17th November 2015
Natie Kirsh is a multi-billionaire who has made his money mainly through property. Ranked as one of the five hundred most wealthy people in the world, he owns property and businesses all around the globe.
Q: What do you think the benefits of investing in property are?
A: Property is a broad term. It can be divided into three parts: residential property, commercial and industrial property, and retail property. One is to sell out of, one is to operate out of, and the other one is to live in. They are three different markets. Historically, retail property, for example, shopping centres, was the gold standard, industrial commercial was okay, and residential was the dog. Now it’s the other way around. Residential is hot and everybody wants to be in it, and there’s a big demand for it as well as a shortage of housing, and housing prices have gone crazy. Industrial and commercial property has remained pretty well in the middle, and retail is now the dog. Why? For simple reasons: internet shopping, and the ability of anybody to go and buy on the internet has cut footfall in the shopping centres. And perhaps worse than that, it has created a situation where anybody buying anything of any value waves his camera or his phone in front of the barcode, and says ‘I can buy it somewhere else at 20% less’, and he presses the guy to give him a 10% or 12% discount. This decreases the profitability of stores, it cuts down the footfall, and the result is that shopping centres have really soft rentals and people are putting them under a lot of pressure. The high street is full of empty shops where things were not great. So your whole property scene is somewhat different. But coming back to your initial question about why invest in property, it’s a protection against the purchasing power of money, and in my lifetime, the purchasing power of £1 today is somewhere between 5 and 10% of what you could buy for a pound fifty years ago. Inflation is a huge factor, and property is protection against inflation. It has the added advantage that you can leverage it, so you can borrow long-term money against the property estate, and so the value of the money goes down, the property goes up, and it’s a hedge against inflation. Property doesn’t take a great deal of management. There are a lot of good reasons to go into real estate, and very good reasons why I’m in real estate to a large extent.
Q: What are your views on technology?
A: Technology today comes in so many different formats, and personally, running a business today is not like running a business was years ago. Today, technology gives you instant information on pretty much everything you do. I run a vast operation in America, and I have instant information on everything I want to know. This could never have happened before. I was just busy looking at some figures on operations in America, and seeing a real deflationary situation looking at last year’s prices against this year’s prices, in perishable products like meat, fish, produce, and things like that. The way you do business has changed, where you can do business has changed, and how you can do business has changed. So you can operate from almost anywhere, and have instant information. You don’t have to go to an office anymore; change has occurred in so many different ways, and in so many different places that it’s almost unbelievable.
Q: Are there any features which you look for when you invest in a business?
A: I am very reluctant to invest in something where I can see the finishing line before I start. I look at things that have scale, but then you have to be at a certain point in time in your business cycle. I am in a very mature business cycle, where I’m not looking to start new things, and I’m not looking to start the beginning of my thought process in what I want to look for. This would not be what I looked for 30 years ago, 40 years ago, or even 20 years ago.
Q: Do you have an investment philosophy?
A: It depends on the amount of money you have to invest, and who’s going to be looking after it. I have an investment philosophy that I only invest where I am comfortable with management. The right type of management can manage almost any situation. Whereas difficult operations can be well managed by competent people who know what they’re doing, great opportunities can be messed up by people who don’t know what they’re doing.
Q: On a more global scale, which country do you think has the most opportunities to invest in at the moment?
A: I’ve got absolutely no comment on that, because I don’t know the world sufficiently well to give you an answer. But my answer for where I like to invest, is that I like to invest in English-speaking countries where you have the rule of law. This is my preferred place of investment. In other words America, Canada, Australia, New Zealand, the UK. I can read the agreements myself, and I know that nobody is going to be able to steal from me with impunity. That’s a broad structure.
Q: What life lessons have you learnt in the course of your distinguished career?
A: I’d like to talk about is integrity: nothing has shaken the world more than the lack of integrity in the banking system. When I was a young man, the bank and the bank manager were the height of probity and correctness, and when you see all the rigging that has taken place in the banking sector, it’s absolutely awful. They punished the shareholders who had nothing to do with it. $250bn plus of fines have been paid by the shareholders, while the guys who perpetrated it were virtually untouched. I can understand that companies should be required give back money that they might have made through lack of integrity on the part of their staff, but to take huge funds out of their banking system can do enormous harm. Integrity in business is vital – we recently saw the lack of integrity at Volkswagen that shocked the whole business world. The consequences have still not been spelt out to the individuals, the company, or indeed Germany. Make sure you can always stand tall.
Q: What did you learn during your teenage years which you think has influenced your success?
A: My father died when I was 16, and I had to assume responsibility for a family that was ill prepared for the death, which came quite suddenly and unexpectedly. It left my mother in charge of a reasonably sized business, knowing nothing about it. She had to learn, and she insisted that I go to university, which I did. I used to work whenever I had spare time in the business, and the business was 70 miles away.
Q: What lessons can you learn as a teenager?
A: I can’t tell you. Everybody’s got his or her own personal scenario for what interests them and what doesn’t interest them. But I say again, to do things which you don’t have any interest or passion for is not a good idea, so do what you want to do.
Q: Is there anything else you wish you had done during your teenage years that you didn’t do?
A: No. Maybe run a bit faster, but not really. You are growing up in a much more affluent world than I grew up in. I grew up in a small town, where everybody knew everybody else. There was less wastefulness. There was less awareness. There were no computers, so your focus was much narrower, and much more self-centred on your immediate environment than the world at large.