I went to visit a prospective client in East London, Bethnal Green. The whole experience was an eye opener for me.
I was not aware of the high property prices and rents achieved in this location; they were actually higher than in the many parts of the West End. The client I went to see took me on a quick tour of a few blocks of properties he owned and gave me an insight into the rental he was getting and the local politics of the area. For example, half a shop which couldn’t have been more then 700 sq. ft., was bringing him £1,000 per week in this market. It was rented out to an independent who must have been doing well in order to be paying this kind of rent.
The client was in the niche trainer business, I wasn’t even aware such a market existed. When I was young in Copland High School, I only knew of Adidas or Nike, the lucky kids who had money to splash out would wear them, but generally the rest of us would be wearing trainers like Dunlop, as they were one of the cheapest, and we would get laughed at by our class mates.
It seems things have moved on exponentially. Teenagers now are spending upwards of £500 to even thousands on a pair of trainers. What’s more is that as some of the lines are niche products, as the items decrease the price of the remaining pairs increase; as the supply is decreasing and the demand is still there.
The area and the local economy is testimony to the hard work and progress of the local community.
A similar dynamic operates in and around Ealing Road, both on the residential and the retail front; the Brown Pound as I call it is often overlooked by the mainstream.
It’s important to get a feel of the location and not just focus on the property itself, the first rule of property is after all location. We have been looking at a couple of blocks in East London, smallish ones around the £500K mark, comprising of a shop and uppers. One of them in particular interests me more; not because it’s better but because it has issues associated with it. It’s rare a fully perfect deal will land on your table with a discount to it; most of the time cheap properties come with issues and complications.
This one comes with two, one is an illegal flat which has been rented for a number of years, and the other is that the retail is occupied by an independent take away.
Both of these will dampen the ability for the potential buyer to gain finance. This means the property is likely to stick around and therefore the vendor will be open to doing a deal. From my enquiries, I know the vendor is not desperate, but at the same time he is commercially minded. Therefore, after the property has had its time on the market, and – hopefully doesn’t sell, we can then approach him with an offer. Time will tell.