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Hello, and welcome to London property, the home of super prime, I am your host Farnaz Fazaipour. And today we’re welcoming Naomi Heaton back to the show. And we’re going to be talking to her today about the CO living and the flexible living model and how this is addressing an evolving market here in the UK. Thank you Naomi. Welcome to the show.

0:56
Thanks, Farnaz. It’s great to be back.

0:58
Let’s start by putting things into context. And what led you to be here today, having seen the historic steps that have led to the CO living in the flexible living model.

1:09
The Other House has been born out of what I could observe. In my other company, London centre portfolio LCP, which specialises in the acquisition of residential rental property, the renovation, interior design, letting and management within prime central London, and managing an entire rental portfolio in central London, I could see how the trends in the marketplace are changing over a significant period of time over a couple of decades. But first of all, I could see how people want to be centrally located particularly International, they wanted to experience the sights and sounds of central London, and location was more important space. So I could see people taking 40 units, in order to be more simple. That was the first trend. The second trend I could see was how people cared more about where they where they lived in, and the lifestyle, and what the place looked like, it wasn’t enough just to have a roof over your head. It wasn’t like anything does. It was to do with this needs to say something about myself and how I see myself and the desire to have an aspirational lifestyle, the idea of having great interior design. And so I could see how the importance of design was becoming more and more important in the offerings, and more and more important in what people select. And then over the last decade, I could see how people were more demanding that they wanted service fingers. And that is obviously to the digital age and the fact that people are used to more immediacy than they were historically. So I could see smaller apartments, better design, more aspirational, more immediacy service. And that led me to see that actually what did our long stay tenants wanted, and that is people who may be staying in London for a month. They simply wanted hotel style living, they wanted that amalgamation between what they get being like local, being part of the place, but having more amenities, and more service. And that was the beginning of the idea. I could then see how people living in hotels, or rather stay in hotels had lots of service, but they felt like guests, they felt like they didn’t really feel part of the environment. And that was unsatisfying for them as well. The people were, were increasingly looking for experiences, aspiration, service and community and a buzzy exciting environment where it’s all laid on. And that was the origin of the other house. Now, obviously, whilst I was developing the other house and saying, Okay, well, let’s fuse it all together. And let’s create this property where you could stay for night, you could stay for a week and stay for a month or a year, the weekend to create fantastic public areas, bring the locals in, but also create this wonderful private club where you could feel exclusive, where you could entertain or work or chill out. Whilst I was working on that concept, clearly, there were other things happening in the marketplace. So, we started to see the onset of, of CO living and CO living was an extremely innovative concept. But it was a concept that was actually targeting a different kind of market. I see co living very much for those people who are transitioning from probably being university or living at home before they go and live independently. And they wanted an environment where being with a lot of other people with a lot of other activities later on was was of primary importance. In fact, the accommodation was probably of lesser importance and say that CO living which is probably for the kind of young 20 Somethings was a real trend that one was going to see and which was really, really innovative. And of course, we were seeing the development of the service department market as well, the service department is, is still actually pretty much in its infancy, the number of, of rooms sold in central London to service departments rather than to tell us it’s probably running about somewhere between three and 7%. So it was always a small market of what the service department might enable people to do was to stay for longer in a flat. But in a way, service departments are also slightly behind the curve, just as hotels have been behind the curve, in the experiences that they offer their guest service apartments become become behind the curve, simply because they were an apartment, but they didn’t really offer much service. They didn’t said he didn’t offer much experience. It was effective to take a shorter period. So that sector has to move forward as well. And so there were all these things happening all these trends, recognising the people wanted to live in different kinds of ways, recognising that what was happening behind the front door was really important, but developing in different ways. And really the other house in this whole fusion of hotels, seven apartment and residential living was an is entirely innovative within the marketplace.

6:32
And both these models that we’re talking about, I mean, you know, your service departments have been around and as you say, they should really evolve before the entire deck from getting too old. But it’s sort of been a market that that that’s established over the last seven years, would you say,

