Private members' clubs add stardust to global housing markets
Making sense of the latest trends in property and economics from around the globe
4 minutes to read
It's hard to know precisely why private members' clubs have quietly become one of the fastest-growing subsectors in the real estate industry.
Some say it’s a desire for connection and community in a world of frenetic activity. Others suggest it’s all about exclusivity and bragging rights. Whatever the truth, the effects are far-reaching. More clubs have opened in the past four years than in the three decades following the 1985 opening of London's iconic Groucho Club. The pipeline of prospective openings is the largest it has ever been.
There are numerous implications for the real estate sector and we lay them all out in a new 16-page guide, out today. I'll revisit them through the week, including in tomorrow's Wealth Report email (which you can sign up for here), but today I want to focus on the impacts we're seeing on housing markets.
Stardust
There were few reasons for homeowners to take note when clubs were generally confined to central locations in global cities - big- brand clubs were city-wide resources - but that changed with the introduction of hyper-local clubs, like Inness in upstate New York and The Dally in London's Islington.
How these clubs drive housing market activity is perhaps best shown via the world’s ultimate neighbourhood club cluster: the Cotswolds trio of Estelle Manor, The Club by Bamford and Soho Farmhouse.
Our research confirms that residential vendors will try to sprinkle a little stardust due to their proximity to these clubs, often mentioning them in their sales particulars even when they are up to 60 miles away.
The reasons why are clear: our data shows that in August 2024, demand for properties within 15 minutes drive of Soho Farmhouse was running at more than twice the average for the area, with 2.3 buyers registering for every one buyer in adjacent areas. They are different buyers, too – more international, more affluent. Typically, 12% of buyers registering in the Cotswolds are from outside the UK, but that rises to 26% within the all-important 15-minute drive to Soho Farmhouse. Not only that, but houses within a mile of these clubs sell faster (by 2.5 weeks) compared to similar properties five miles further away.
See the report for more.
Asking prices
The Bank of England's September rate cut had a swift impact on housing market sentiment. Sellers raised asking prices by 0.8% during the month, Rightmove said this morning. That's about twice the usual rate for this time of year.
Overexuberance could squeeze housing market activity. Mortgage rates are higher than the vast majority of home seekers are used to, and supply is rising, so buyers have more choice. In fact, the average time to match buyers and sellers is now 60 days, according to the Rightmove data. That's three days more than last year, illustrating just how price sensitive buyers are.
Improving sentiment isn't constrained to housing markets. Manufacturers haven't felt this good since David Cameron was prime minister, according to a survey by industry body Make UK.
This is interesting given the growing list of slowing or stagnant economic indicators, but interest rate pivots from central banks across Western markets is still the only story in town. In fact, UK economic momentum is weakening at such a rate that analysts at the big banks, including Goldman Sachs, HSBC and UBS, reckon the Bank of England will soon be forced into more aggressive action to stimulate the economy. Markets currently expect cuts at both the November and December meetings.
Resident experience
The total number of completed Build to Rent (BTR) homes now stands at just over 114,000, having surpassed 100,000 earlier this year. A further 62,030 homes are under construction and 84,607 have full planning permission granted.
BTR schemes are in high demand. Average lease-up rates have climbed from an average of 17 units per month for schemes that completed in 2020, to 47 for schemes that launched last year. Occupancy levels in existing schemes are also high.
It is through this lens that we created our BTR Resident Experience Index (REI), to quantify how schemes are performing from a resident perspective. The Index allows us to draw conclusions as to what “best-in-class” looks like and to understand how both individual schemes and the sector can improve. Getting it right will drive investment metrics like occupancy and retention, lease up and rental income, as well as reducing costs and improving net operating income.
Knight Frank published the latest edition last week, and you can read it here.
In other news...
Jay Powell's rate conundrum (FT)