Russell Petrie, Head of Student at EQT Exeter joins host Jamie Harris, Head of PBSA and Jenna Harris, Head of Co-Living at Harris Associates on the third episode of ‘Reinventing Real Estate’ – the podcast bringing you insights from the industry’s leading experts.
Russell brings over ten years of experience in student housing, previously at Barclays and Round Hill Capital where he built up portfolios across Europe. At EQT Exeter since 2021, Russell heads their student strategy as they look to expand in this burgeoning sector.
In this episode, Russell shares how starting his career during the 2008 crisis shaped his long-term investing approach. Having flipped his mentality from a lender focused on downsides to an equity investor seeing opportunities, Russell has cultivated resilience even in challenging markets.
With student housing facing major supply shortages, Russell sees continued potential for strategic growth and differentiation in the sector. He identifies that brand identity and storytelling are key factors in attracting investment. He also discusses how EQT Exeter utilises AI tools to efficiently filter potential investment opportunities, while maintaining human connection that is vital in real estate.
Rounding out the episode, Russell outlines the capabilities that separate winners from losers when navigating market shifts and navigating the tension between adopting technology while keeping a personal touch. With Russell’s expertise, EQT Exeter is poised to lead in applying both data and emotional intelligence.
Jenna: Having started your career during a financial crisis, must set you up to have a long-term view throughout the changes within the market and must build resilience. How do you think that affects the way you look at things?
Russell: Starting your career when the world is on fire sets you up with a certain mentality that somebody who started three or four years after me just wouldn’t have seen. When I transitioned from being a lender in the worst financial market we’ve ever had, to a more principled equity investor, you need to flip your mentality. As a lender, you’re looking for every downside scenario and how to protect yourself without ever losing a penny. To be a successful principal investor, you have to have a glass-half-full attitude and believe the world will be better in five years when you sell than it is today. Without that belief, you will be unsuccessful after having seen waves of layoffs and crumbling of companies with 150-year histories. I think that sticks with you throughout your career.
You look for similarities and I think a lot of people are looking to the global financial crisis for parallels with the recent macro shock of rising interest rates and inflation. Actually, that thinking has been wrong most of the time – there are not a lot of correlations between the two crises. And I think that can be a little dangerous as much as a positive, because having seen how bad it can get, it can make you always think when things go wrong, they will go that wrong again.
Jamie: There are going to be 400,000 more students by 2035 and there are going to be more international students. Additionally, the number of planning applications has declined dramatically over the past few years because of construction costs. So, all of these factors seem to be what people from our side are telling us that’s the reason why we want to be in the student housing market now.
Russell: We did a piece of work where we looked at how many students were added in London over the last three years. 85,000 new students came into the London market and only 4,000 beds. So, we have a building in London, and we can attest that every year over the last two cycles, they sell out quicker at higher rents than what they’ve done in the past.
Even though it’s had a huge trajectory, in my tenure over the last 15 years it feels like we’re at an inflection point where it can even become greater. The service that it provides to potential tenants both in its product quality, its usability, its value for money. I think the space is just going to come into its own.
And I’m excited to see how it evolves over the next ten years because you know, it’s a great sector.
Jamie: I think the student market is fundamentally countercyclical but seems to always prosper and we’re at an interesting time right now where there is substantial macroeconomic change, but it’s all pointing in a very positive direction for the student housing market. Harris Associates is marketing and bringing that sort of product experience to life. The student market and the student sector are poised for continuing growth and optimism and we’re kind of wanting to see what happens next. But what I would say from an investment perspective is that we have a window of opportunity over the next few months before all these funds enter back into the market as we know.
Jenna: EQT Exeter uses AI tools, one that we thought was incredibly interesting was Mother Brain. It filters through investment opportunities and puts them into an order of priority. That’s an incredible filtering system that’s at your fingertips to enable you to be more efficient with your time.
Russell: It’s a great tool that lets you focus on not only being one of the leading tech investors but also ingraining that into what we do and making ourselves better. It speaks to the values and the ethos at EQT Exeter.
Jamie: It seems like that is absolutely the way forward of how, investment professionals are going to be sorting through, analysing and underwriting. But, also leveraging connections, to understand how you use everyone’s human relations and connections to actually benefit the whole business.
Jenna: Maybe people are looking at it wrong and instead of asking if AI is here to replace people, we should be asking if it is here to enhance and increase the performance of, human input.
Russell: The biggest problem we find is actually how do you harness AI? We must go through our own process of educating ourselves on how to tap into these areas in an intellectual way. It’s fascinating hearing the AI industry and all the headlines and then seeing it internally as a live use case.
Weirdly real estate, even though it’s bricks and mortar and quite physical it’s a people business. I think the winners and losers are based on the strength and quality of their relationships. If you can harness these types of tools to enhance those relationships or make new ones, those are where we’re going to really see win cases through AI adoption.