Mishcon de Reya page structure
Site header
Main content section

Propertyshe podcast: Naomi Heaton Founder and CEO of The Other House

Posted on 09 November 2021

“We all know that London has so many virtues in terms of education, rule of law, culture, being cosmopolitan, being a financial centre and all of those things are important but people love being in central London and for many it will always be their, their destination of choice so whilst there will always be other opportunities and other possibilities and investment, we look for angles, I cannot see the allure of central London will disappear.” 

Susan Freeman

Hi, I’m Susan Freeman, welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya, in association with the London Real Estate Forum, where I get to interview some of the key influencers in the wonderful world of real estate and the built environment.  Today I am absolutely delighted to welcome Naomi Heaton.  Naomi is Founder and Chief Executive of The Other House, a completely new lifestyle hospitality brand in prime central London from the Portfolio Club.  Established in December 2019, this is a joint venture between London Central Portfolio (LCP) and APG, the largest pension provider in the Netherlands which manages approximately 587 billion Euros worth of pension assets on behalf of its pension fund clients.  Since its creation The Other House has acquire two assets; the Harrington Hall in South Kensington and the Wellington Block in Covent Garden, opening in 2022 and 2023 respectively and it is actively acquiring more.  The Other House will blur the lines between hotels, service departments and the private rented sector to create a new sector of residents clubs in the accommodation space.  Residents are able to book from a day to a year and there will be a real emphasis on place making.  Naomi is also Chairman of the LCP Group which she founded in 1990 exclusively to provide a service to investors in the prime central London private rented sector.  She has also launched a number of funds investing in this asset class.

So now we are going to hear from Naomi Heaton about how she moved from advertising to the residential property market and what we should expect from The Other House.  So Naomi welcome, welcome to the studio, it’s lovely to be talking to you today.  I’d like to start off with a little bit of background and unusually for someone who is so immersed in the world of property, your, I know your early career was in advertising but you started you know, I think you were the youngest female main Board Director at Saatchi and Saatchi?  That must have been quite a big thing at the time, I mean how, how did you, how did you move from advertising into real estate?

Naomi Heaton

Well it was a very fortuitous journey I suppose.  I went into advertising, I had a wonderful few years there, Saatchi was the most amazing place to work with great personalities and characters but I’d always pursued this other hobby of buying and selling property and it all started when I brought my first flat which I bought very young because I couldn’t see the point of renting and giving the landlord the money, I might as well go and buy one myself and it was a real stretch, like it is actually for everyone now, so I kind of begged, stole, borrowed.  I literally borrowed off everyone, too up a massive mortgage.  At that time you could get seven times the multiple of your salary and bought my first property which is a garden flat in Camden Town, did it up and that, that was the beginning of the bug and then what I used to do in my spare time although I can’t really see how I had that spare time, but I used to look for dilapidated property in central London, particularly in W1 and do it up, reconfigure it and sell it and found that I had a skill at making some money out of it, more than the next person because of being able to see space and how to reorganise it and how to create an aspirational interior without spending the earth and it became a hobby initially and then finally I thought well actually I’d quite like to run my own business.  The thing about advertising is you are very beholden to the client and the marketing execs and you have this… these parallel lines with the creative people who want no logo and the marketing companies who want all logo and I thought, well I am going to try and do this, see where I can get.  And that was the very beginning of how it all begun.

Susan Freeman

And do you think that working in the world of advertising and you know being familiar with the value of brand was something that, that sort of helped you as you moved into your new career?

Naomi Heaton

Yeah absolutely.  Well it helped in many ways.  I mean I learnt so much from advertising and the way I have approached business is very much being fed by the agencies I worked for which were Leo Bennett, Saatchi and Saatchi and Young and Rubicam.  The power of the brand is absolutely with me all the time particularly in the new venture which no doubt we will talk about, that the way you communicate it, the way you make it feel and look, the way people engage with it is just so phenomenally important so that has always been with me in everything that I have done, done since then without doubt.

Susan Freeman

It’s interesting because the, the real estate sector was quite slow to realise the power of brand so it’s interesting that you were you know, aware of that so early on in your career.  So you started LCP, London Central Portfolio in 1990.  What was the vision when you, when you started the business?  What did you want to create?

