Down but not out after property bust

For Alexander, who started out in the industry 27 years ago at the age of 21, admits he lost his entire personal savings in the collapse of property investment fund Heritor's Residential Property.

The fund, in which Alexander was a "major investor", was taken into administration with PricewaterhouseCoopers in November, wiping out a "seven-figure" sum which the property tycoon had earmarked for his retirement fund.

But at his New Town business, DJ Alexander, the slowing of the sales market and the subsequent hike in rentals has been a godsend.

Alexander has upped the number of properties on its books by 600 to 5,000 – and with a 15 per cent commission on a fully managed property, the figures are good. He is expecting a 15 per cent rise in turnover to 45 million for the year to August.

He explains: "What has been difficult for us is that things have changed dramatically in the market.

"In 26 of the 27 years I've been in property, it has been pretty straightforward to predict that the market will rise. That is no longer the case."

He adds: "The residential lettings market has been fantastic. No matter what happens economically, people always need a place to live. They have babies, get married, separate – their situations change and they need to move accordingly.

"The difference now is that people are reluctant to buy or sell because of the market, so they are renting more."

And they are renting longer. Alexander's figures show that the average lease was 11 months at the end of last year – now it is 18 months.

He recalls that at the start of the downturn, last year, demand was far exceeding supply: "Then, all of a sudden, it went full circle," he reflects. "People wanted to move and couldn't sell, so decided to rent out their properties instead – and even builders started to rent out some new build properties because they couldn't sell.

"Then there was an oversupply in the market. We have come through that now in that there is a healthy demand, and by God there's a healthy supply too."

Alexander is known to have personally bought a number of properties, as well as his "significant" investment in Heritor's.

He admits: "I had put my hard-earned money into it – it was basically money I expected to retire on. Now I'll have to work for an extra ten, maybe 15 years. It was horrible, but these things happen. You just have to get on with it.

"I am very fortunate in that my main core business has been fantastic. I had a good business going into the recession and I expect to have an even better business coming out."

There is a hint of wistfulness in his voice as he muses: "The majority of people's wealth in the UK in recent years has been on the back of property. I don't think it will ever go back to the halcyon days.

"People got carried away, wanting bigger cars, bigger houses and so on. I think when something happens, you've just got to adjust your lifestyle and start appreciating things you took for granted."

Although he won't be drawn on details of his investment, the property entrepreneur admits the cash he put into Heritor's was in seven figures.

Heritor's – which was behind the conversion of the former Edinburgh Academy boarding houses into luxury flats and last year was forced to put on the market three Georgian townhouses for just over half the 2.25m it had paid for them 11 months earlier – held properties worth an estimated 150m in a partnership with HBOS. It mothballed its 20 development sites in Edinburgh and Glasgow immediately following the administration.

But Alexander is now dusting himself down and throwing all of his energy into developing his rental business.

The latest stats show that the firm let a total of 133 properties in June – around 15 per cent higher, year-on-year. And his two UK offices in Glasgow and Edinburgh – DJ Alexander also boasts a small but growing operation in Dubai – have taken on a "handful" of extra staff in the past year, taking the total headcount to 49.

DJ Alexander, which generates some 90 per cent of its income through property rental, added a sales business to its portfolio 12 years ago. Income from that side of the business is 40 per cent lower in the current year, but Alexander is not too worried.

"It is a small proportion of our business," he explains, adding that the division sells around 20 properties a month.

In fact, the division was set up initially to service clients who had been renting out properties but then decided they wanted to sell.

"People were asking us for recommendations of where they should go," recalls Alexander. "And it seemed ridiculous not to set up our own sales side – as otherwise we were just watching the business go elsewhere."

And watching business go elsewhere is not something that appeals to Alexander.

Conserve your cash – and your skills

David Alexander gives his tips on surviving a downturn.

• Cash is king in any downturn.

Do not spend money unless it's crucial to your business and budget for much harder times.

In my opinion, this recession has not reached its bottom. If you budget for much harder times and it doesn't happen, then you will be in a good position – but if it does, then you will be able to survive it.

• Try to tweak, improve or finesse your service.

You have to remember that your clients will be feeling the recession too.

Anything you can do to improve the service you're giving people will help – and make people more likely to bring you return business.

• Look after your key staff.

You will need them to work harder and longer and you need people to be motivated and work together.

Also, don't be afraid to part company with poor performing staff. When things are good, you may be able to carry people who are not pulling their weight, but in a downturn, you cannot do that. It is very difficult, but you have to make sure that everyone is performing.

YOUNG STARTER

DAVID Alexander's first property venture was an estate agency which he opened in Leith in 1982 when he was only 21.

Initially focusing on sales, he decided to start a letting operation at the insistence of one customer and later closed down the sales side of the business.

In 1989, he moved his operation to Edinburgh city centre, opened an office in Glasgow in 1997 and, in 2007, launched a small operation in Dubai.