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Proximity and Price

17th March 2018

Whilst looking at a deal that we are considering in W1, I noticed the disparity which exists on the doorstep of this property.  The deal we are looking at is at £1,100 per sq. ft., across the road the properties in Quebec Court have a comparable at £1,700 per sq. ft.  This is a low comparable for a sale in late 2017.  Previous comparables are even higher at £2,000 and £1,800.

We sourced a property in Quebec Court back in 2016, for a client.  It was 550 sq. ft, on the 7th floor.  The market price was £800k, we secured this deal for £625k, which equates to only £1,136 per sq. ft.

The current valuation of this property, based on the last comparable, will be £935k.  The deal was done in September 2016, this means the property has increased by roughly £300k in a year and a half.  This means the investor has doubled his money, as only half or less would have been put into the transaction, the rest of the funding would have been raised by way of mortgage.

The odd thing is the block we are looking at purchasing is selling at £1,100 per sq. ft., and Quebec Court, which is close, is selling for £1,700 per sq. ft.  They are only a 3 minute walk away from each other, or 0.2 miles according to Google.  And, if you walk a further 0.2 miles down you will get to a tower, which doesn’t exist at this point in time.  But it doesn’t stop the developer Almacantar from selling it off plan.  I have heard from a good source that someone has recently purchased an apartment there, at £4,400 per sq. ft.

This is a location I know well, our office used to occupy the tenth floor of this building until they, like everyone else in central London, decided to make good use of permitted development.  Under this scheme you can get office to resi conversion without the need of planning.  The developer took advantage of this and is converting the former office block into high end residential apartments.

It is now being marketed discreetly, as they do not publish their prices on their website.

The hike in prices relative to the short distances between the buildings is stunning.  And I have been in and around this location for over 15 years.  Still this disparity amazes me.

A new build apartment like a new build car carries a premium.  What is being built there is also a superior product, as it will have many facilities which the other two blocks will not.  The maintenance of these will be reflected in a hiked up service charge no doubt.  However, the fact that you have access to them will be reflected in the property prices themselves.

The bottom line is, you have a price differential of 60% from one building to another, which is only a stone throw away, and then a hike of 260% with another block the same distance further south.  All of these share almost the same post code, and if you take a 5 minute walk from Marble Arch, north down Edgware Road, you will come across all three blocks!

£1,000 per sq. ft. is not a big deal anymore.  Ex councils are selling for this sort of level in the right places.  Areas in Wembley are being valued and sold for £650 per sq. ft.

This shows that although the deal we are looking at may seem high to the outsider, a closer analysis will reveal we are coming in at the lower end of the scale relative to the area.  We feel the deal we are looking at will rise to match the rest of its neighbours, in a relatively short amount of time.  Get in touch if this deal interests you.

Suresh Vagjiani

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