17 December 2016
We are currently working on a deal in a strong part of London, where the Crossrail is due to come in 2018. The property consists of a parcel of land with a building containing multiple studios, which are bringing in a gross income of 8% per annum. On a purchase price of £6m, this is a whopping return on your investment given the location is a stone throw way from central London, and is in a regeneration area in its own right. If all you do is purchase and hold the investment, this would be no bad thing.
The building itself has multiple ways to add value, through a programme of development and refurbishment. The current square footage is 12,000, and given the purchase price is £6m, this equates to £500 per sq. ft., which is cheap given the location commands rates of £850 per sq. ft. minimum.
Given this is a market where good deals are surfacing, we can afford to be picky and go only for the cream, and where there is an angle. This is one such deal.
On this piece of land, we spotted an opportunity, we knew something which both the seller and the agent missed. It is said information is power, in property this can be translated into hard money.
We knew, and had then got confirmation from our planning consultant, that this piece of land can be split, meaning part of the land can be cut off from the main property and not affect the value of the existing building. The property is on a corner plot, and the empty piece of land fronts another street.
Here we can get planning for a three-storey building, in its own right the GDV of the finished development will be in the region of £6m. This means the land with planning should be worth at least £1.5m.
In other words, the property can be cut off and resold for £1.5m once planning is in place. The planning can be applied for between the period of exchange and completion. There is even a possibility of getting this resold based on a positive preapplication which negates the need for going for full planning and is a quicker way to cash in on the investment.
Here is an example of money being made based on knowledge, it’s hard to find this in the property market as generally everything is known and apparent.
Due to the way this deal can be structured, here’s an opportunity to make a lot of money with relatively little. If this excites you call the office now.
Suresh Vagjiani