Naomi Heaton

Well the, the first step of me getting into property as, as we just talked about was the fact I just really loved doing it and I could make it work for me but gradually as I, I did it and bought and sold and when I started thinking about a new, new business I realise that you needed more to business than just making the acquisitions otherwise you were always dependent on, on the last thing that you bought, where was the next deal going to come from and what were you going to do in the meantime.  So that was a fundamental driver in how I developed the business.  The other element of how I developed the business was obviously I was buying, doing up and selling and that’s… we all know that the process of buying in England is not exactly easy.  Then if you are going to do it up, getting hold of builders and making that work and then ultimately if you were going to let it out, how were you going to do that?  So I really felt that there was a service for investors who were hands off, they were probably International, offshore, that they needed assistance to buy the right property and then to handle the renovation and then ask me to do the letting and management.  So the whole idea was, okay I’ve been through this experience because I’ve done it just as a hobby but a commercially successful hobby.  Other people need that very same service so I came into it from having done it myself and I think one of the interesting things was that I had never been in an estate agency background.  I’ve obviously, as you have said, been through advertising and I’d also been at the sharp end, buy and selling property so I really looked at it from a different perspective of how do you maximise the profit opportunity out of doing it and how do you actually make the process an easy process for other people who aren’t right on the ground.  So those were the things that were the vision for, for LCP which was really acting for investors, generally foreign investors because even then it was the international investor that was so important in prime central London, acting for them and I always used to say they were high net worth’s, smart delegators i.e. they did obviously have the funds to come into central London but they also understood that it was a complex a market as any other market and you’d get your stockbroker to buy your, your shares or whatever but so often people felt that they could do property on their own and still feel they can do property on their own because we will leave, feel, touch, experience property but actually going in, particularly to a foreign country or foreign city and understanding, particularly in central London that every street is different, every building is different, the price per square foot is different.  That’s quite a different art and science and that is what I wanted to offer foreign investors and I wanted to offer them the full one stop service.  So that was really the inspiration.  The other element of the inspiration was that as a… if you buy and sell, you buy and sell.  As I said, that’s the end of it.  If you can develop a business which has a service offering then you can… the business becomes much, much bigger and much more valuable than just the trading of the assets and in fact originally we bought and we did up but then we tagged in the, the letting and management because that is actually the recurrent income, that’s a steady business base that you can always rely on and all of those kind of thoughts were partly due to the fact that I came to property not through conventional channels but also because of my advertising and commercial background as to how one should develop a service business.

Susan Freeman

And I mean, obviously the business has really grown.  I mean what, what is the, what is the scale of the, of the business now?

Naomi Heaton

Well on the LCP and obviously LCP has now expanded into other things, we manage about a billion pounds of assets for our investment clients and the beauty of the business is most of what we acquire we do retain for the letting and management.  Obviously we have some clients who want to buy for their own use but in the main it’s an investment business and the other core platform is the fact that I’ve always approached it and approached residential as a, as an alternative asset class.  So just as when I started LCP we were probably one of the very first buying agents, we represented the buyer in a market where clearly people were familiar with estate agents who were representing the seller and again that seemed an obvious thing to me that as a buyer you want representation because the, the estate agent is representing the vendor you know, however charming and knowledgeable and helpful they are, ultimately their remit is to represent the vendor and buyers need to be represented as well, particularly if they want to make sure that they are going to acquire exactly the right property and if they are going to make sure that they are going to be paying the right price and that they are going to get the capital appreciation that they are looking for.  So the buying side was very, very innovative at the time but the other thing was looking to unclear 11.50 asset class.  Residential was not seen in the early 90’s as an alternative asset class and when we used to speak to potential clients or potential investors they would be outraged by the fact that you could say that residential property was an asset class.  And now of course it is completely accepted and completely normal but it wasn’t at that time and then to look at it and say okay we’re going to build up a financial model about you know, how much it costs, what your fees are in order to buy that property, how much it is going to cost to renovate which we know literally lead to a percentage point when you visit the property, what are the rents or range of rents you are going to achieve, what are your running costs so that you can end up with your gross and your net yields and you can look at your return on investment depending on how much money you are borrowing and so forth.  That again was completely and utterly novel but it wasn’t that I was trying to deliberately do something which was different and innovative, it was just to me completely common sense and in a way everything that I have done during my career has been to do with seeing what’s out there in the market place and seeing that there are opportunities or openings and then moving into them but it’s been a, it’s basically been due to observation and assimilation rather than you know, waving a banner saying I’ve got to be an entrepreneur, I’ve got to be innovative.  It’s almost been a natural case of observations and assimilation.

Susan Freeman

No it’s interesting and I mean I’ve seen you described as the Doyen of London buying agents and you must have been one of the first in the UK to actually be acting for the buyer.

Naomi Heaton

Absolutely, yep.

Susan Freeman

And do you think London still has the same appeal for International investors as it did 30 years ago because we’ve obviously been through quite a difficult period over the last couple of years?

