Ian serves up the aces in property

From the macro-political threats to Malta to the accommodation patterns of Durham students, property developer Ian Baggett has cast his net far and wide.

From the macro-political threats to Malta to the accommodation patterns of Durham students, property developer Ian Baggett has cast his net far and wide. Nigel Stirling talks to the man in charge of a multi-million pound property empire.

Ian Baggett is a rising star on the property scene in the North-East. In the space of a few years his Jesmond-based property company - Adderstone Group - has built a development programme worth £50m.

And, after cashing in on the buy-to-let craze, he is switching the company's emphasis away from residential investment to commercial investment and development, boosted by a £30m war chest supplied by Allied Irish Bank.

"Two years ago we had a development programme of around £20m. We are doubling that and felt that to get the scale we want, and to take the group to the next level, we needed to look at larger, commercial developments," says Baggett.

To those who do not know Baggett, who is aged just 33, his lofty aims for Adderstone may seem to border on the precocious.

But the Durham University graduate has already managed to fit more into his life than most of us would in several lifetimes.

Before his 30th birthday he had chalked up a doctorate in political geography, a stint as an officer in the Royal Navy in Hong Kong, and attempted a career as a full-time professional tennis player.

And he surely must be among a select class of professional property investors to have published an academic paper on a subject as august as the macro-political threats to Malta in the post-Cold War world.

But Baggett appears disarmingly removed from his achievements, especially his success in building a property company that this year will generate revenues of £40m.

"They are all telephone numbers to me. I think it is a good idea if they stay that way. There is a danger of getting complacent," he notes warily.

There seems little chance of that. Baggett's thorough approach to investments was marked out early in his business career.

Attending Durham University in the early 1990s, his first academic thesis set out to determine the accommodation patterns of local university students.

"I hadn't wanted to do a purely academic dissertation. I had wanted to do something of some relevance, so I set out to do a dissertation with the aim of working out where the best place was to buy properties."

Using census data and `confidential' university records, Baggett analysed student living patterns over the previous 20 years, taking into account affordability, crime levels and quality of housing.

"I noticed there were 300 students living in Bowburn - a little village south of Durham. They were living in a series of six streets."

He was quick to seize on his `inside knowledge' and bought a house for £15,000 on one of those streets, using £2,000 inherited from his grandmother and a loan from Northern Rock: "All my mates were taking the piss out of me. They said there was no way I was going to get students to live in Bowburn. But I knew. I took my dissertation to the bank and said find me the money."

By the time he left university, Baggett owned five houses in Bowburn and collected enough in rent to earn a living as a landlord.

"It gave me a bit of flexibility to try and do something else. I did not have to panic about what I was going to do next."

A talented tennis player at school, Baggett had played on the professional circuit in France between academic years while at Durham University. Already Durham and Cleveland county champion, he decided he would try and fulfil his ambition of having a full-time career on the professional circuit.

"My ambition when I got to university was to get a decent degree, meet interesting people, have a good few years and become a professional tennis player. Up until the age of 20 or 21 I dreamed of winning Wimbledon.

"I had some results against players ranked in the top 30 in the UK and, if I hadn't done as well academically, I'd have possibly gone to an American university on a scholarship."

But within two months of leaving the region to try to earn a living on the French professional circuit, he was back in the UK. "Ultimately I was a loser at tennis. I did not succeed in my ambition but tennis has been a big factor in my life. I acknowledged early on that I was not the most talented player and I never received any coaching early on which was unusual.

"I was always written off by the coaches and told I'd never make the county team. I became stubborn and it gave me confidence to become county champion and beat those who'd the coaching I never benefited from."

Returning to Durham University to undertake a year-long post-graduate degree in political geography, Baggett also put himself through the admissions procedure for a place in the Royal Marines.

With a background in geo-politics and by virtue of fortuitous timing in the global security scene, he saw a career in the Armed Forces beckoning.

"The Cold War had just ended and it was very topical at the time. There was a lot of talk about what the new threats would be, what was going to happen next. I ended up joining the Royal Navy in the instructor branch. I was effectively going to become a teacher in the navy in my specialist subject of geo-politics."

Officer training at the Royal Navy College at Dartmouth followed where he up-graded his Masters course to a PhD in geo-politics.

"It could have potentially been a very good career. You lecture but you could also do a bit of intelligence work if you became expert in a certain sector. That was the ambition."

After passing out, Baggett was assigned to a patrol boat policing Hong Kong's waters in 1996, in the run-up to the UK's hand-over of the island to China in 1997.

He was one of three officers on the 36-man vessel whose job it was to keep drugs and illegal Chinese immigrants out of the British colony and to stop the smuggling of contraband to the mainland.

"It was the run-up to the hand-over and we had to hand over any catches to the Hong Kong police. We knew that they wanted the credibility in the hope that after the hand over the People's Liberation Army didn't step in and take over the security of Hong Kong."

As a student of the political and economic forces shaping the world, the year-long tour of duty was a fascinating time for Baggett.

"I've been back in the last couple of years, which I should not have done. There is no British influence there and few ex-pats left. Economically, it's gone backwards; it's not as vibrant as it was. In terms of development, it's been overtaken by Shanghai. It is quite sad. It has had its day really."

It was during this time the Royal Navy closed its instructor branch to social science graduates - effectively ending Baggett's chances of a career as a naval instructor.

"They backed a few guys to do research degrees and then thought `do we want a guy in uniform questioning what they are being asked to do'? and backed out and just wanted engineers.

"I soon realised that in the navy I was a very small and insignificant cog and, to be honest, I did not like that no-one was paying attention to how hard I was working or how well I was doing."

