Q&A with JLL’s Head of Living Strategic Advisory

BTR News spoke with Paul Winstanley, Head of Living Strategic Advisory at JLL who recently returned to the UK from New Zealand.

Paul Winstanley, Head of Living Strategic Advisory at JLL | BTR News
Paul Winstanley, Head of Living Strategic Advisory at JLL.

We spoke to Paul Winstanley, Director – Head of Living Strategic Advisory at JLL about his return to the UK from New Zealand, where he headed JLL’s Build to Rent team for Australia and New Zealand, the differences and similarities between Build to Rent in the three counties, learnings, JLL’s resident-first approach, and some of the company’s key areas of focus over the next 12 months.

You recently returned to the UK from New Zealand where you headed JLL’s Build to Rent team for Australia and New Zealand. What can you tell us about the differences and similarities between Build to Rent in the three countries?  

Both Australia and New Zealand are trying to take advantage of key learnings from the UK given the Build to Rent sector is now so well established here. In many ways, the demographics for Australia and New Zealand are as strong if not stronger in support of a Build to Rent sector than the UK. Build to Rent has the potential to not only help solve the housing crisis in each country, but also enable institutional capital to access the local residential markets, which are in both cases dominated by small-scale investors and owner-occupiers. The experience for those who rent in both countries is all too often far from ideal.

Australia’s Build to Rent sector is experiencing a rapid growth phase, with schemes now in the pipeline in most, if not all, states. Victoria, New South Wales and Queensland are leading the charge, with Melbourne, Sydney and Brisbane seeing the most investment focus. Product-wise, the UK is largely being used as the Blueprint, however schemes tend to be bigger in scale in comparison to the UK’s initial schemes, with Australia’s State Capitals already heavily urbanised.   

The challenges for Build to Rent in Australia surround Land Tax, Stamp Duty and Overseas Investor Surcharges. These remain obstacles to more rapid growth, although there is evidenced political will – at a State level at least – to support Build to Rent as a sector. There has been little traction to date with the federal government, but industry remains hopeful that there will be movement here over time.

New Zealand remains very much at the beginning of its Build to Rent journey despite its obvious potential. There are only a small number of first mover investors – the most prominent being Kiwi Property Group, who are on site with a 295 apartment scheme at Sylvia Park in Auckland, adjacent to the large shopping centre they own in that location. For the sector to flourish there is a clear need for Government driven legislative support, most notably to iron out issues with the ‘Overseas Investment Act’ which prohibits overseas ownership of residential assets without specific ministerial approval. Additionally, the lack of long-term interest deductibility for tax on residential investments, and the absence of depreciation for residential property significantly reduces investment returns. To date the Government has not been prepared to support the sector.

How has your international experience informed your work in your new role?

I was fortunate enough to lead several teams for JLL while working overseas, including Research, Strategic Consulting, Build to Rent and Marketing (in an acting capacity). Working across numerous disciplines and with key stakeholders across the Asia-Pacific region, has taught me the value of transferable skills and working collaboratively. I found the sectors in New Zealand and Australia to be particularly good at adopting a ‘Strategic Approach’ through a dedicated ‘Strategic Consulting’ function within businesses. On my return to the UK, I wanted to transfer this approach specifically to my specialism in the Living Sector here, by creating a Strategic Advisory team at JLL to work alongside my experienced Capital Markets and Living Advisory colleagues.

I have already seen how, by joining the dots across teams, clients are the key beneficiaries as they get a multi-disciplinary approach and access to specialist advice appropriate to their needs. It also opens working with other like-minded companies in different fields to create a wider, client-focused team that can deliver optimum performance.

As a further lesson, from exposure to fund capital across Asia-Pacific, and indeed globally, there is increased appetite for Living Sector investments in all corners of the globe. JLL is ideally placed to assist clients to access opportunities all around the world due to our global reach – something that is only enhanced by a strategic approach to capital deployment and long-term investment options.

We understand JLL is looking to take a resident-first approach to its strategic advisory work – what does that mean in practice?

Build to Rent has now been an increasingly active investment market for the best part of a decade in the UK, and we are now seeing the investment appetite for a wider variety of large-scale residential portfolios including Build to Rent, Co-living, Shared Ownership and assets linked to Affordable Housing need. Obviously, that’s great news for the rental sector in all its shapes and sizes, but when looking to strategically advise clients on how to optimise their investments, it is always critical to keep one eye on product performance and to consistently ask yourself ‘what does good look like’?

With a ten year track record, I believe the sector has a better understanding than ever as to what good does, indeed, look like. The answer, in my opinion, is a resident-first focus.  Successful and market-leading Build to Rent investors and managers have one thing in common – they deliver a product to their customers which is resident-centric and promotes a culture with the psychological benefits of homeownership, without its long-term financial commitment.

I don’t, however, think this should just apply to Build to Rent. Why can’t a resident and experiential approach apply to all forms of long-term residential investment? Where and how we live is often so important to how we feel about ourselves. I feel that investors who truly get this will not only maximise their financial return prospects, but also make the most impact from their sector participation. A real win-win.

So, in short, I see our strategic advisory function as very much product and resident experience focused. Getting those key elements right from the outset feels the easiest way to achieve a successful result from investment in the Living Sectors.

What are the main services JLL’s strategic advisory team offers regarding Build to Rent?

Our new Living Strategic Advisory business line fits naturally between our respected Living Valuation Advisory and Capital Markets teams and will look to offer bespoke solutions to clients’ problems. We are seeking to offer clients complementary, strategy-led services outside the traditional valuation and transactional functions, taking an analytical approach to help clients to implement their vision and set themselves up to meet, and hopefully exceed, their investment objectives.

Concentrating solely on grade A/institutional, large-scale, residential portfolios and assets, we are assisting clients by providing bespoke advice and helping them to achieve their ambitions and investment goals. We specialise in analysing investment value drivers and characteristics, whether at an individual client or market level, and assisting clients by interpreting data and drawing ‘real world’ conclusions from a growing body of market intelligence.

So, if a client wants to know what type and specification of Build to Rent product could work where, based on micro-market and investment market intel, what big data and research trends are telling us about future market trends and different geographies, what policy themes are on the horizon, or what Living Sector international capital is looking to see from products they buy, the JLL Living Strategic Advisory team are here to help.  

What are some of the key areas JLL will be targeting in the coming year?

Over the next 12 months the JLL wider residential specialist teams – Capital Markets, Valuation Advisory and Strategic Advisory – will continue to provide holistic support collectively for clients, and we will therefore be targeting how we can best provide clients with tangible solutions to their residential investment opportunities and practical needs. It is no secret that, coming out of Brexit, the global pandemic, and the current economic uncertainty with rapid inflation, the market will not be straight forward to read at any level – and certainly not without a greater focus on evidence, market trends and external economic pressures.

The next 12 months will inevitably present challenges (but what year doesn’t?). At JLL, we believe that with challenge comes opportunity; and with opportunity comes future success.