The pink niche

By Katrina Burroughs
Financial Times
Published: May 10 2008

The power of the pink pound has long been known to property professionals but they are having to rethink their strategies to take full advantage of the opportunities offered by this market. A widely accepted view is that gay men have historically invested in property in unpromising postcodes and have helped make these areas desirable to all: examples include Soho, Earls Court, Hoxton and Vauxhall in London, Greenwich Village and Hell’s Kitchen in New York, Eixample in Barcelona and Surry Hills in Sydney. Another common perception is that gays, with plenty of disposable income, are more design-conscious and urban-dwelling, caring more about architectural excellence or the potential of a plot than the performance of the local schools.

But that is not necessarily so, says Justin Lloyd, managing director of Brighton-based 4 Sale Estate Agents, which was set up as a gay-owned company aiming to serve homosexuals in the late 1990s. “When people think of the stereotypical gay apartment they think of a fashionable two-bedroom unit with fabulous entertaining space and the latest gadgets,” says Lloyd. “But the gay market is extremely diverse. We have buyers looking for everything from a one-bedroom bolthole to a seafront stucco mansion.

“In the past, the big difference between the straight and gay markets has been children. However, we are seeing more gay couples with or planning to have children, so even this difference is less clear than it used to be. It is fair to say, though, that gay buyers tend to be early adopters [of an area]. They will take more risks.”

Another veteran of the market, Barry Manners, co-founder of Chard Estate Agents, in business since 1993 in the Earl’s Court and Kensington areas of London, describes seeing a radical shift over the past 15 years. In the late 1980s and early 1990s, mainstream property professionals were not always giving great service to the gay community. As a result, specialist agents, builders, interior design outfits and financial services groups emerged . But today “the gay village is all but over,” says Manners. “It was a 1980s/1990s thing. Now clients are much more interested in where the local supermarket is than whether there is a hot leather bar nearby. We really don’t need estate agents that specifically serve the gay community now.”

If the gay ghetto is ancient history and the accepted stereotypes no longer valid, what can property professionals glean about the market? Developers, interior designers and those in marketing are keen to receive new intelligence because there is a pot of gold at the end of the rainbow for those who can understand and access the sector.

This month, Out Now Marketing, which advises clients including carmaker Toyota and financial institutions Citigroup and Barclays, publishes its 2008 Millivres Gay Market Research Study, sourced from readers of gay magazines. The survey paints an alluring picture of well-heeled clients with a high proportion of double-wage households.

The report estimates the total income of the 3m-plus people that make up the UK gay community at more than £70bn annually and suggests that respondents, on average, earn significantly more than the national average. The most recent data suggest that about 41 per cent of homosexual men own their own homes, 15 per cent are intending to buy, 8 per cent already own an investment property and a further 9 per cent are planning to do so. These percentages translate into 463,000 buyers looking for dwellings and 280,000 after investment properties.

Over the past 15 years, Ian Johnson, Out Now’s chief executive, has done similar work in the Netherlands, France, Germany, Belgium, Ireland, the US and Australia and says the UK research is indicative of a global movement: “These trends are evolving in most of the liberal western democracies. It’s a period where social and economic change are working in lock step – good for society in terms of integration and good for business in terms of niche marketing.”

But, in spite of the rewards it promises, the gay property market is not a subject with which mainstream developers are entirely comfortable. Phil Brown, marketing director of London-based Cala Homes (South), is typically cautious. “It is a bit of a minefield,” he says. “People don’t like to be classified. Everyone is very, sensitive about it.” But, equally, he is keen to mention the firm’s award-winning development Cala Domus in Harlow, Essex, which attracted substantial interest from gays. “It does make a difference to marketing,” he says. “You have to know where you are going to put your spend. We advertised Domus in AXM [a gay lifestyle magazine] as well as a specialist architectural magazine.”

Nikki Ackerley, managing director of Property House Marketing, which represents UK developers Barratt Homes and Berkeley Homes, says gay buyers are a significant sector for her clients. “For strongly design-oriented developments and those in places where there’s historically a large gay community, it would be madness not to advertise in the pink publications.”

Design is one of the key elements in making the most of the market’s potential. Devon Buchanon of Millbank Interiors says: “When we first set up in business in 1975, with all gay employees, it was the first enterprise of its kind in the building trade. Our aim was to be blind to sexuality. We were saying: ‘We are just people, not gay people, and we can do this well.’ Now we find investors and straight clients approaching us for our ‘queer eye’.” He explains the concept: “It’s a shorthand for being open to new, innovative designs and ideas. One thing people expect from a gay business is to be slightly ahead of what’s popular.” He pauses: “I wonder if that is so relevant now. We have all become so knowledgeable, through media exposure, of what constitutes good taste or even new taste.”

So, if great new design is within everyone’s reach, are the developers who are targeting the gay community’s cash supplying the right stuff? Interior designer Christopher Dezille, who has just completed a penthouse in Dean Street, Soho, central London, for a developer aiming at attracting a pink purchaser, says: “Developers are not always very good at understanding how best to court the gay market and much of what we see as being aimed at this demographic is misguided.” In his project, the walnut flooring with neutral paints and textiles were conceived for “someone with an eye for style and glamour, who works longer hours and keeps later nights”. He has thrown in a few references to Soho’s nightlife in specially commissioned photography. “We had one shot of Brewer Street, another of reverse reflections of the neon bar signs in windows – just subtle ways of saying ‘This is where I play.’ ”

If the story on the home front defies simple characterisation, professionals agree that there is a clearly identifiable gay market in holiday properties abroad. The pink press has long been full of holiday homes in the popular getaways of Sitges and Gran Canaria in Spain, Mykonos in Greece, Sydney and Miami. Joshua Rafter, managing director of Outlet Property Services, says he has seen more buyers looking overseas recently. “People have started switching their money from investment properties in the UK to holiday homes overseas,” he says. “New destinations such as Rio, Cape Town and Thailand are proving especially popular. The gay community is one of the most enthusiastic about buying holiday homes abroad. No dependants definitely means more money for property investment.”

At the top end of the market, developers are creating luxury gay holiday communities in the sun. Rafael Danés of Suite DO builds opulent retreats for stressed executives and launches the most ambitious of these developments this month. Danés has bought and restored a small settlement of century-old vernacular buildings near Campos, south-east Mallorca. State-of-the-art interiors feature Boffi kitchens and wet rooms, and properties share a concierge service and spa. Danés has hired Montse Peñarroya from Axel hotel in Barcelona as his marketing director to make sure the development reaches the consciousness of his target audience: “We understand the potential of this market,” he says. “It is a great market for us because we are interested in aesthetics, style and the good life in general.”

However, there is one large sector of the gay market that tends to be overlooked by some property professionals: lesbians. This might be partly due to the belief that lesbians earn less than gay men (though Out Now’s research reveals their incomes are still higher than the average) and are more likely to be raising children. Johnson says this amounts to a massive missed opportunity and believes the next step in the evolution of the market must be the proper understanding and subsequent targeting of this overlooked group of gay consumers. “The industry really needs to learn how to better understand and market to lesbian women. Failing to do that cuts the profit potential of the gay property market almost in half.”