Naomi Heaton

Yeah well the answer is I do.  We have been through an incredibly difficult couple of years.  We’ve been through a particularly difficult couple of years in our sector because what we’ve always specialised in is prime central London, the very, very centre of London so the City of Westminster and the Royal Borough.  That has always been due to the fact that we believed in the scarce resource, so clearly there is very little build potential, new build potential in central London, 70% is a conservation area.  It’s got its beautiful architectural heritage.  It’s never going to be able to be changed dramatically.  Once you have acquired a property in central London, that’s it, it’s off the, off the buying list so it is so different from buying into a new build development where you have multiple assets, it’s very, very similar and clearly new build outside the centre of London can continue to occur whereas we have a finite stock and that, that underpins the value.  So the value of central London, it’s a bit like fine art or fine wine or amazing cars where you have such a limited amount of it, it generally defies kind of normal general economic principles and that was always the attraction and it’s always been clearly a market which has been very heavily supported by the International buyer.  My, my clients are generally International.  I have some UK clients but they are probably invested in property already in one way or another even if it is their family home so for the foreign investor, particularly the Asian investor and the Middle Eastern investors always have a tremendous love for property and a tremendous love for central London property.  The other element of our model is that because we are largely buying for people who are acquiring for rental investment, we’ve always concentrated from a commercial point of view on, on small units, on multiple small units because you will always get the higher rental return from small properties than you will from a large freehold house.  So we are looking at how we maximise or optimise the perfect opportunity for our clients, we will be looking at individual flats or blocks of flats or whatever it may be and that again is very much an International market becomes into it so after the last two years clearly we have not had the investment market coming in that we would normally have because although some will buy sight unseen and we have clients who have been with us for many years and will therefore trust that we will provide them with what they want and clearly it’s been a very price competitive market so for those that have come in, I think they will be incredibly successful longer term but the International market just hasn’t been there for the small rental units so the market has been very, very suppressed.  Having said that, I have total confidence it will come back again.  After the last election we had what we called the price bounce at the beginning of 2020, just before Covid and the market hadn’t been suppressed due to a lot of, of increases in stamp duty, uncertainty about Brexit, several general elections.  We had that particular Conservative election win in 2019 and the market started to accelerate which is just what we thought would happen.  Confidence came back and investors are incredibly ruled by their sense of confidence and sense of certainty and the market started to rebound for three months until obviously Covid came and then of course it fell back again.  But what that indicated was the appetite and I, I genuinely believe people will come back, that all the evidence is that International buyers are kind of revving back now that the, the restrictions are being lifted, that they are beginning to look at returning and I think one of the most interesting perimeters is the rental market.  So the rental market has come back really, really strongly so again during Covid or the height of Covid, people weren’t moving, people weren’t coming over and the market just slowed right down but this last September there has been three times as much demand as the preceding September, rents are moving upwards having been suppressed because there was less demand and the rental market is a more instant barometer of what’s happening.  So in sense, people are coming over, students, corporates they are all coming back and I am of the view that by next spring the real estate market, the real estate market that we operate in in prime central London will start to rebound and of course it’s been really unusual because I’ve never seen a time when the UK domestic market has come out of a suppression more quickly than central London.  Central London has always been the one to move and then the domestic market moves later and slower and this hasn’t happened in this particular instance.  But I think that when we get back to a near normal situation, as much as we can, the central London market will, will slip away.  After the credit crisis the market went up in one year in central London by 23%.  Now I am not saying that that will happen again and none of the kind of pundits are suggesting that, they will be more cautious but there is a general view that 2022 will be a much, much stronger market for central London assuming that we don’t have some, something else coming up from left field that we will see it all coming back.

Susan Freeman

Well that’s very, that’s very positive and are the, I mean the prime areas for wealthy International investors still very much the same or, or has the focus of interest shifted in any way?

Naomi Heaton

Well I think investors are always looking for other possibilities and other opportunities.  There’s, there’s clearly been some investment to the Northern power houses which is fantastic and was always the objective of developing those areas but I would say that the more sophisticated investors, the higher net worth investors will always see prime central London as a destination of choice.  Obviously there are other amazing global capitals in global cities but of course we all know that London has so many virtues in terms of education, rule of law, culture, being cosmopolitan, being a financial centre and all of those things are important but people love being in central London and for many it will always be their, their destination of choice so whilst there will always be other opportunities and other possibilities and investors will be looking for angles, I cannot see the allure of central London will disappear.

Susan Freeman

That’s very good to hear.  Now you stepped down as CEO of LCP and remain Chairman but you founded a new concept, The Other House.  What was it that you saw in the residential sector that led you to this new concept which I understand is going to revolutionise hospitality?

