The last decade has been particularly turbulent and painful due to the global recession and struggling economies affecting us all one way or another. But times are improving.
I have observed during bad times and good times three fundamental things that companies in the property sector did (and do) in order to continually deal with the ups and downs. They:
Reinvent the house, where necessary;
Think outside the house; and
Act outside the house.
Cogress UK Limited appears to have been unusually successful in steering its way to success, and I believe I can learn from them; maybe you could too.
The founders of Cogress UK re-invented, and thought outside, the house / box and came up with a pioneering new investment model to help bridge the gap between the property world and investor (both sophisticated and speculative), at a time when the market needed new ways to ensure development build without traditional institutional support. Cogress acted and came up with a solution by creating a property development platform for people to invest their money with a chance of a higher return than can be found in a depressed stock market, and more.
Effectively, as I understand it, Cogress’s new model enables people with a relatively small investment amount to access a big investment opportunity. This is not crowdfunding, I hasten to add. Crowdfunding usually entails a huge number of investors dealing in small amounts of £100 onward. But Cogress effectively underwrites equity for the developer where the minimum investment is £20K by a potential investor like me from within the vetted community of 17,000 people who choose to invest in a particular development opportunity.
I believe Cogress uses the word ‘community’ because it appears the company is inclusive; in essence the founders have come up with a winning formula business model to enable developments to go ahead by giving the opportunity to qualified people with funds of £20K or more to be part of the property world and develop an interest in a portfolio of properties in prime locations. I have a small portfolio of properties in Yorkshire and the North East of England yet I can see the attraction of the Cogress model and investing in London and other prime locations.
I feel comforted in the fact that:
every project Cogress handles is exit-oriented (24-36 months the norm) and goes through a thorough due diligence process, with Lord Mendelsohn residing as chairman of the advisory board which carefully vets each option to ensure the needs of both the investor and developer are met;
Since 2009 the Cogress management team has successfully invested in more than 150 projects globally including UK, US, Canada, Germany, Cyprus and Israel, with over £900 million of asset value; and
the people who started Cogress came from a legal and property development background, the staff have a grounding in estate agency and the founding father and CEO, Tal Orly, is actually a qualified lawyer (like myself). Orly studied LLB law at East London University, qualified and practiced in Israel for 5 years and has been developing properties in London since the 1990s.
Clearly a lawyer with an entrepreneurial streak, Orly also possesses business savvy, not only in creating a new business model but also in his creative, smart and daring approach to spot opportunity.
Curious in identifying value real estate, Orly has a talent for identifying up and coming neighbourhoods aka post-codes of value. He says: “when you think of beggars, you probably think of run-down areas, but the opposite is true. Beggars want to target areas where they know people have money so that they can get pounds for their time.”
Earlier this month Cogress announced it had completed 14 UK deals within a 12 month period, reaching a GDV (Gross Development Value) in excess of £200m albeit the company had only launched in the UK in 2014. The company aims to complete on 20 more deals before the end 2015. The figure reflects the ambition of Cogress and underlines rapid growth in the market. The announcement comes at a time where some analysts are suggesting a potential slowdown in UK property, with the ONS’ January House Price Index revealing annual price increase in retail property is at 8.4%, down from 9.8% the year before. However, Cogress’ rapid growth to date reveals investors aren’t perturbed and still see the market as an astute option. I believe it is.
Orly commented: “Our growth has been driven by the continued attraction of London residential property which, according to ONS figures achieved 13% growth in the last year – an extremely strong performance. We expect this trend to continue, but also for mixed-use and commercial property to improve throughout the year, including our own progress alongside the continued growth of the market”.
Worldwide, Cogress senior management team has completed 170 deals – worth a cumulative £900m – and intends on launching into mainland Europe this year.
We may think Cogress’s approach and ambition beggars belief, but it’s creative and appears to have proven lucrative for all involved. As I ask myself “is now the right time to get involved?” maybe you and I can take a lesson in both business and life from the kind of creative approach taken by this private equity company.