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Looking past the labels

The conclusions of a recent report from Knight Frank on W2, are a ringing endorsement of the areas which have been traditionally seen as the poor side of Hyde Park. I have been in this locality since 2002, when I started in property as an estate agent in Spring Street, Paddington W2.

I have seen the area get cleaned up and rise from the ghetto it was, before in the darkness the area would change. It has slowly gentrified and in a few years will match the rest of the prime patches existing around the park.

It was always an oddity, why the prices were so low in comparison to its neighbours only a stone throw away. The same way in which council flats seemed cheap and exceptional value from a BTL point of view back then, the only thing holding them down was the unfair label they had been given and the discriminatory way the lenders used to view all council flats regardless of location.

I give very few reports on property much credence, especially the forecasting kind, this was a very refreshing report, it was very thorough in its research and perceptive in its predictions.

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The research is centred around the 625 acre epicentre of London, which is Hyde Park. It analyses the ongoing development on the north side of Hyde Park, from Marble Arch upwards. Listing those which merely have planning consents and those which are actually going through to build and those which have actually been completed, it nails them down to the number of units which will be coming on to the market. The numbers are: 239 units have planning and 137 units are under construction.

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With such low numbers coming onto the market there is little fear of an oversupply. This regeneration of Paddington will be boosted by the Crossrail which is due to come in 2018. There are three blocks which we have purchased on behalf of our investors which will be riding this wave. The first was a row of four mews houses which I bid for in an auction in London Mews, the second a commercial block with planning for four flats in London Street, and the third which is due to complete is on Southwick Street which comprises of a restaurant on the ground and lower ground with four residential flats above it.

There have of course been several properties we have obtained for clients, a large number of which are in Hallfield Estate W2, where prices have gone from £300,000 in 2011 for a two bedroom to £450,000 currently an uplift of £150,000 within three years. Even if the properties were kept empty the whole time these were still deals worth doing. Despite the damp property forecast in the coming couple of years I still think there is more mileage in this particular area partly due to the regeneration due to occur in Queensway.

The report points out that in the decade leading up to June 2014 the price growth in other postcodes neighbouring the park went up by 27% in comparison to W2.

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This i s disappointing if you look at it in isolation, but the past isn’t always a good indication to predict the future. If you consider the growth rates for the last couple of years, you will find Queensway and Paddington have surpassed the growth rates in both Mayfair and Knightsbridge.

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This will take some digestion especially for the Indians based in India. Their purpose for purchasing is not always based on sound investment, they have an emotional attachment to areas like Mayfair or Belgravia much like a fashion label.

I was showing one property on the cusp of Mayfair in Hereford House to an Indian industrialist, it didn’t suit his requirement. I mentioned to him I have a good apartment just across Oxford Street which will be more suited, he insisted it had to be Mayfair. This mindset is obsessed with labels and that too labels of the past.

What’s happening now and into the future means the centre of gravity will be shifting and will not be as it always has been.

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For the year and a half leading up to June 2014, Indian purchasers have been a dominant force in purchasing property in Mayfair, making up 25% of all purchasers second only to the British based buyers. Every year 3000 ultra high net worth families come to London to escape the heat of India. Land Registry figures show almost £450m has been spent in purchasing 221 residential properties, the most popular being in Mayfair, St John’s Wood and Belgravia; and these are just the transactions for the public, many are done by way of share transfer and are never seen.

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The Indians have come into force in the London property scene, one of the most impressive has been the purchase of the Canadian High Commission by the Lodha Group, for £306m. The Lodha Group plans to turn the seven storey 135,000 sq. ft. High Commission into a scheme of over 40 luxury residences. I received a tip off from someone who was appointed to do the due diligence for them late last year.

Another luxury developer is Luxlo, which has undertaken a series of residential developments in Mayfair including penthouses in Park Lane which have sold for over £4,000 per sq. ft., and Aion, whose latest ultra-prime apartment at 18 Grosvenor Square is priced at a record £5,130 per sq. ft. The Dominus Group, another luxury developer owned by an UHNW Indian family, is also said to be looking for development sites in Mayfair.

Their interest is not restricted to the residential market, UK and overseas based Indian families also own some of Mayfair’s most prestigious hotels. The famous Flemings Hotel is owned by the Veladail Hotels Group, headed by Satinder Gulhati. The Washington Hotel on Curzon Street is understood to be owned by the Sanga family and The Mayfair Hotel is believed to be owned by Jasminder Singh of the Radisson Group.

And not forgetting the now infamous Sahara India Pariwar Group, headed by Indian entrepreneur Subrata Roy Sahara, who currently owns landmark Grosvenor House Hotel which was acquired for £470 million in December 2010, and two years later acquired New York’s Plaza Hotel for £570m.

It’s clear Indian Indians have a strong appetite for London property, but perhaps their tastes could do with some refining, so that it is not based purely on labels and contains a little more research. It is with this intention I fly to both Mumbai and Bangalore for events which will take place on this coming Monday and Tuesday at the Taj Hotels in both places. The events have been organised for those who wish to find a good home for their funds. London property is a sound place to invest and clearly the appetite is strong in India.

The Real Deal 

South Hampstead, London, NW6 Purchase Price: £875k

  • A large two bedroom flat on the first floor of a period conversion
  • Long lease
  • High ceilings
  • Fantastic views of the communal gardens
  • Properties in this location are being sold for around £1,100 per sq. ft. while this is coming in at around £810 per sq. ft.
  • Very good buy and hold opportunity as the prices in this location are going to rise heavily

Call us now to reserve!

Suresh Vagjiani

A Property Investment Company

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!Tips of the Week

Property is about three things, Location, Location and Location – automatically the rentability and capital growth of the property will be taken care of.

You don’t need to own bricks and mortar outright to invest in property, there are a number of property funds which invest in property and give you very good hasslefree returns with very low entry levels.

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