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The right ingredients

13th November 2020

We are currently working on a very lucrative deal in the south east of London.

This is one place one should buy and hold, even if there is no value add to the deal.  That’s because there is going to be a natural rise in values, like a wave.  The reason for this is half of the buyers are first timers.  This is an important part of the housing sector, it is demand from this segment which means new entrants are coming into the property market – new blood.  This shows the location is still priced to attract and encourage this segment.  These new entrants are thought to fuel the rest of the market.

Often, property is viewed as a money generator or as a piggy bank.  Buyers will be turning to property increasingly given the low bank yields and the threat of negative interest rates.

Really, property should be about shelter, and not pure speculation.

In this location it is actually refreshing to see this is the case, at least it is where a large chunk of the demand is coming from.

From an investment perspective, this gives a lot of stability to the deal.  Speculative bubbles can rise and burst, I know this first hand.

Here, the demand come from those first time buyers who need a roof over their head.  We have a housing shortage in the UK, which is like a black hole that can never be filled – not with the current policies in place.

The deal we have agreed constitutes of a commercial on the ground and basement, with flats above.

It’s very close to the station and therefore the rental will be high and the voids will be low.

A perfect location.  What’s more appetising is the immediate value which can be added.  We are structuring the deal for a late completion.  The aim is, by the time completion takes place, we will have the permissions in place.  We are confident regarding this point because we are not reliant upon the planning process which is whimsical and untimely in nature.  We are going down the route of permitted development, which is guaranteed in 56 days; and is certain.

This is what every investor wants, they wish to remove the variables from the deal.

This investment does so.  Once this is in place, we will move to the second phase which will utilise planning.  This will add approximately 2,000 sq. ft. to the deal; about 60% of extra area to the building.  Once we have locked the money in we will keep biting at the deal to maximise the extra potential.  This is the same process we are following for a couple of existing sites we have, that are similar in nature.

Suresh Vagjiani

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