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Berkshire Hathaway HomeServices lands in London
Big news for expats in the London property market is that London firm Kay & Co has joined Berkshire Hathaway HomeServices, Warren Buffett's real estate brokerage network. We spoke with the firm's managing director, Martin Bikhit.
First published in the March-April 2019 edition of The American magazine
Berkshire Hathaway HomeServices | Kay & Co Website
Thank you for speaking with us Martin. How did the connection between Kay & Co and Berkshire Hathaway HomeServices come about?
It all came a bit out of the blue really. We had a call towards the end of 2017 from Berkshire Hathaway HomeServices (BHHS) inviting us to a meeting in London where they set out a proposition for Kay & Co to become its exclusive UK affiliate. I was very aware of Berkshire Hathaway Inc. and of course Warren Buffett. I was aware that he had a real estate brokerage outfit in the US but had no idea of the scale. The initial meeting led to many more, coupled with a visit to BHHS’s headquarters in Irvine, California where I had the pleasure of meeting some extremely inspiring individuals including the then CEO of BHHS, Gino Blefari (now CEO of our parent HomeServices of America) and Chris Stuart, then COO and now CEO of BHHS. It was the people behind the organisation, the ethos and the culture and their global real estate aspirations, together with the once in a lifetime opportunity to bring a brand revered worldwide to London which made us realise that joining the BHSS network would herald the best future prospects for Kay & Co.
How do you navigate big world events that affect both the UK and the US?
To compete in an ever changing world you have to remain nimble. It was made very clear to us that while we were now part of a much bigger network, that the boutique nature of our business shouldn’t change, and nor should we want it to. The key is really knowing your clients, and our clients like the touchy-feely service we offer. The only difference now is that we have a global platform behind us which lets us compete with the multinational corporates of the real estate industry. The market has obviously taken a hit as a result of Brexit but we are confident there will be a bounce back - but big deals are still happening - just look at the size of the purchase that Ken Griffin recently made. Given the fact that the combination of house price falls and the fall of the pound against the dollar has resulted in a massive net gain in buying power for US and other dollar tied buyers, I’m not surprised he made such a significant investment.
When your deal with BHHS was confirmed, you mentioned the importance of large US tech firms like Apple, Twitter and Instagram coming to London. How will their arrival affect the property market?
People working in the tech industry now account for a large proportion of our high net worth and ultra high net worth clients. Google arriving in Kings Cross was the first big one, this was one of the main drivers in us opening an office to service that area of London - right on the ground floor of the Google building itself. Facebook are due to open a new European HQ there too, that’s currently under construction and will be one of the most amazing buildings in London to work in. We have seen a massive increase in demand for real estate in Kings Cross - it is probably our best performing office for rentals with our listings boasting the shortest marketing times of all of our offices. We are currently working on a 2 viewing to 1 offer ratio which is pretty amazing! It is not just the immediate area though, Marylebone and even Stratford - due to the high speed train link from Kings Cross - are all benefiting from the US tech industry.
Are the influx of US firms and developments such as the new US Embassy in Nine Elms strengthening US-UK ties?
US-UK ties have always been strong and always will be. Irrespective of what happens with Brexit, the UK and London will remain the gateway to Europe and is a significant market in its own right. The US Embassy move was a good one, a state-of-the-art building in an excellent location. I’m looking forward to visiting when I attend my US Global Entry interview! How has the Nine Elms development affected London’s property market? It’s a significant development covering a huge area. Not only the US Embassy, Apple will have its headquarters there too inside the iconic former Battersea Power Station. Doubtless lots of Americans may consider basing themselves there initially but I would certainly urge them to consider other areas of London - it’s such a great city with so many different neighbourhoods, there’s somewhere to suit everyone.
Are you seeing growth in the number of Americans moving to the UK?
Yes. Currently US tenants make up about 41% of our business. This is up from about 35% two years ago. On the buying side 24% of our buyers over £10m are now US based. Previously they were in single figures. I put this down to the fact that US buyers are now value here compared to before and the ones that I have spoken with agree a bounce is on the cards post Brexit.
What will working with an American firm, Berkshire Hathaway, bring to your company?
For me the most exciting thing is the fact that I can now give my clients global exposure and an unrivaled referral network. We only converted to the BHHS brand in November and have already formed a very close working relationship with our New York office which is run by an amazing lady by the name of Ellie Johnson - she’s a through and through New Yorker and a real estate veteran. I’ve met with a number of members of her team who are all keen to collaborate with us on the marketing of each others properties. Indeed it is off the back of a joint listing presentation that we won 6 prime London listings from a single developer client with a total value of £100m. They loved the fact that they would have true representation in New York and by a brand with the strength of Berkshire Hathaway behind it. Not surprising given Berkshire Hathaway ranked third on this year’s Fortune list of the most admired companies in the world. I’ll be in LA in March and intend to meet with some of the leading brokerages there to ensure that a similarly close working relationship is developed. Beyond that we opened an office in Berlin last year and more recently have opened one in Milan with Dubai to be announced shortly.
What is your top tip for an American looking to buy/invest in London property?
If you are looking to invest I’d be buying somewhere where there is a really good pool of high earning tenants with long term job prospects but also somewhere where there is limited supply. The problem with some areas is that there can be just too much new stock coming through the development pipeline meaning your rental return will fluctuate as there will be more supply than demand possibly and tenants will have too much negotiating power.
How is the London property market looking for the many Americans who rent property in the capital?
It’s looking good. I think the standard of accommodation is improving. I’m not sure the facilities on offer in some American apartment buildings are quite here in the UK yet, but we are getting there. Doggy day care and in-house crèches are some of the things that build to rent landlords and developers that I have been talking to are looking into implementing so as to set their buildings ahead of their competition.
Finally, what’s next for Berkshire Hathaway Kay & Co?
We have a lot we want to accomplish but our three year plan is to build out our London network with additional office locations around Hyde Park and also in North West London to ensure that we can serve our customers, especially our American ones, as efficiently and as comprehensively as possible in prime central London. We will then look at serving other highly desirable residential locations. Ultimately we want to be the go to brand for Americans in the UK as much as we already are in the US.