Robert Soning, COO of Londonewcastle comments:

Q. What do you look for in a residential management company and what could be learnt from commercial?

“Buyer expectations for new build developments are very high – much higher than they were 5 years ago and so we need a residential management company that understands and can meet these challenges.

There are more mixed use developments – so the management company need to understand, integrate and coordinate with the different uses on site – an ‘Estate’ management understanding and experience – for example, leisure uses on site bring more people and later hours and this must be managed effectively to work properly over the long term.

We need businesses who can provide 24 hour onsite concierge and associated ‘lifestyle management’ services e.g. restaurant bookings, theatre tickets, private dining, health and fitness services. It’s not just about the back end – the front end is key and we need luxury hotel levels of customer service and management. Front office staffing is key:

• the right people selection and recruitment process • training • motivating • managing – e.g. secret shopping, customer satisfaction surveys, leaseholder feedback meetings.”

Q. Future developments – what facilities will they have and how will they be managed?

“More sophisticated services will be offered in large developments not just a screening room and a gym, but private dining rooms, ‘club’ rooms which are more multi-functional and day to night, for business meeting and leisure use – like a private members club in effect.

We may also see leisure / entertainment uses that adjoin the residential becoming more open and integrated; for example, a café, restaurant or spa that share the same lobby space as the residential – which will need to be considered and managed. These facilities will bring more people over longer hours so responsiveness needs to excellent.”

Q. Is there a skills gap and training issue in the market?

“Yes there is. We need sophisticated organisations with skills and expertise of both residential and commercial management.”

Q. Can we learn from overseas or commercial managers?

“From overseas definitely. London – and England – is still not a service industry led mentality like it is in America and we can still learn a lot from them.”

Q. Is a low service charge a false economy?

“ Yes, it rings alarm bells that service levels may be low and inadequate; for example, maintenance, sinking funds, management, refuse. As buildings get more complex and the facilities expand, there will be a new minimum level of charge.”

Q. How do you see the role of social housing and build to rent organisations?

“The important thing is that social and private housing is separated at the design stage of new build projects, but day to day management needs to ensure coordination and communication between private and social managers.”

Q. How important is service charge when marketing properties to overseas purchasers?

“It is very important to show value. But overseas buyers are used to high-rise, managed buildings so there is a level of expectation. Again it depends on the in price of the apartments, but too low a service charge can be damaging as it risks rising concerns over inferior service levels - especially long term maintenance.”

Q. Do mixed use buildings provide an opportunity for consolidation in the market – e.g. could commercial managers step into the residential space and/or vice versa?

“Absolutely – there is no choice. London is now very sophisticated and you can’t have one without the other – mixed use developments are the norm. I think larger commercial managing agents will start doing residential management – either by adding their own offering or buying/ merging with residential management companies – or vice versa.”

Q. What different challenges (and benefits) do mixed use projects have?

“Mixed use is more challenging – the challenges are wider integration and maintenance issues. You need experience and a sensitivity to the issues.”

Q. What impact will mixed use schemes have on future property values?

“They could have a positive impact on values, if (a) they are run well and (b) the tenant mix is managed sensitively / controlled by the developer at the outset to ensure the right fit between each class and the relative price point.”

For more on this subject, click here.

Robert Soning, COO of Londonewcastle took time out to reflect on the changes in the London residential property market recently:

The style and quality of design of new developments has changed dramatically since 2007 - for the better. Developers have to try a lot harder and really get the details right – specification, style, finish and services have all got to be right to appeal to buyers.

The Growth of Residential Services

What has also really changed, is the continuing upwards drive for residential services which used to be the preserve of prime area developments only – I’m not just talking about swimming pools and gyms, but screening rooms, private residents clubs, libraries, business centres, wine storage and 24hr onsite concierge services. When we tabled the idea of the latter for The Henson development in Camden back in 2007, people thought we were mad, but residents really bought into it. We are going to see this trend continue as people continue to work longer hours and travel more, spending less time in their homes while buying more goods online for delivery to their home address.