Naomi Heaton

Well it will, it’s going to be the new disrupter in the hospitality market but it came very firmly from what I was doing at LCP and as I said to you earlier, the innovations have all come from observations and in this particular case we were renting a large portfolio of flats to corporates and to high net worth students studying over here and they were, the main… what I call the main stream market and what you find in central London is 75% of tenants are actually renting one or two bedroomed units, they are not actually renting the big houses and they, over the years, I could see that they were renting smaller units because budgets are always a consideration particularly if you are a corporate tenant, that they wanted location is that you are coming over here for a period of time, you want to experience the sights and sounds of central London as we would if we were going to any major city around the world and so location was more important than the size of the property.  So I could see properties getting smaller and actually that trend started after 9/11 when we saw no Americans coming over here and the bigger three bedroomed units just fell off a cliff and what you were letting were two bedroomed units and then one bedroomed units have actually become more popular and getting higher returns.  So I could see units getting smaller, I could see that they needed to better and better interior design which is one of our specialisms with LCP, how do you interior design to make it look a fantastic destination but always with an eye to a budget because it was investment so you could see that and actually we would put the, the pictures on the wall, the photographs in the frame, put the teddy on the bed, lay the table so you’d make it feel exactly like an aspirational lifestyle interior which is what sold the property to the tenant and then what we were seeing more recently was tenants wanted everything 24/7.  They weren’t prepared to wait for service or maintenance or anything like that and I just thought well we are actually renting a bunch of hotel rooms here and if that’s what we are doing, why don’t we start looking at the hotel market and the hospitality sector and see whether we can give them actually what they want and then when I looked at the market in greater depth I could see that at our end we obviously created a great sense of place, a sense of home where people could put down roots for the time that they were here but there was very limited access to, to service and at the other end you had hotels which you had the great service, maybe too much, a bit starchy, a bit formal, a bit being on your best behaviour but you didn’t have that sense of place.  So we thought well, let’s toss it all in the air and say, let’s lie sense of place with sense of service and bring something together and what we wanted to create was something which was a combination I suppose between long stay rentals, service departments and hotels where you could have a great sense of place, great living experience but you could also have the service if you wanted it and all wrapped up with the kind of sense of members club so we’ve termed our assets or our brand at a residence club, it’s called The Other House because the intention is whether you are staying a week, a day, a month or a year, you feel you’re in your other house.  Where are you staying?  I’m staying at my other house in South Kensington or my other house, Covent Garden and to make people feel part of a club so part of the concept is that we have what we’ve called Club flats which are great living spaces with, with sitting room, kitchen and, and living… bedroom.  We have great public areas including destination bars and a brasserie but we also have a club area with a spa and bars which are simply for our residents and for private members.  So you can have all these different areas and different spaces and you can pick and choose how you want to live in that area.  We will be using a lot of tech as well which I think had been launched even two years ago before Covid, would have been a bit daunting but now if people want to use the tech solution they don’t have to but they can control their stay, they can check in, they can get into their room, they can book all their services, order their restaurant choices, whatever it is they can use an app that we are developing so that those people who want to be in control can be in control.  Other key elements of it are of course sustainability and we have four pillars; one is to make people feel at home, one is to give them control; one is to create great experiences because what people want is, is experience and, and a lifestyle and feeling like a local, feeling like a resident but we also have this fourth pillar of sustainability and making sure that everything that we are doing is great for the environment because we know the kind of people that are going to stay with us we feel are people who know what they want, know where they want to go, they are on a journey and part of their journey is being… making or having positive social impact.  So that’s a really important element of, of the whole proposition.

Susan Freeman

It sounds fantastic and do you anticipate that your members, visitors are likely to be corporate, people travelling on business or leisure or is it going to be a mixture of both?

Naomi Heaton

It’s going to be a mixture of both because we are both a hotel and also a long stay proposition.  We are going to cater for lots of different people so I see very much that form a corporate point of view we are beginning to see a trend which has been called slow travel.  The view that corporates will send their people over for longer time, less often but longer time simply because that is better for the environment, it’s actually better for their physical and mental wellbeing.  So we are going to be ideally positioned for those people who are coming for longer stays.  We will also be having a sector, 20% of our guests are going to be from the traditional private rented sector, so people who are coming maybe for a year on secondment or studying but who want to have this less service and facilities on demand that the hotel can offer.  On the other hand we will have the transient stayer who will be the tourist, the holidaymaker because to all intents and purposes they can have that hotel experience but they are going to have a great sense of place when they are there.  So I feel a whole mix.  The other thing I think is quite interesting is that a lot of people purportedly have moved out to the country during Covid feeling that they wanted more space and now of course they need to come in on a fairly regular basis to central London so what are they going to do?  And of course one of our facilities is that we will store kit.  So if you are coming in for a few days every week or a few days every month, we can take all your kit and put it back when you come back so you are literally walking into your, your second home, your other house because you don’t even need to think about it.  But also its not some lonely flat you are going in for a few days, you’ve got the whole lovely environment what’s happening around you so I feel that we will get the short-term stayer, we’ll get the pied-a-terre stayer, we’ll get the long stayer and it will be a huge, wonderful mix of all these different people which will also make the whole ambience different because it won’t be that kind of rather turnkey feel that you can get in a hotel where you are in, it’s fantastic, and then you are out because there is a kind of sense of permanence there.

Susan Freeman

That storage facility will be really, really helpful.  It reminds me of the ski hotels where you know, frequent skiers will store their equipment.

