‘Not A Family Office:’ Monaco Developer REDD Explains Why London Real Estate Is Still A Good Choice
Jacopo Marzocco and Russell Smithers couldn’t be more different.
Olive-skinned with brown eyes and shoulder-length brown hair, Marzocco is an Italian that lives and works in Monaco–when he is not doing IronMan triathlon competitions in Hawaii. Smithers, on the other hand, is blond with blue eyes and wears an impeccable grey suit—he is as British as it gets.
The two are respectively executive chairman and managing director of REDD, a real estate company that has recently taken the London residential market by storm.
In an exclusive interview with Forbes.com, Marzocco and Smithers talk about the origins of the business and explain why they don’t like to be called a family office.
REDD, which stands for real estate, design and development, was launched in Monaco in 2016 by Paolo Marzocco. The venture is a spin off from the Marzocco Group, the family-run real estate development company that Paolo co-founded with his brother Claudio in the 1960s. The group was behind some high residential 60 projects in Monte Carlo, including the 170-meter Tour Odéon–Monaco’s tallest skyscraper.
“We had this large family business behind us but we wanted to do something different,” explains Jacopo Marzocco, Paolo’s son and REDD executive chairman. “And because 99% of our assets were in Monaco, we decided to diversify and invest elsewhere.”
London was the logical place to start, Marzocco says. “We see the prime central London market as very similar to Monaco. The clientele and the level of expectation is the same.”
Initially, the intention was to do this from Monaco but Marzocco–who studied international business at Regent’s University in London and cut his real estate teeth in New York–said they lacked enough expertise in the local market. Most importantly, they needed to react quickly to the opportunities that were getting on the block.
Enter Russell Smithers. He and Marzocco were introduced by a common friend back in 2014, but it was only a couple of years ago that they decided to join forces. Smithers, who has more than 10 years of experience in the central London market, had previously been an associate director at Walton Wagner, a development manager consultancy.
“On my side, I needed a source of capital to put a developer hat on,” Smithers says. “On the other hand, REDD had the capital to invest but didn’t have a person on the ground in London. It was immediately the perfect fit.”
The duo soon decided that the London business would have been kept under the same brand. This would potentially allow REDD to expand into other locations in the future.
The company officially debuted in the London market in October, revealing that it had built up a £100 million ($130 million) development pipeline in some of London’s most exclusive neighborhoods in a matter of months.
That month, the company bought a five-storey building at Balfour place in Mayfair for £15 million, with a view to transform it into a new luxury mixed-use development. A couple of weeks later, it acquired another building at 7 Charles Street, also in Mayfair, with plans to redevelop it into a £10 million duplex spanning over 3,100 sq ft of space.
“We think it’s the perfect time to be buying,” Smithers says, adding that they are not passive investors. “We’re not just buying something because it’s going to return an income and we sit on it for 10 years. For us, it has to be proactive. There needs to be a development angle.”
The intention is to refurbish these assets and sell them after the market has recovered. Which is the reason why Marzocco and Smithers are not afraid of the challenging London residential market and the uncertainty swirling around Brexit.
“All the developments we are doing are starting now and will be ready after Brexit is over,” elaborates Marzocco, who has optimism regarding the outcome of the process. “There’s still some time to end this instability. If [Brexit doesn’t happen] we’ll bounce it into the long term. We will rent [the units] out and we’re happy to hold them, if needs be.”
REDD has two sides, which Smithers says are “symbiotic:” property development and property management. The idea of setting up its own property management company stemmed from the fact that the Marzocco family already had a portfolio of homes in London. This high-end, concierge-like service will take care of things like restaurant bookings, airport transfers, children parties and so on. “This way, the service becomes bigger than just the property itself,” explains Smithers.
Now REDD has also launched a mobile app, aimed at landlords and private owners in Central London, that will offer tenants a range of members club services, from property management and building maintenance to lifestyle offers. Smithers says that the app is tailored for “young affluent tenants” who are letting homes in luxury apartment buildings, private houses, rental portfolios and build-to-rent schemes.
Marzocco adds that millennials in their 20s or 30s now comprise a large proportion of private tenants in London’s West End, in areas such as Mayfair, St James’s, Belgravia, Knightsbridge and Marylebone. Indeed, recent figures from the City of Westminster show that almost half (46%) of all the properties in these neighborhoods are privately rented.
Marzocco believes that the services offered by the REDD app are now “an expectation of the younger generations.” Smithers adds that “prime property management is more than simply running a property well, you need to deliver a certain lifestyle.”
On the back of their experience in Monaco, where one penthouse of the Tour Odéon last year quoted a shocking $387 million, the Marzoccos have certainly the expertise to deliver that “certain lifestyle.” But neither Jacopo Marzocco nor Smithers like the term “family office.”
“We’re very much not a private family office,” Smithers says, “we’re much more.” He is echoed by Marzocco: “Russell is right, we’re set up to be a free-standing property company and we’re ready to take this new challenge.”
Maybe Marzocco and Smithers are not that different, after all.