I think interior design has evolved and become more expressive. Thankfully, most developers have moved on from thinking that every buyer in the world wants an Eames chair.

In terms of demand, it’s well documented that we are currently experiencing a surge in international buyers – with 59% of all buyers of prime stock being International and up to 70% for new build developments in prime areas.

New Markets

The two main difference between now and 2007 is the breadth of new markets that are now investing in London beyond the traditional major European states and selected Far Eastern and Middle Eastern nations.

The breadth of areas that are now being invested in beyond the usual has also changed to encompass areas that would not have previously been considered and this has been driven by quality developments with quality specifications and services that meet the needs of these international buyers and investors.

For example, Russian clients didn’t really featuring back in 2007, but we had a number of buyers from the country at The Henson. Mainland Chinese customers were also not a part of the market, but now represent about 3% with a heavier bias in Canary Wharf. Malaysians have also entered the market in greater numbers – with about 350 off the total 900 or so off plan sales for Circus West, the first phase of Battersea Power Station’s regeneration.

What will be interesting over the next couple of years is if Chinese customers will grow as a percentage of the market – especially outside of their currently favoured areas and price point - and the oft talked about growth of BRIC countries – especially India, where few inroads have been made other than a few sales at the top of the market.

Londonewcastle creates individual developments for people with individual taste. We develop with the domestic owner-occupier market in mind and it’s that vision that our overseas customers want and buy into.

Inside/Outside Space

Outside space is always at a premium, but customers really want to maximise useable space. As a result, ‘Winter / Sky Gardens’ do seem to be in vogue at the moment. They can now be seen at numerous other developments across the capital. We have designed them into our Dollar Bay development in Canary Wharf and it’s easy to understand why they have become popular with architects, developers and planners alike. They provide flexible, year round, usable inside-outside space and amenity. You have the flexibility to use what would traditionally be a terrace for a number of uses – sun lounge, library, study or additional living space.

Customers see the benefit because we are limited to the amount of time we can use outside spaces in this country due to the climate or in a tall building, due to the height, perception of safety and wind. It’s the opposite situation in hot climates, where there is a preference for shaded and/ or climate-controlled spaces to escape from excessive heat, humidity and poor quality air.

In addition to private amenity space, it is also good to provide shared communal spaces in developments where neighbours can relax. It improves the richness of the development and helps to foster communities with the development.

A New London?

Yes, as prime areas have extended it has pushed traditional notions of prime (defined by areas that cost £1,000 per square foot (psf) – Nine Elms, the city fringe (encompassing Old Street and Shoreditch), Paddington, Kings Cross all spring to mind.

Shoreditch is now commanding £1,000psf for quite average developments on the right streets and we have high hopes for our proposed development of the Huntingdon Estate in this area which will deliver a specification and living experience that has not been seen in the area before.

Welcomed Legislation

Legislation is always changing and evolving – from greater community/ public consultation – which we welcome - to moving towards carbon-neutral new developments including thermal efficiency, the use of recycled materials in construction to the energy efficiency heating/ cooling systems and appliances.

Interior Design Evolved

Open plan living has continued as a trend, rather than it being new. I think we are moving away from Scandinavian simplicity to more expressive interior design with a wider palette of seemingly clashing materials that work well when used intelligently together, but admittedly this is in more individual areas and seems to be less prevalent in the ‘greige’ parts of town.

One thing we are really seeing in new developments is demand for as much storage space as possible throughout the apartment – or within the development; for example, the provision of storage boxes in basements can command as much of a premium as car parking spaces.

Technology in the Home

We are going to see the continued increase of home automation – the one thing that hasn’t been linked up yet is bathrooms and kitchens. You will be able to switch on appliances remotely via smart devices, fill a bath and put your fridge in holiday mode for example. There is no reason to believe that you won’t be able to control security and access to your home too as it is already possible to set up profiles for home automation systems today.

I think we are likely to see screens and audio systems being even more integrated into the fabric of the home – multi function screens that act as TV, home hub and communication devices.