Naomi Heaton

Absolutely right, I think, I think it will.  Also having your own kitchen means that people can do their own thing.  We embrace all the things that are happening so we also understand that people will get takeaways.  That’s a bane of many hotel, hotel’s life where you have the moped driver coming in through the lobby.  We’ve organised it so it’s out of sight really but recognises that’s what people are going to do, recognising that, you know, recognising for example that people get Amazon deliveries and having the lockers, making sure that we are completely up-to-date with what’s happening and also with our technology, making sure that we can run everything from a really sound technological basis so we don’t need lots of manual interventions in the processes that you have that underpin a hotel.  Often it is very manual but it doesn’t need to be and because we, because we are in a lucky position where we are starting a new brand completely, we can get all of these things right from the get go.

Susan Freeman

Well it sounds as if you have thought about everything.  So I just wondered what the price point is likely to be because obviously you are somehow between hospitality and normal sort of flat rental.  How will it be priced?

Naomi Heaton

Well it will be priced such that the longer you stay the more reasonable it becomes and I think that’s a normal, normal kind of comprehension within the market place and if we take an average room rate across the board for a transient stay, you are probably talking about somewhere in the region of £250 a night.  It’s not set in stone, the market is constantly changing but we always wanted to be at a price point where we were highly… we had the most fantastic interior design which we do, it’s really cool, we are going to create this amazingly cool vibe but we want it to be the next place that people come to in town because it is just going to be such a fantastic melange of all sorts of experiences but we also wanted it to be something which was relatively accessible and relatively affordable so obviously rates will vary right across the year depending on demand but we are looking at that kind of average room rate in South Kensington and then for the longer stayers, so it comes down accordingly.  So longer stayers pay less, shorter stayers pay the higher rate and I think that will be kind of a normal way of approaching it.

Susan Freeman

And what, what are the buildings likely to look like because I know you’ve always focussed on heritage, London Heritage buildings and so what’s the optimum number of flats and how large, how large will they be?

Naomi Heaton

So at the moment, well first of all we are concentrating on heritage buildings.  Our whole experience is to do with renovating and making fit for purpose old buildings because we feel that it’s the absolute hub of what central London represents and they are beautiful.  Of course from an environment point of view it also means that we are not knocking down and we are not building from the ground up and that is really important to us as well.  The two initial assets that we bought are fairly large so South Kensington is over 200 club flats, two hundred keys and the one in Covent Garden will probably end up being in the region of 170/180 club flats.  So they are substantial buildings, that was partly driven by the opportunity to get these two fantastic assets so we’ve got to have this fantastic asset in South Kensington with 11 different town houses which are being combined together historically and then in Covent Garden, a site that I know you are very familiar with, which is an island site near the Lyceum and the Covent Garden Piazza which is made up of 7 different buildings which is absolutely beautifully stunning in its architecture so they are going to be wonderful landmark buildings and then the interiors are going to be done in a bold but rather English, slightly quirky individualistic kind of way.  The whole keynote is bold, drama, style.  It is certainly not timid or neutral so… because we want to create places which are really exciting to be part of but the whole renovation and beautification of these old buildings is very much part of what we’ve been setting about doing.

Susan Freeman

And just in practical terms, how, how have the planners regarded this because I know historically they have been worried about small flats, they worry about bedsits.  I mean, and do they classify it as a, as a hotel or as, as residential?

Naomi Heaton

No, we are… it is absolutely a hotel.  It will always remain one building so there is no kind of residential element in the sense we can sell off individual flats.  It is, for the planners they want a degree of transience and we have a high degree of transience because although we have the longer stayers, most of the, the room changes will be on the transient level where people are only staying for a few days.  So we have a high degree of transience, we can always move people around; we always have the right to move people around.  Indeed what will happen particularly for the pied-de-terre people, they won’t come back into the same room.   They will come back into the same room but it won’t be the same room.  For the long stayers they have the option if they want to exit because for vacations they can and chose to come… not pay while they are away and then come back and they may get another unit.  So we have a lot of flexibility built in but basically we have a level of transience that is quite acceptable to the, the planners and therefore it is, it is a hotel use class, that is what we require, hotel use class and we have the degree of transience that makes it comply with that use class.  Having said that, the plan is a really, really supportive so if you take the Covent Garden development where we are re-applying for permission, it already has consent for 146 bedrooms but we wanted to change the configuration.  They have been completely part of everything that we are doing and our concept and, and welcome it actually.  They welcome the fact that there is probably a little bit less itinerant traffic, it means that there is less of an impact on the residents, it means that people are probably wielding more of their life in the locality and therefore supporting the community and, and the shops and so forth.  So complete support which often the planners have been behind the curve probably in terms of what the consumer wants and, and I think that this amalgamation of kind of long let serviced apartments and hotels is so obvious, why were they so separated.  These kind of very strict delineations which are basically being planning led and I think there is just a realisation that how people are living and moving and you know, with slow travel becoming more and more important, more and more part of the environment, that we have to look at things differently.

