Neary 20 years ago Rightmove was a fledgling and little-used property portal that was barely there and struggling to persuade a sceptical public – and industry – that it was the future of house hunting.
Today it and the other main portals claim that 95% of house searches start with them, a breath-taking monopoly of consumer habits and one that’s enriched Rightmove shareholders beyond their wildest initial dreams. Last year alone it returned £140 million to them via its stock buy-back scheme, aside from its usual fat dividends.
Rightmove’s big break-through was to persuade agents to plough money into its development and expansion, in return for shares. It’s a model that both Zoopla and most recently OnTheMarket have used to great effect.
But the property development sector has not followed this path, happy to piggy-back Rightmove and Zoopla’s success, but otherwise relying largely on very traditional marketing methods.
For example – developers still spend huge amounts on local newspaper advertising even now, years after agents largely abandoned traditional media and ‘went digital’.
But the Build to Rent (BTR) sector is different. Forged in more recent times and appealing directly to a largely 20 and 30-something audience, many BTR developers are looking for alternative models of finding tenants.
It’s a huge potential market. There are already nearly 140,000 BTR units in the UK either planned, completed or under way, according to the British Property Federation, more than half of which are in London.
One of the key operators in the capital is Quintain, which is spending millions building a small city of BTR units in the formerly care-worn commercial and industrial area around Wembley football stadium, now known as Wembley Park.
In an unusual move for a BTR operator, the £3 billion company this week took a 10% stake in Movebubble, a London rental platform for both traditional and BTR properties which offers agents and landlords like Quintain the ability to reach a new generation of tenants through the proptech firm’s app.
“Quintain and Tipi are emerging as market leaders in the BTR sector, which needs platforms such as Movebubble to expand, succeed and connect directly with the renting population in the UK,” says Rajesh Shah (pictured), Executive Commercial Director at Quintain responsible for its BTR brand, Tipi.
“We were extremely impressed with the innovative and entrepreneurial approach Movebubble takes and we are very excited to be involved in the company’s bright future.”
What makes the deal significant is that Movebubble hopes it will be the first of several such tie-ups with BTR companies listing properties on its site, aping Rightmove’s beginnings.
To find out more, Dealmakerz quizzed Movebubble’s co-founder and CEO Aidan Rushby.
How will the partnership work – is it two-way – i.e. will Quintain list its properties on the app and will renters joining the Tipi development use Movebubble’s tech to complete their tenancies and other paperwork?
Aidan: “This is purely a strategic investment from Quintain who see the current and future potential of the business.
“Tipi already has its properties listed on the app, under the Movebubble One brand. Any tech/products we look to build in the future will be in the interest of all renters and not specific to a certain partner. Longer term we will be exploring ways that data can help improve where and the types of buildings that are created.”
DM: Did you get feedback from lettings agents about the deal; i.e. are they relaxed about a build to rent giant joining the platform is such an obvious way and investing in it?
Aidan: “This investment will absolutely help our letting agents as well. It will allow us to growth the overall number of renters using the platform and their listing will still be very much a part of that ecosystem. Plus, it will allow us to invest further in our product and give access to the same experience.”
DM: Is this the first deal of its kind as far as you’re aware – i.e. a large developer/landlord/BTR company investing in letting tech?
Aidan: Yes, I believe so; but remember in the early days of Rightmove and Zoopla they saw significant investment from agents…such as Countrywide and Connells.
DM: Who approached who – were you looking for strategic investors and found Quintain?
Aidan:“We were approached by a couple of property funds who were really interested in what we are creating but we really liked the team and vision at Quintain and it became a natural fit.”
DM: Where is the Movebubble business at the moment in terms of tenant and property market share – and how will the Quintain investment change that?
Aidan: “We continue to grow at over 100% year-on-year which is in line with our goal of reaching 100m renters by 2030.”
DM: Can you say what the current valuation of Movebubble is – i.e. what has Quintain taken a 10% stake in, approximately?
Aidan: “Unfortunately, I can’t comment on the value of the business but we’re excited that this new partnership will lead to large future growth in the valuation of the business. Quintain clearly feels the same – which is a great vote of confidence.”
DM: How will Movebubble One work compared to the existing platform – what will it offer that’s different?
Aidan: “Movebubble One is a selection of hand-picked BTR partners. We’ve brought their properties onto our platform under our brand name, as it has a strong resonance with renters and all the operators are seeing significant value.
“We still have all our other listings and will continue to do so. The benefit of Movebubble One properties is that (as with many BTR developments) they are designed specifically for renters to make the experience better, more flexible and seamless. This aligns perfectly with our renter first mission.”
DM: Can you see yourself doing similar investment deals with a BTR supplier or is this exclusive?
Aidan: “This isn’t exclusive, we’re having conversations with other suppliers, developers and funds.”
DM: Do you think build to rent is the future of British renting – will it take a significant percentage of the PRS eventually?
Aidan: “I think it will be an important part of the market, as there are targets of 300,000 new homes a year set by the government and this sector is seeing huge investment.
“What’s clear, is that renters’ needs are not being met and there is a growing number of people who are unable to buy. On top of that, we’re seeing a shift amongst the younger generations whereby renting no longer has the stigma it used to – it’s becoming a lifestyle choice to fit the modern world that is rapidly changing.
“What the BTR developments provide fits that lifestyle choice but also shows that the PRS has rested on its laurels for far too long and renters expect more.”