Alistair Elliott is Group Chairman and Senior Partner of Knight Frank, the London-based global commercial and residential real estate group. He started in the company as a graduate trainee, with no family background in property, in 1983. Knight Frank, which is still run as a partnership, has 523 offices, with 18,000 people in 60 territories and is known for its sophisticated publications including the Wealth Report, (Y)our Space and Global Cities report. By LUX Editor-in-Chief Darius Sanai
LUX: What skills do you need to make it in the real estate industry?
Alistair Elliott: The business environment [when I started] in the 80s was very different to what it is now. The thing I found appealing was that it was a network orientated business: if you could develop an ability to get on with people, then that was a good part of the job done. There are perceptions about real estate that is very elitist, but it actually isn’t: you’re dealing with all sorts of people all the time.
One way or another, I was able to get on pretty well with a lot of people and that developed a network of clients from all sorts of different arenas and as importantly, a network of other people on the advisory side of real estate.
Follow LUX on Instagram: the.official.lux.magazine
LUX: How did Knight Frank develop an expertise in the ultra high net worth market?
Alistair Elliott: It happened to some extent because our business developed out of an organisation which established itself as having a very professional approach to advising on top real estate. Historically, we started exploring overseas territories, particularly in America, Africa, and Europe, quite early relatively speaking. And those enterprises were largely commercial but often established as a consequence of our extensive contacts in the residential arena.
Now, people who have [high-end] residential property often have interests in other
property sectors. If we manage these relationships correctly, the opportunity is
significant. So we have developed an expertise as a response to the needs
of clients who were demanding broader depth and breadth. We went from top end residential in London and the UK to an eclectic mix of businesses overseas, which now give us a competitive global network to provide strategic advice across all sectors.
LUX: Are the skill sets for managing commercial clients different to what’s required for residential clients?
Alistair Elliott: I think there is a very distinctive approach needed in contrast between people buying and selling their homes and people who need offices, warehouses, hotels, etc. So the b2b and b2c client management is very, very different. The really exciting opportunity for us is to learn how we can develop one relationship to become the other and vice versa.
LUX: Is there a greater concentration of ownership of commercial real estate in private hands?
Alistair Elliott: From the 13th Knight Frank Wealth Report, which has just been published, it is a matter of record that about 30% of all commercial real estate investment globally is now led by private wealth. This percentage would have been a minute fraction ten or 15 years ago. So as they have gathered wealth, these private clients have diversified more from whatever their main area of interest was.
First they tend to invest in their business, whatever it may be. Next they buy their home, or homes, and then they look at what other opportunities there are for investing in real estate. There is a significant desire amongst private wealth to have something tangible, whether it’s their boat, or car, jewellery, or wine collection – there is a great attraction in real estate being part of that investment strategy. Better to see it, touch it, and manage it.
LUX: How does Knight Frank establish links between a client’s residential and commercial real estate interests?
Alistair Elliott: We have learned over the last ten or fifteen years that making those connections cannot be taken for granted. You have got to develop a really strong amount of trust and and a reputation for discretion before you start developing those relationships together. If you take them for granted, or are in any way indiscreet, then that evaporates straightaway.
What we have learned now is how we move that residential relationship [to other areas], whether it’s through our global wealth team or a private office or the fact that we have now got teams around the world who are able to look after these individuals: we’re learning all the time.
Read more: Rosewood’s flagship hotel opens in Hong Kong
LUX: Have you thought about diversifying the services you offer clients beyond real estate?
Alistair Elliott: That’s a very good point. It is very difficult to say we have a typical client. But on the one hand, you’ve got an American private equity business that is looking to allocate billions of pounds into real estate. On the other hand, you’ve got an Indian based corporate that’s looking to expand in Mumbai and Bangalore. And we’re trying to manage these different relationships. Then in addition, in every location of the world, we have private, wealthy individuals who own homes and want to allocate investment to real estate.
The vast majority of our work globally has historically been in the traditional real estate investment arena. What we’re now trying to do is to rebalance that around the world and create a much greater name for ourselves and much greater brand profile in the area of being best placed to advise those with private wealth as to how they can use their capital to greatest effect.
This means we have got much to do in developing our capabilities around the world and the likelihood of us diversifying significantly is limited. However, what we are focusing upon is being best in class professional real estate advisor in the world, and we’ve still got a lot to do to get that accomplished. Managing wealthy individuals, family offices, sovereign funds, is an incredibly intensive, time consuming business. So, if they want advice on buying and selling a boat, or whether they should invest in cars or wine, I can’t foresee us going into those territories. If they want help in arranging real estate finance or insurance, then absolutely, we are covering those areas. But there would need to be a direct correlation with real estate, I don’t believe at least for the foreseeable future, we have got any ambition to go beyond real estate.