Susan Freeman

That is so true because you know, so much has changed in the way we, we live and it’s all changed so quickly so it is sometimes difficult for the planning system to keep, to keep up.

Naomi Heaton

Exactly.

Susan Freeman

And I just wondered will your clients, customers book direct or like a hotel online?  How would you see that working?

Naomi Heaton

Well they will be able to book in every which way that they’ve always booked so they can book online, through the online travel agents, they can book direct and obviously if they are looking for a longer stay they may go through the traditional service department agents and so forth so they will, all the avenues to booking a room will be the same as they would use for those separate sectors.  Clearly we would love everyone to book direct rather than booking through other channels but they will be able to book through all the channels that they can completely use to when they were looking for the kind of property that they wanted.

Susan Freeman

And you’ve said that you will be operating a Residents Club, a sort of members club.  How will that work?  Will you only be able to use the facilities when you are actually staying there or if you are a sort of regular guest would you be able to sort of dip in and out even if you are not staying in one of the Club Houses?

Naomi Heaton

Currently the thinking is that you would, you obviously are automatically a member while you are staying and if you were to go to another Other House so for example, when Covent Garden’s opens you would just be able to go and use the… whilst you were staying in South Kensington, you could use the club in Covent Garden and so forth.  If you were not residing but wanted to go to a club somewhere else in the world which is obviously our intention that we are going to be completely global then the likelihood is there will be some very nominal membership fee for you to have access to that other club premises and it would be a very nominal fee so that you could get into it.  And we will obviously be open for membership as well so for people, residents in the community or people who are just coming in for meetings, then we will have a, a private membership scheme as well.

Susan Freeman

And of course what we haven’t discussed is the fact that you are backed by the Dutch Pension Fund, APG and they are one of the largest global pension funds so you know, really amazing fire power behind you.  How did you get together?

Naomi Heaton

Well it was it was a series of steps, one of which led to another, as is so often the way things evolve and develop.  It is a series of steps.  We, for a long time trying to identify the right investor, trying to find the right partner and we talked to quite a few people but actually with, with APG the, the introduction was relatively gratuitous.  It was through Jefferies Investment Bank and it was a chance mention by APG about our proposition and then a chance journey from one of the executors of APG coming to London and meeting us and then buying into the idea, that they absolutely got the idea of flexible living and they are great supporters of the slightly longer stays as opposed to just the hotel says.  I mean they have huge investments in, in other hotel chains around the world.  They were the Founding investor with Citizen M which I think is now at 21 hotels across the world.  So they are very interested in it but they were really interested in the, in the fact that this was a different angle, that it was flexible stay and that it was tech based, that we were offering something different.  But the, the path to the door of APG was a series of different connections which got us there finally and then finally meeting someone who, who really got it and of course that’s what is so important to, to find the, the person that can understand what you are talking about and has the vision and it is a great vision and they are fantastic partners to have because they have a completely long-term view, they are really revolving, they, they will look at a 30 year horizon.  This is what is so great is that we are not trying to do anything quick or short-term or maximising profit for short-term gain.  We are looking at developing a new brand which is going to be… have enormous longevity and which we will move hopefully to New York and Singapore and Dubai and Europe and this will have obviously the backing and the legs to be able to do it.  So it is enormously exciting and they are enormously good partners to be working with.  So we are utterly delighted.

Susan Freeman

That’s, that’s terrific.  So the aim is to roll it out internationally once you’ve established in London.

Naomi Heaton

Yes.  So at the moment we are looking to buy maybe another four hotels in central London between, we’ve kind of got our out post with Covent Garden, South Kensington so moving inwards to areas like Fitzrovia where I am sitting at the moment or Covent Garden, sorry or Notting Hill or Sloan Square to infill because we see central London as being a series of different villages, all with different characters where different people want to be for their own particular reasons.  So we want to buy more here and then once we’ve established our presence in central London as a major global capital, we will then move out internationally.

Susan Freeman

That’s really exciting.  You mentioned, you mentioned earlier that sustainability is key.  What are you able to do in retro fitting your buildings to reduce carbon emissions?