6:48
I might say the service department market, it’s longer than seven years are considerably longer, but probably people haven’t been particularly aware of their existence. And it’s, it’s been particularly I mean, it’s been a particularly attractive market for people who are being relocated for short term projects, for people coming over the holidays, it’s been a more cost effective solution than staying in a hotel. And for that market has been started from 10, zero base and gradually building and become more and more relevant, and particularly the COVID service departments or a real solution solution exactly. Because people the hotels are closing down. And most most of the people that were travelling were people who were staying long term one way or another. And they did provide a real solution. And I would say that there are a lot of service departments now who are developing other amenities and other facilities, or at least teaming up with restaurants and bars and so forth. Because we are talking about a lifestyle era now. And I really feel it COVID In particular, may people value, the importance of experience, not be in such a rush, be able to actually look around oneself, as well as just doing the task in hand as you’re coming to work, okay with that constant measure. And that this whole sense of valuing time valuing experience, certainly now when I go on a trip, and suddenly on a holiday trip, the experiences I will be getting will be the most memorable element of it, have whatever those experiences might be. So that’s what’s become more and more important. But also, of course, over the COVID era, Tech has become so much more important. Clearly we have a Gen. Gen Zed, we have millennials and, and for them, tech is their life. But during COVID, tech became more important for an old generation slide because that was how we were having to communicate and transact and everything else. And the other house is founded in tech is not tech, which is trust in your face. And you don’t have to use it. For guests who come here, residents who come here who want the old fashioned face to face hospitality with air for them, for those that actually want to check in access every with a mobile key and don’t want to put anyone actually where they want to get to their flat because their time shorten their own business. We have all the tech to enable that. In fact, we have tech which enables people to want to how much energy we’re using, so that if we are over consuming, they can be part of our journey to become more sustainable and reduce our energy consumption. The tech will enable you to see how busy the gym is, before you get down to the gym. So you can manage your life better. You can order your food and drink on it. We also really tech based behind the scenes and I think that’s a really important element of what we are because you will find most hospitality businesses are really low tech, and that they’re dependent on historic tech solutions and they can’t move away From them, because their whole Juggernaut is based on them. Whereas we were able to build all our behind the scenes systems, of which we have about 41 that no one will see except us. And they all talk to each other. And they will talk to us in terms of our understanding of the consumer. And also feeding the finance and accounting at the end of the of the cycle, say tech is fundamental to us, and being able to give people control if they want to be controlled. And I think one of the great things about the other has been coming up, whether you’re a tech person, or whether you’re not even it’s your own place to do what you want, how you want. It’s not stuffy or sterile or formal or people observing you. It’s letting you be whoever you want to be. And experience is really important, great experiences, not interiors, are so much fundamental to what we’re doing. We can talk about hotels, we can talk about service, we can talk about living, but actually what it looks and feels like as opposed to what the services that you offer is as fundamental as a service. And we have celebrated British mechanism. We are the mouthpiece of Islam. It’s colourful, it’s bold, it’s a little bit outrageous, it’s contemporary, but it’s lovely. And, actually, that is as much part of what we are, as the services that we’re delivering in a way through enabling, enabling people to live. And that will always be part two with the other house, Covent Garden, and hopefully, the other hospital Bravia women, we hope to get our planning consent, we will be creating new environments, which are potentially more outlandish, pushing the pushing the boundaries even further than then then in South Kensington, that is also possible to actually is not just a question of CO living, or serviced apartments, or flexible living is, of course is what the services are that you offer, whether they’re relevant on what the experiences you’re offering, and also the ability for spaces to be multifunctional. During the day, we will have a lot of people using our spaces, whether it be a cafe, the kitchen, or whether it be done in the club, which is accessible to all our residents. They may be working on their laptop, they may be meeting people for coffee, and then in the evening Morton club environment is it we have a wonderful cocktail bar, the island monkey is so cool, because we see our guests is not being a particular age or demographic, we see them as people who care about the planet. They care about social and environmental responsibility. They’re wise as an hour with our people in search of new different experiences. They’re people who are in the know, they’re the people who know about this form, which is really cool. But actually, it’s kind of slightly off the mainstream, to the curious, why is it now curious is a monkey. And that is absolutely our ethos. That’s our ethos. In terms of the other house, it’s the ethos of all the people that run the other house who work at the other house, wise and curious. And all of those things are fundamental to different living models, as fundamental as the model itself.

13:25
So I always believe that markets find a way. And I think, you know, we’re going through a transition in the kind of investment market in London, in the UK. And it’s something that’s of great importance to lots of serious investors all over the world. So as an investment model, this sort of CO living Senior Living, flexible living is something that is kind of pushing forward and potentially becoming a very valid alternative to the buy to let investors. So from an investment perspective, what would you what would be your advice to people who are looking at the UK market thinking, you know, where should I be putting my money? How can I get involved? I mean, I know that the other half is a different scenario here. So obviously, you’ve got your main main investors here, but what would be your advice to people looking at this space?