The planning landscape has changed dramatically since our beginnings as a company in 1995. It was hard back then, now it’s even harder. With a chronic (endemic?) shortage of new build development in the capital and yearly targets that are never met, one would imagine that things would change. That the greater good of considered, new development which brings much needed regeneration and affordable housing would prevail? Well it hasn’t in the last few years - and doesn’t look like there is much chance of it changing any time soon.

Increased planning complexity has led to increased time and costs, which increases risk and impacts viability. It seems odd and is unsettling that I’ve watched my children grow up without a brick being laid on a site of ours in one London borough. And why? Well, as I said, it’s complex.

Which brings us neatly to the Community Infrastructure Levy (CIL): announced in 2007, legislated in 2008, planned to be scrapped in 2010, but then retained later in 2010, reformed in 2011 and now being introduced at various times across the capital. It set out to answer the criticisms of existing Section 106 agreements (S106) and in doing so simplify the planning process.

Except in our experience, the introduction of CIL has not made life simpler. Boroughs understandably work to their own timetables and are bringing their CILs forward at a variety of different paces and levels. However, this has created uncertainty and a situation whereby there isn’t a level playing field. This is particularly acute when evaluating neighbouring development opportunities that sit in different boroughs that are at different stages of introducing CIL or have different levies.

The idea of CIL is to make things more straight forward by setting the price within each borough so that developers can calculate payments in advance. Seems simple, but that assumes that Section 106 negotiations and payments will then be replaced. Err, no… CIL has not replaced S106 agreement negotiations and payments and has therefore become an additional burden, which further risks restricting supply (and we haven’t even mentioned Mayoral CIL yet…). This burden is made heavier by the fact that payment is loaded towards commencement and there no instalment policy has been entertained.

Regrettably, it’s yet another example of the added bureaucracy and red tape that the Government reports to be battling against. Given, there should be some basic clarity when the scheme has been been introduced across all boroughs, but because some items are excluded and still need to be negotiated on a case by case basis, it’s hard to see the speed of applications improving.

And in conclusion, it is particularly concerning that the Mayor of London has so far decided not to entertain the application of relief from CIL on unviable schemes, which will inevitably stop more marginal schemes – perhaps those in much needed fringe locations - from coming forward and which is in turn will regenerate London and make up the housing development shortfall.

I sat down last week with our CEO David Barnett and he gave me some of his opinions on how the property market performed this year and what he thinks is going to happened next year. I thought I share this with you.

How has London performed in 2012? How did the year feel to you?

In our opinion London continued to perform and hold its status as one of the world’s capital city. The London residential market has remained rock solid and continues to grow. At Londonewcastle it was the first year we felt ourselves pulling away from the chaos of 2008.

What were the key events/ issues/ drivers and will they continue to impact the market in 2013?

The major piece of regeneration was by far the London Olympics. Its features enhanced London’s position - not only as the world’s capital but as a capital that goes through a huge transformation. The Olympic legacy will enhance London over the coming year. Not only did it impact the sporting sector but the housing prices around the area it also initiated large scale infrastructure projects, improvements to transport links, shopping facilities and local amenities, which has transformed previously neglected neighborhoods making them more desirable.

What did LN do / how did you find it?

We had a successful year of gaining/ planning consent and are looking at a number of really exciting projects across London. The Dollar Bay development in Canary Wharf for which we obtained the planning permission in March is a 31-storey luxury residential tower with 185 units.

Just recently we received the planning permission for Kelaty house in Wembley. Located directly opposite the Wembley stadium the development will comprise of student accommodation with up to 599 rooms and 198 room hotel (total GEA of approx. 400.000 sq feet).

What do you think will happen in 2013?

We think the London pricing will be stable with certain increases in London’s prime postcode areas. The planning system will remain an obstacle for the delivery of housing.

What’s in store for LN in 2013?

We are looking to complete a number of major acquisitions. Most importantly, a further 300 000 sq feet development been submitted to planning in key 1 2013.