Naomi Heaton

We have, well we are doing a whole, well we are doing a whole number of things.  So first of all we are renovating rather than building.  We are ensuring that we are performing on a certification which is called BREEAM which is a sustainability or the most respective sustainability bench mark there is and we are seeking to be BREEAM excellent which is in the top 10% of all assets which are monitored.  That is extremely difficult with refurbished buildings because as you can imagine, in every respect whether it be acoustics, fire insulation, whatever it may be, it’s very much more difficult to do within an old building.  We are looking at monitoring all our usage, energy usage and in fact on our App we will be informing our new residents of how much energy we are using and whether or not it’s below or above where we would expect it to be for an efficient amount of energy use so that people can actually modify their behaviour.  We will clearly be doing all the things that one would expect one would expect anyone to be doing now in terms of proper refuse, recycling, recycling packaging, not using single use products.  All of the things that we can make a difference on, with the kind of energy that we are using we are using 68% renewables so every aspect and every box that we can tick, in order to help improve our, our footprint we are undertaking.  As I say, we are getting to BREEAM excellent.  We are also on another benchmark which is called GRESB, the Global Real Estate Benchmark that’s very committed to environmental, social and governance policies so it is not just, it is not just looking at sustainability although that is a really important part.  It is looking at your whole culture of your organisation, how you are looking after your people, your corporate governance so for us, it’s a whole fusion of all those things which are of paramount importance in which we will be monitoring on a regular basis so that we are not only kind of looking at it during the fit out, we are looking at it on the ongoing management of the building.

Susan Freeman

And Naomi you are clearly very entrepreneurial and always have been and I wondered, do you think that men and women think differently and therefore run businesses differently or is an entrepreneur and entrepreneur and that’s it?

Naomi Heaton

I think, well I think men and women do run businesses differently but I also think that an entrepreneur is an entrepreneur and I think you get male and female entrepreneurs and I think it’s to do with thinking more out of the box, taking… potentially being able to take more risk but it’s not the sense that you are taking a risk because it actually seems to be an obvious path.  It isn’t necessarily an obvious path for someone else and therefore appears to be risky but the person doing it it just seems to be the right thing to be doing so you’ve kind of taken that into consideration you can do it.  There are a lot of people who just can’t do it.  Most people can get to be a number 2 but running a business is different and most people aren’t entrepreneurs.  But I think it’s something which as I said at the beginning, it’s not that I was looking for opportunity to be an entrepreneur, it’s just you see how the land lies and you see… and it’s not even that you say, oh here’s an opportunity, you just say, well here’s a gap that has got to be filled and that is what makes an entrepreneur.  But clearly as an entrepreneur you need to make sure you have all the people around you who can deal with and are interested and committed the corporate governance and, and the, the financial stability of the organisation and so forth.  You need all of that but you need that kind of little bit at the beginning which is just seeing that opportunity and then going for it single mindedly and what I also say is that whenever there is a road block, which there are frequently, it’s also that ability to look round it and quite often come up with a solution which had been better than the original solution that you were going for so I think it’s that kind of versatility of thinking that enables one to kind of being very solution orientated and move things forward but I think that’s probably, well I mean I know that’s a male and a female thing.

Susan Freeman

And have there been any road blocks along the way that you’ve thought I am not sure how we are going to get round this?

Naomi Heaton

Well I, no I don’t think I’ve ever thought I am not sure how we are going to get round it, I think though its required a huge amount of persistence and also finding the right path.  So the thing about The Other House is we started developing this concept in 2012, that’s 9 years ago when actually it probably would have been far ahead of its time, both as I said because of tech and people not being used to tech whereas Covid has made people much more aware of having to use tech rather than normal human contact in certain situations but also as you said, the planners for example, would probably have found it a much more difficult concept 9 years ago and we have, the concept has had lots of iterations, it’s had lots of different names.  We’ve spoken to hundreds of people about it along the way and so it wasn’t exactly, well it was road block in the sense that we had a concept but we weren’t delivering it to market but it was, it just require persistence in order to overcome it rather than saying, oh I can’t… this is just too much.  It never occurred to me, well it never occurred to me that we would not get there in the end but we just had to keep on bashing our heads you know, not actually closed doors, brick walls, whatever you want to call it but it was sheer and utter bloody persistence and determination to get there and finally the doors opened and the doors opened in a most unexpected kind of way so yeah, you don’t know what’s going to happen and how it’s going to happen.

Susan Freeman

It’s interesting because you know, you make it sound you know, so easy you know, this new concept is happening and it’s really useful to know that actually it takes a lot of hard work and as you say, persistence.  I just wondered whether anybody had been a role model or inspiration or you have just forged your, your own, your own path?

