-use schemes. One of them contains 38 apartments and a commercial unit on the ground floor and is located on Staines Road in Hounslow Town Centre, near Heathrow Airport. It is scheduled for completion in December 2018. The other project, Gladstone Parade, is on Edgeware Road in Cricklewood, and also contains 38 apartments as well as four commercial units. Gladstone Parade is due for completion in 2019.
Cricklewood is likely to benefit from its proximity to Brent Cross Shopping Centre, which is undergoing a £1.4 billion redevelopment, adds Bygrave. Cricklewood and Brent Cross London are also part of a £4.5 billion regeneration scheme, for which Hammerson and Standard Life Investments secured outline planning consent in 2010.
Source: Odyssey Partners
The 73-unit development in Brickfield Court, Slough was completed in August
Affordable homes — stubborn undersupply
Bygrave believes there is opportunity to tap the build-to-rent or private rented sector as well. According to Knight Frank’s investment survey for 2017, the PRS market is worth an estimated £25 billion today. The proportion of households in PRS is expected to rise to 24% by 2021, says Knight Frank.
Source: Odyssey Partners
Bygrave: The whole strategy is centred on affordability
In terms of housing supply, “what is being built in the London market currently does not match the shape of demand,” says Savills in a report in April. Savills estimates that 58% of demand is for homes that cost less than £450 psf, whereas only 15% of the five-year demand forecast is met by future supply.
Therefore, Bygrave believes there are still opportunities in Odyssey’s current build-to-sell business model, backed by Asian capital. “It’s about building affordable homes for people,” he says. “Globally, it’s a product that sells.”
This article appeared in The Edge Property Pullout, Issue 797 (Sept 18, 2017) of The Edge Singapore
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