LUX: Do you treat residential sales differently to commercial sales?
Alistair Elliott: I think there are characteristics which can be similar. That said legal systems vary, as do the economics behind different properties that people need to be aware of. I think the emotional attachment to somebody buying and selling a home needs very special care – a different kind of care to an institutional investor who is looking after their pension funds, or investors who are looking across Europe to buy into the logistics market.
So the person dealing with it may have a similar skill set, but they’ve got to have a different emotional connection with the client to reflect those different demands. Somebody looking for a home in the Alps, or in Mayfair has a different set of criteria than a pension fund looking to invest in warehousing across Europe.
LUX: Your firm is a partnership and you are senior partner and Chairman. How different is that to being the chief executive of a firm with a different structure?
Alistair Elliott: The simple answer is I don’t know, because I’ve only been at Knight Frank. But I have spent a lot of my time with our private clients. And with our corporate and institutional clients. I sense there is something within a partnership structure, which I believe is very special. It requires a certain approach to management which is different than the corporate approach to management: it’s longer term, because we don’t have to respond to shareholders or markets. So we can take more time to make decisions, and I would like to think that makes them better decisions. But that’s for others to judge.
That said, we have less capital – our capital is our own, and we don’t go to the markets for capital. We’re very proud of our independence: some people might say that constrains our ability to invest quickly, I would like to suggest it gives us more time to make considered investments and learn from other people’s mistakes before we make our own strategic investment decisions.
LUX: How is technology changing the world of real estate?
Alistair Elliott: The technology revolution gives our clients access to everything. And that’s a challenge because they’ve got access to all the information we used to thrive on providing them. So we’ve got to do two things. We’ve got to present that information in a more attractive style, so it’s appealing to our clients, and we’ve got to interpret it ourselves in a way where we can confidently give better advice to our clients by seeing them and taking them on a journey with us. I believe, absolutely, that is how we will set ourselves apart. So, using technology to better effect, we’re about to embark on the biggest investment in technology that we’ve ever made to create a more vibrant and more digitally savvy business, but one that helps our people provide a better service, not the other way around.
LUX: Why do you publish the Wealth Report?
Alistair Elliott: We made a decision, as part of our group strategy, that we’re not big spenders of corporate advertising. So we’ve adopted a slightly different approach to associate our brand with as many of the world class assets as we can, commercially and residentially, and that in itself gives an automatic brand profile. Then we try to be the smartest when it comes to interpreting the data and research into attractive presentations to our clients. We’ve now developed a stable of publications around the world, which are designed to take data that may be available to everybody, interpret it, and present it in a way that makes it very relevant to our private and institutional clients. So whether it’s the Wealth Report, Global Cities, (Y)our Space, Active Capital, these are global documents, which are intended to show how we can interpret our research and make it relevant to each of our group of clients.
LUX: Speaking of Global Cities – do you think cities are fundamentally changing as an inflection point? Or is it just a part of a long iterative process?
Alistair Elliott: I think it is part of a long iterative process, but one which is gathering immense momentum. However you look at the big cities of the world, they are getting bigger and bigger. In the emerging markets there is still a massive move from rural environments, into cities. And that is presenting challenges and opportunities, but it’s one the real estate world is fundamental in responding to.
LUX: London has risen to a prime position among the world’s cities, in a way it wasn’t in the 70s and 80s. Is there a risk that it will fall off that perch?
Alistair Elliott: If London thinks there isn’t a risk, then it needs to remind itself that the risk is enormous. When you’re on the top, there’s only one way to go.
I think the world needs to see fairness. But that doesn’t mean to say becoming an anti-wealth environment or an anti-poor environment: it needs to be sympathetic to both ends of the spectrum and come up with a fair strategy. London needs to be an interesting place to live and work for every person who’s important to the London community. And that includes the less well-off and the wealthy and also the bankers and tech entrepreneurs. And it includes key workers. And I think one of the biggest challenges for city planners is to get that engagement right. But to think the private sector is going to come up with the solutions is ill conceived. And the only way government will put right many of these things is by taking the initiative themselves and showing strong leadership not just by increasing tax which will only prove to be disastrous.
LUX: How do you relax? Is there an email switch-off time?
Alistair Elliott: I think people treat me as a bit of a joke internally because I don’t go to bed until I have no emails in my inbox, I can’t sleep unless I know my inbox is dealt with. I feel it is a 24/7 job, that’s what I’ve taken on – however I don’t feel overburdened by it. I live by the 3 Ds of ‘deal with it, ditch it or delegate it’, and that enables me to ensure by the time I rest in the evenings I’ve got nothing in my inbox. I am fortunate to be able to switch off quite easily and find time for exercise, family and friends.
Find out more at knightfrank.com