The value of subtlety

20th April 2017

Just before the Easter break I was called by an agent to see a property in W2. It is opposite one of the most expensive roads in London, namely Kensington Palace Gardens, where the average sale price of a property is £36m.

The property is a one bedroom flat, to the rear of the block which means it’s very quiet, this combined with the location of the block being in a dead end road means it’s an exceptionally quiet location, given it’s in one of the most prime areas of London, Notting Hill. It requires modernisation but nothing major, I mean how much can you do to a one bedroom flat?

The price of this property can be closed at £550k, which equates to £1,279 per sq. ft. Prices in this locality are floating around the £1,500 per sq. ft. mark. The pounds per sq. ft. is the rule of thumb quick measurement of a deal. Not always accurate, as it’s only a two dimensional measurement and does not for example take into account the heights of the ceilings, as well as some of the more subtle features of the property.
Typically speaking the smaller you get in size of the property the higher the price per square foot gets. This is because the property market is a little like a triangle, there are more buyers at the bottom end and therefore there is more demand at this end of the market.

This flat should command a further premium due to its location within the block and also in the street.

Prices can vary considerably even within a hundred yards, reflecting often subtle differences in the local character and positioning of two otherwise similar properties. This is a feature which will picked up by the prospective tenant or buyer, whom would have trolled through several properties in the location and will be appreciative of these features which would be missed by the armchair investor.

Even if we ignore these points and treat them as cherries on the pie, this property represents a 15% discount on the market price; in a location which is very solid. This is a buy and hold deal for long term, or even on a permanent basis. Investors often forget you can extract equity by way of remortgage rather than selling. You will have wait longer, but this way you get to keep the asset and you circumvent the issue of capital gains tax, as this is only applicable at the point of sale and you are not selling the asset.

This deal should be tied up this week, and is in need of a buyer; if it whets your appetite call the office to find out more.

Suresh Vagjiani

Suresh Vagjiani
Suresh Vagjiani
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