Last week I mentioned a property which was coming up for auction, this was a one bedroom ground floor flat with garden in Maida Vale. I mentioned a ceiling price of £280,000.
Spookily enough this was the price it went at.
We purchased the property for a client and will be involved in the decoration and the ultimate resale or remortgage. On all projects there tends to be a six month delay due to a lending criteria which requires the current owner to have held the property for a minimum of 6 months.
The policy was, I presume, designed to prevent investors from making too much money too quickly from property.
But this kind of policy prevents the market from picking up and giving much needed liquidity to the property market. It means cash is stuck in for longer for the investor.
The garden here is a great feature and we will be consulting the top agent in the area and a designer to ensure we are able to squeeze the maximum out of this flat.
There is a risk of going over board in this, this area is not Mayfair and so we must be aware there is a ceiling on this street and ensure we do not go above this.
By ceiling I mean there is a price most purchasers will not go beyind to live on this street. This means if we were to spend £75,000 on this property it will be unlikely we will be able to sell and make a profit as the price would exceed the ceiling on the street.
Sometimes however this becomes a glass ceiling.
I know an investor who has successfully smashed through the perceived glass ceiling on all his projects. All his projects were in Notting Hill and each time he achieved the highest £ per Sq FT price ever achieved on the street. His key was he would get an interior designer to polish off the apartment. The flat would be looking like the best show flat you have ever seen. With all the trimmings such as curtains and artwork. There is a reason why big developers spend allot of money on
their show flats. Why not apply the same principle to your investment be it a single unit?
The Candy brothers sold their apartments at £10,000per Sq Ft, an unheard of rate, but they did and successfully. The demand led to increases which did not make any economic sense. The only way this could be made sense of was the demand was strong at this ultra wealthy level and there was no supply. Rates for these apartment where increased at about 15% over a 3 month period.
So there are, as always, exceptions to the rule Many spend a huge amount of money in their own residential properties
without a hope of recovering the funds, this is ok as long as they are aware they have zero chance of extracting those funds out of the property; it will be only for their own use. This is not OK when doing development for business. The bottom line is always maximum profit in the shortest time.
However the exceptions to the rule occurred in locations such as Notting Hill and so there are restrictions as to how far we can push in this location. A nearby studio which started off at £200,000 has now achieved offers of £275,000. This confirms the demand for this location is ripe. Watch this space we will cover our progress on this property.
Suresh Vagjiani
MD Sow & Reap