It was a seminal experience for Baggett and may explain the brevity of his one-year stint as a valuer and consultant with chartered surveyors Sanderson Townend and Gilbert in Newcastle.

"By then I had a little bit of equity in the houses and they had gained in value. I was seeing deals being done by guys with not much about them.

"Buy-to-let had become a bit more popular by then and banks were starting to lend against residential investment property. I went to Northern Rock and said `how much money can you lend me?'"

He saw his opportunity in the suburban Victorian terrace houses that had been used as offices by professional firms in the city.

"The timing was perfect because a lot of solicitors and accountants were moving out of period buildings, because they were non DDA-compliant, and into purpose-built, new office buildings. We bought an office on Osborne Terrace and moved gradually up the terrace."

In partnership with a local entrepreneur, Baggett's first deal was to buy the former offices of Northern Arts, one of the last properties he had valued at Sanderson Townend and Gilbert.

"I would have been a crap valuer. They are paid to be negative. Every deal I have ever done, the valuers advised against it. One of my great pleasures now is reading back over the valuation reports saying apartments wouldn't work in this location or that."

Baggett quickly bought the former offices of Crutes Law Firm on Osborne Terrace for £330,000 ("Solicitors can never tell you they cannot exchange quickly. They exchanged in two days of accepting the offer because it was their property!")

He said: "We put down a £135,000 deposit and from that we secured a position on 24 apartments which we got £2m of property out of. We were able to defer completion for two years and effectively secured exposure to growth in 21 apartments."

The Osborne Terrace properties provided the platform for growth in Adderstone's residential investment portfolio and a number of developments.

One of Baggett's proudest achievements has been the salvaging of The Journal Tyne Theatre on Westgate Road, which Adderstone bought in 2003.

But he admits to being frustrated by the involvement of Newcastle City Council which has held up the conversion of the Victorian theatre's rehearsal rooms for two years, while the up-keep of the theatre itself is costing Adderstone £50,000 a year.

"It sends a tingle down my spine every time I walk in there. The England Theatre Trust appreciate what we have done, as does the English Theatre Trust, but within the city council there is no appreciation of the risk we, as a relatively small private company, have taken in salvaging it."

He claims the granting of planning permission for flats has been drawn out. "The exercise has taken two years when really it should have been one. It has always been a break-even exercise for us and, if we had done that, we would have gifted the auditorium to the charitable trust."

In the next 12 months, Baggett's company will move into its next phase with a £50m development programme - 70% of it in commercial schemes.

But in its first major commercial development - a £15m business park development on the site of the former Austin Pickersgill shipyard in Sunderland - Adderstone has shunned approaches from property companies ("surveyors in suits," says Baggett) to form a joint venture.

He has recruited John Wall, Newcastle- based former head of corporate finance at accountant PricewaterhouseCoopers, as non-executive chairman. And, having shelved a listing on the Alternative Investment Market for the time being, he plans to dish out shares and share options to his managers and appoint directors from within Adderstone group of companies.

"John is very well connected as well and the hope is he can bring more deals to the table through his connections with the business community.

"As we are taking on more, I am finding less and less of my decision-making is correct. To go to the next stage I need to take a step back and take a more strategic view of the business."

The CV

1984 Hookergate Comprehensive School.

1991 Durham and Cleveland Junior County Tennis Champion.

1993 Undergraduate dissertation, `The Geography of Student Accommodation in and around Durham City'.

1994 Graduated University of Durham, with five investment properties in Bowburn.

1996 Royal Navy Tennis Champion, Wimbledon.

1997 Hong Kong Squadron, Royal Navy.

1998 Trainee surveyor, Sanderson Townend and Gilbert (now Sanderson Weatherall).

1999 Completed PhD, Political Geography, University of Durham.

1999 Northumberland County Men's County Tennis Champion.

2000 Formed Adderstone Group.

The Questionnaire

What car do you drive?

Jeep Grand Cherokee. I need something good enough for contractors to know they will get paid but not so good that I get people's backs up.

What's your favourite restaurant?

San Lorenzo's, Gosforth High Street.

Who or what makes you laugh?

My son all the time; my wife when she's drunk.

What's your favourite book?

Zen and the Art of Motorcycle Maintenance by Robert Pirsig.

What's your favourite film?

The Mission. Great story and the bad guys are Portuguese.

What's your ideal job, other than your current one?

My childhood ambition was to become a professional tennis player.

If you had a talking parrot, what's the first thing you'd teach it to say?

`Yes, I agree with you'.

What's your greatest fear?

Bad health, personally or for those close to me.

What's the best piece of business advice you have ever received?

Leave a bit in for the next man.

Worst business advice?

Don't work too hard.

What's your poison?

Bigger deals.

What newspaper do you read, other than The Journal?

Daily Telegraph.

How much was your first pay packet and what was it for?

£4.50, delivering 450 free newspapers around Highfield and High Spen.

How do you keep fit?

I get whipped more often than not now by some of the area's up-and-coming junior tennis players. As an antidote, I play football with some old blokes on a Monday night.

What's your most irritating habit?

Doing bigger but not better deals.

What's your biggest extravagance?

Home in France and a castle in Northumberland. I have to pinch myself anytime I visit either.

Which historical or fictional character do you most identify with/admire?

I could hardly profess to identify with them but, from what I know, I admire the likes of Isambard Kingdom Brunel or some of the other empire builders.

And with which four famous people would you most like to dine?

Victoria Beckham, Rebecca Loos, Christian Ronaldo and Wayne Rooney all at the same sitting.

How would you like to be remembered?

As a good husband, father, son, brother, friend and employer.

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