14:16
I think that there are a lot of really interesting sectors developing in the marketplace. Of course, originally, the rental sector was predominately private landlords, individual private landlords. And gradually that’s developed over a space last 15 years for the buyer, the the big rental investment portfolios, the buildings which are specifically for for rent and run by traditional landlords. And of course, there was a huge amount of excitement and interest in that. And we do have an enormous amount of rental demand. So it’s an interesting We are valid sector. But there are many other different sectors within the marketplace. And they are all important and they are all emerging. And they are all processing targeting targeted. So as you say whether or not we’re talking about Senior Living Senior Living has to be a really interesting market. And then one or two players in the market are doing things which are really great. Because that’s, again, a market where the whole lifestyle is important, the whole experience is important is understanding that that market wants so much more than they’ve ever been offered previously. So sectors like current living sectors, like senior living sectors, like service departments, well, I actually think that service departments will have to evolve, and service departments will probably become something slightly different, because it’s just not enough. And so, I think that for investors, they should be looking at all these different opportunities. Because these are all hinged around lifestyle. What matters is what we do behind the front door, it is no longer good enough to invest in bricks and mortar, bricks and mortar have to be offering something relevant to today’s consumers. And today’s consumers become more and more demanding, and probably more and more of aware of what they want, more and more particular as to what they get. And if we don’t recognise that particularity, we don’t recognise the way that consumers want to live. And the fact that lifetime experience is so important, then, ultimately, any offering will not succeed. So these are all investment opportunities, without doubt that people should be looking at and should be on their radar, because it is the way forward and possibly the market will fragment even more. And there’ll be other lifestyle segments that can be targeted, which are being targeted at the moment. And clearly with the other house, I was particularly familiar with the long stay rental market. And that was my lever to set up a concept which completely disrupt the market by combining a lot of different things in one. But there will be other areas where the accommodation sector can be more relevant to a particular sector, and you have to be targeted, you cannot be all things to all people. I mean, if we look at the retail market, those brands, which are all familiar family names, we who are absolutely singularly failing, because they are all things to all people and actually doing everything but nothing well. And more and more, we have to understand that the consumer market will become more and more segmented. And we have to target those segments. Because if we’re too broad, to try and do too many things, and please too many people, you end up with new brand definition.

18:17
So having a history always being ahead of the curve, I’m going to take away from that, that, you know, the future of this space is very much going to be focused on targeting specific demographic demographics. So you know, as you say, the CO living is for the 20 year olds, the senior living so and then probably that will get even divided further, you’re single, you’re married, you’ve got kids, you go

18:43
Yeah, may well be and whether or not what is it was demographics, not necessarily in terms of age, although of course, there will be age demographic, and of course, I will be offering to to any relevant young people, but it’s actually recognising what people’s needs are. And of course, you could have the same need across a wide demographic. So if you take the other house, I feel it’s much more we appeal to people with a certain attitude to life, rather than necessarily a certain age. We have quite a diverse demographic here. And also with diverse needs, because the reasons why you may need to be in long term accommodation. And of course the other house is aiming to be 50% long stay I guess that could be a year plus, or you’re over here for three months for whatever reason your needs can vary, but your affinities may be the same. And in terms of the desire to be somewhere cool and different and somewhere where you can feel good about coming in. You can feel good about yourself, and you can feel good about bringing your friends and family. And that doesn’t necessarily have to be a demographic. It may be a type of person. But nevertheless, the whole idea is segmentation. And I am sure that the market in all consumer goods will become more segmented and has to. And interestingly, the word consumer, which is a very interesting phrase, because I don’t suppose hotels have been seen the consumer goods or service. But they are consumer goods as much as a brand of chocolates, or a bottle of gin. And, as you probably know, my background was in advertising. I started out in advertising as a director of sauces. My whole ethos is looking consumers, and what do you say to them? To make your brand relevant? How do you attract them? How do you keep those brand values fresh. And when I started up, LCP, it was understanding that there were investors out there, who couldn’t get into the market, they didn’t know how to buy property, didn’t know how to renovate it, didn’t know how to let it. And LCP was probably the first by side agency in the UK, and did everything for that investor, was probably offshore and hands off. And that was just observing a need in the marketplace. And then the other house is observing a need in the marketplace, and observing how consumer trends change. So we are as much as I used to work on resume I mentioned things like chocolate engine is AI and caffeine, not mentioning any brands, but I worked on what we call fast moving packaged goods. And that is the ethos that all these different property sectors need to bear in mind. How do we target the consumer? Which consumer? Are we going to be relevant? How are we going to be fresh?

22:00
So you may end up having people like minded people, you know, who are all artists, or musicians or techies living in environments that are practical for them? perspective,

22:12
it would be perfectly possible because they might get sick of each other. And maybe they’ve been artists might prefer to live with a techie. But the reality is, we have to be aware of what happens behind the front door and how people live.

22:27
Well, thank you very much for sharing your insight with us as usual. And we look forward to working with back to the show again.

22:36
As I always do, thank you very much. Thank you.

22:40
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