One of the world’s leading property companies, Knight Frank, is planning to ramp-up its residential presence in Australia as part of a global expansion. “We’re looking to build the brand across the globe,” says Stephen Ellis, CEO of Knight Frank Australia.
The firm, which was founded in London in 1896 and has a network of 244 offices worldwide, operate in the luxury property market and is especially active in the UK and Europe. “Knight Frank’s reputation in the top-end market is renowned—if you pick up ‘Country Life’ in the UK, you only have to look at the castles and the manors and the chateaus being sold by Knight Frank. We think that contrary to some of our competitors like CBRE and Jones Lang, it’s a point of difference that Knight Frank has 60% of our income from residential."
This access to high net-worth individuals is what Knight Frank will leverage to build residential business in Australia. “Our exposure with places like London and Paris and Monaco, which naturally have attracted high net-worth individuals, has given us a fantastic database to work with,” says Ellis. Each March, the firm tracks the spending habits of high net-worth individuals in their annual wealth report. In London, it has 40% of the central London housing market over £4 million. In New York, they've just formed a partnership with Douglas Elliman, the largest residential real estate brokerage in the city, to deal with top-end homes. They also have a big residential presence in Singapore with over 1000 agents. “As the market becomes more and more international, Sydney and most of the capital cities in Australia are seen as highly desirable locations to live, they’re seen as safe havens," says Ellis. We’re seeing taxes implemented in places like Hong Kong and Singapore and even London to try and cool the market, taxing foreigners, and it’s making Australia even more attractive. The market across the whole property sphere, not just residential, is becoming more and more globalized.”
Knight Frank wants a bigger presence in Australia’s residential market because the firm wants to be seen as the same organization globally. “Where someone can walk into a Knight Frank office in Sydney, Hong Kong or London and know that they’re going to be offered the same services,” explains Ellis, who took the helm of Knight Frank Australia four years ago and says he has focused on dealing with the commercial sales business, the industrial business and their office leasing business. "That was, in my mind, more paramount than getting into a new business like residential," he says. “I’m now focusing very much in the residential space to build up our presence in this market, not just in the apartment market, the project marketing business, but also in the prestige market. I’m not saying we want to be in every single suburb of Sydney, Melbourne, Perth, Adelaide and Brisbane, but what we do want to do is capture the international and high net-worth individual market.” Currently, Knight Frank has a small team in Sydney, and also operates residential project marketing businesses in Perth and Melbourne.
The key to expanding the residential business, says Ellis, is hiring the right people. He is actively seeking partners and employees in Australia, but his preference is to have people as part of the Knight Frank business rather than another business. “I’m not saying no to franchise but you have a lot more control over the profile and the way the business is operated if we have ownership of the business,” Ellis says. He is looking at recruiting locally and bringing in people from London. “One of the challenges is finding people in Australia who understand the brand,” he says. He already has two staff in Sydney who came from London, and is about to employ an Australian who is returning home after working in London.
Asked if Knight Frank would consider teaming up with a local partner such as a McGrath Estate Agents or a Di Jones Real Estate or a Belle Property in Sydney, Ellis responds, “one or two of those organizations have spoken to us and there are always different views as to how things should and shouldn’t be done. The issue is that Knight Frank is very particular on how they tackle this market, particularly the prestige home market, and the likes of maybe a Di Jones has their own way of dealing with things. McGrath might sell a property of $1 million; we don’t want to get dragged into that market too much because that’s not what we’re about. Ultimately what we want to be doing is a prestige service akin to what we do in London.”
Ellis says getting into the prestige home market has to be opportunity led. “I’m not just going to go into that market with anybody, it’s got to be the right person, and I’ll wait for that right person,” he says. “The residential project marketing business is hot right now and we need to be in that market. By the end of the year we want to establish a real presence in the residential project marketing business in Brisbane, and we want to significantly expand our presence in Sydney.”
Despite talk that Australia’s residential property market is overheated and destined for a slow down, Knight Frank has faith in the local sector. “We’re very confident about the Australian market, even in places like Perth,” says Ellis. “The economy might vary from state to state but generally the population growth is there to sustain more demand for housing, and that’s not going to go away. That will continue to attract not just local buyers but offshore buyers, and Sydney in particular is becoming a focal point for high net-worth individuals. My only concern about this market right now might be that some developers are getting ahead of themselves,” he said. “I think one of two people might come unstuck.”