I finished my last post by saying that ‘I am hopeful that 2021 will be more forgiving, but it could just as easily be much more severe.’ So which way did the cards fall?
Globally the coronavirus situation proved to be a much longer lasting fire to put out than many had originally hoped and planned for. In the UK this was true but I am enormously grateful to have been here as the speed of our vaccination rollout combined with our incredible free healthcare and effective government recovery loans has meant that our small island was one of the safest locations and operated as close to economic normality as possible. I have close friends in other countries who were much less fortunate.
Hurst & Hurst Estates went into the year with high momentum in both sales and new site acquisitions and to be honest I expected this to drop off rapidly as Covid headlines switched from ‘we’re almost out of the woods’ back to ‘new strain signals the end of life as we know it’. I was, as usual, mostly wrong as demand for our new homes remained very high throughout the full year, although the market for new sites has proven very tough.
The changes to the working environment that the Covid pandemic has created has moved a significant number of people out of cities and into the countryside and, through sheer luck, this changing trend has aligned our product with a greater number of customers than before as the people relocating value highly the same points (transport links and high quality) that we do.
Since our incorporation we have been very picky about which sites we buy and how we design and build our homes. Trust me this does not make life easy, just ask our land buyers and engineers! An example of this can be found at our Azzura & Luna apartment blocks which feature not only frameless glass wall and door corner connections (pretty cool) but also have no internal pillars which would have otherwise impacted the views out to sea. We primarily operate this way to build our long term reputation and protect ourselves in times of downturn (it’s also more fun), in sacrifice of short-term profits, so it’s nice to see this approach being rewarded over the status quo box building calculations.
The high demand was of course excellent but also created some interesting situations. For example, we had so much demand that customers were fighting to secure some of our properties before we had even completed on the land they were due to be built on, which was about 8 months before we had scheduled to start preparing our marketing and sales information. We had no set prices or marketing material, no CRM software, none of the legal & conveyancing work had been done and even our reservation forms had to be drawn up, but aware that this was our largest project to date and that we were operating in very abnormal times, we did not entertain the idea of refusing reservations until a later date. We ended up using Microsoft Word for CRM all year as we couldn’t find any particularly attractive software, it’s funny how unglamorous business is from the inside.
During the year we had planned to continue our path towards vertical integration by moving sales in-house. I was in the middle of the interview rounds with some excellent candidates when it became apparent that we had fully sold out of all stock, both current and upcoming, across each site. The sales had been secured by a mixture of our 3rd party agent and anyone in our company who had a spare 5 minutes, roughly split 50/50 between the two. The recruitment process was put on hold at the time but we are currently reconsidering the situation as our sales volume is increasing by a reasonable percentage each year, so what worked in the past is unlikely to be sustainable for much longer.
New members did join the construction side of the team during the year however and I have been blown away by their contribution towards our common goal. I truly cannot believe how lucky I am to be able to work and spend time with the amazing people in our team. As much as I love architecture and being involved in a company which creates beautiful homes, the best part of my work by far is the people that I am surrounded by. When I first registered the company on my uni laptop, I had no idea that this may one day be the case.
As we’ve moved strategically from circa 10% of sales being off-plan to a targeted 100% in order to match our cashflow to our growth, we have invested significantly in building marketing infrastructure which offers customers the off-plan sales experience that we believed should be possible, instead of what was already available. Previously the market norm was to provide the customer with a 2D plan and a low resolution CGI and expect them make a large financial decision based off the limited information, with the concession that a discount would be applied to the price to justify the experience. This seemed crazy from all angles so we are now able to offer our customers information such as super high resolution virtual tours, including real images embedded inside of the production showing the true views from each window, alongside physical examples of all finishing materials used for a tangible comparison so they know exactly what they are buying.
2021 presented some serious challenges within the land and planning side of the business which have materially impacted our strategy. In one example, a key site of ours which we had expected to commence works on at the end of the year was refused permission despite being recommended for approval by the planning officer and having no council consultee objections. The meeting was a political farce with multiple regulations being broken by the chairman, who was looking to gain some easy votes and 80% of the time being spent trying to find a legal reason for refusal, as he openly admitted he couldn’t find any. After two years of work and investment on a development which would allow a meaningful number of young people to buy their first homes and move to an area they sought after, this delay seems most perverse, but sadly now also increasingly common. The situation is morally wrong on so many grounds, including the chairman openly declaring that he didn’t care how much public tax payers money he wasted pursuing his political tactics, but what can you do against such bureaucracy? It would seem beneficial to the wider community if officials looked to support local companies and would-be homeowners, and some definitely do, but the reality is that a worrying number are like this chairman.
Anyway… there’s no point in getting angry at roadblocks, it doesn’t help your cause, but there was genuine concern that with our existing sites nearing conclusion, some of our future sites experiencing long planning delays and the market for land being the hardest it’s been for many years, that our pipeline would have a large hole plonked in the middle of it. This wasn’t conducive to getting many great nights sleep for a while as with new team members joining, overheads growing and aggressive growth targets to hit, such a hole would be devastating to our progress.
Thankfully the gap was filled relatively quickly with another cracking site that fits nicely alongside our other upcoming developments and we’re due to start work there soon, plus the delayed land is in appeal. If the appeal is successful then this negative will have been turned into a positive as with some creative funding arrangements our annual sales will see a decent net gain over the previously expected total. That is no small ‘if’ however.
Heading into 2022 we have some more superstars joining the team, which is very exciting, and as we are fast outgrowing our office space I’m currently working on our 10 year plan to see where we should most logically relocate to. Although, if there is anything that sticks in my mind from the last two years, it’s the saying that when we make plans, God laughs…