The build-to-rent (BTR) sector may be growing at a spectacular rate, but the public is in the dark when it comes to who’s who in the industry because of the lack of recognisable consumer brands.
At a debate last week entitled Building Brands in the Private Rented Sector, hosted by Redleaf Communications at The Shard in London, panellists from development, marketing and investment backgrounds got together to discuss what needs to change.
— Henry Columbine (@henrycolumbine) October 31, 2017
Here, Property Week rounds up the key takeaways:
“Market-leading brands such as Nike do not just spring up overnight - it’s about getting the basics right first,” said Charlotte Steedman, founder of marketing consultancy Conductor.
Forget the flashy logo and don’t go big on the advertising campaign until you have built up trust in your rental product, was the message from the panel. Brand is important but to get to a position where the tenant identifies quality and value with the building’s brand rather than the building itself takes time. Developers should first focus on location, convenience and price, she added. Once the customer understands your product and service, then it is time to move on to the logo.
The BTR industry understands its proposition; the general public does not. A survey of renters carried out by Conductor found only a small percentage of tenants knew about the existence of purpose-built rental accommodation operated by professional companies. Developers were told they needed to engage with their audience and redefine the rental offering to the tenant.
“Barista yourself” was the suggestion from Allsop partner Lesley Roberts. “Buying a cup of a coffee used to be just that,” she said, explaining that there was little brand loyalty and no real difference in price or service until the arrival of the barista, at which point making coffee became a skill that the public recognised and was willing to pay for.
Before people start to connect with a brand, they need to understand what the price and service proposition is. “Think Ryanair,” said John Kenny, chief operating officer at Grainger. “It’s cheap and I can put up with it for a short while, so I’m prepared to risk booking a flight with them, but I would be looking for a different relationship if I was going to risk a few years of my life.”
BTR firms need to help the consumer understand what is included in the price and why it is set at a premium to traditional PRS stock, he added. When a tenant knows they get broadband, Sky and a concierge, they can understand the relative value on offer between schemes.
Technology now jostles for equal importance alongside property design and service and, as Kenny put it, these factors make up the Venn diagram of the most important considerations when designing a BTR scheme. Convenience, lifestyle and great service are underpinned by technology, so much so, said Kenny, that “it would be less important in a scheme these days for the roof to blow off than for the wifi to fail”. If the network connectivity is unreliable, service, convenience and lifestyle will all suffer, he added.
From an investment perspective, brands do not yet carry any value, said GVA head of real estate Alastair Carmichael. Without comparables in the market that can demonstrate a brand has driven a reduction in voids, for instance, it is not possible to value a brand as an accountant would value rental income, storage or car parking. Carmichael said it is only a matter of time before brands will start to carry value, but to get there they have to be driven by exceptional customer service.
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