Naomi Heaton

Well I probably I suppose forged my own path in the property world because LCP was a completely new innovative concept which started with me and one other person and then developed and The Other House, again was just kind of observation.  So the… where… my, my kind of mentor and where I really picked up a lot of how I approach situations is through the advertising world and I had one particular mentor who was originally at Saatchi.  She actually came to Leo Burnett when I was there and then I moved back to Saatchi or with her when she moved back who was immensely successful and ended up running the North American operation of Saatchi and Saatchi and was completely inspirational and I suppose she probably taught me the determine, persistence and kind of go, not go getting but just working towards your aim and your target and what you wanted to deliver in a way that I haven’t, I didn’t, I haven’t experienced before or after and she was, yeah, she was completely inspirational and I’ve learnt so much from her and I would always say that she was my mentor and that was from my advertising days so I carry all of that and as you rightly asked at the beginning, so many lessons from advertising the way I have approached things, despite the fact I am in, in many ways a completely different market but advertising has been very much part of the whole ethos in terms of, of approach as I have gone forward in, in the property industry and in a way with The Other House where we are creating an absolutely new brand, from you know, as I say, 2019 it was a concept on a piece of paper, in 2022 it’s going to be this fantastic building welcoming guests and to go from a piece of paper to a brand, a developed asset, the operational procedures, its phenomenal.  I mean I think it’s the experience that most people will never have lived through and indeed all the people that are coming into the organisation where this is not just like another opening, or… this is an empty, this is a… there’s no rule book, there’s no instructions, there’s no manuals how to do it, we have to build it as we go along and that is a phenomenal experience to be part of.

Susan Freeman

I think, and I had not thought about this before but perhaps we need more people in real estate with an advertising background.

Naomi Heaton

That may be the case and I suppose I was at Saatchi’s during the glory days as well and they were probably the most phenomenal hothouse of ideas and entrepreneurialism themselves at the time that I was there so I think I probably just struck lucky the really good training which I have been able to use.

Susan Freeman

No well it is say luck, luck is always an important, important part.

Naomi Heaton

You have to get the break, I mean you work to get the break, generally you have to work to get the break but it is ultimately luck that you get that break when it comes and then you have to grasp it.

Susan Freeman

Fantastic.  So Naomi thank you, thank you so much and I really look forward to, to visiting The Other House.

Naomi Heaton

Well you will be invited and most welcome and hopefully you will attend our opening party and try out the wonderful experiences of The Other House.  It’s been really great to talk to you.

Susan Freeman

Thank you very much, I look forward to it.

Naomi Heaton

Thanks Susan.

Susan Freeman

Thank you, Naomi Heaton for some real insights into the changes that are sweeping through the residential and hospitality sectors and for highlighting the power of persistence.  We really look forward to seeing the roll out of The Other House hopefully next year.

So, that’s it for now.  I hope you enjoyed today’s conversation.  Please join us for the next PropertyShe podcast interview coming very soon. 

The Propertyshe podcast is brought to you by Mishcon de Reya in association with the London Real Estate Forum and can be found at Mishcon.com/PropertyShe along with all our interviews and programme notes.  The podcasts are also available to subscribe to on your Apple podcast app, and on Spotify and whatever podcast app you use.  Do continue to subscribe and let us have your feedback and comments and most importantly suggestions for future guests and of course you can continue to follow me on Twitter @Propertyshe and on LinkedIn for a very regular commentary on all things real estate, Prop Tech and the built environment.

Naomi Heaton, MA Hons (Oxon) is founder and Chief Executive of The Other House, a new lifestyle hospitality brand in prime central London from The Portfolio Club. Established in December 2019, this is a joint venture between London Central Portfolio Ltd ("LCP"), leading real estate investment advisory and APG, the largest pension provider in the Netherlands which manages approximately €587 billion in pension assets on behalf of its pension fund clients.

Since its creation, the venture has acquired two assets, the Harrington Hall in South Kensington and the Wellington Block in Covent Garden, both of which require significant development, opening in 2022 and 2023, respectively and is actively acquiring more.

The Other House will blur the lines between hotels, serviced apartments and the Private Rented Sector to create a new sector of 'Residents' Clubs' in the accommodation space. Residents are able to book from a day to a year (or more) and there will be real emphasis on place making. Whilst the initial focus will be on prime central London, the venture will expand globally, catering for the aspirational business and leisure traveller

Naomi is also Chairman of the LCP Group. She founded LCP in 1990, exclusively to represent investors in the private rented sector in Prime Central London. It offers an all- encompassing service including property search and acquisition, refurbishment and design, letting and rental management, based on sophisticated financial modelling. She has also launched a number of funds investing in this asset class.

Her unparalleled experience in the sector and entrepreneurial vision led Naomi to observe the rapidly changing requirements of the millennial generation in terms of place making, lifestyle, and the use of technology in the accommodation sector and the need for a sea change in how this is approached. Previously Chief Executive of the LCP Group, she appointed Andrew Weir, ex head of Foxtons, to this position in 2020 so she could concentrate on the development and launch of The Other House.

After graduating from Oxford University, Naomi entered advertising becoming a main Board Director at Saatchi & Saatchi and Young & Rubicam, advising blue chip, multi-nationals. She writes frequently in the national press and is regularly invited by the BBC and Sky News to comment on property related matters.

Naomi has been elected one of Citywealth's Top 50 CEOs and is represented in the Spear's 500 and Tatler's Advisory.

How can we help you?
Help

How can we help you?

Subscribe: I'd like to keep in touch

If your enquiry is urgent please call +44 20 3321 7000

I'm a client

I'm looking for advice

Something else