1st July 2017
It was about a month ago when I showed an Iranian doctor a property in W2. The flat was a two bedroom top floor period conversion, in a location which was due to rise over the coming years. This assumption is backed up by a Knight Frank report which focused in on this location, known traditionally as the poor side of Hyde Park. This is where the smart money will go into.
Normally I take many reports with a pinch of salt, as mostly they are written by those who sit in ivory towers and whose feet never touch the ground. This one had some punch to it and was set firmly at ground level. The total supply was recorded from the planning permissions granted in the area, and this number was further broken down into those developments where work was actually underway, as not all developments with planning take off for one reason or another.
This report shows the supply will be very restricted in an area which is due to be experiencing a huge uplift due to the massive development taking place in and around Queensway.
This property sits right on the door step of the development.
The property was shown once and then twice as the doctor decided to bring his developer friend into the deal.
The property consists of 700 sq. ft., and it was cheap at £700k, the going rate is £1250 per sq. ft., and it’s a share of freehold. Leasehold properties are always a concern to the Asian mindset as they wish to keep property in the family for the next 21 generations.
This alone means the deal is a good one. There is a real big cherry on this pie as well; the property is likely to be granted planning for a mansard which will add a further 430 sq. ft. to the property, bringing it from a two bedroom to a four bedroom – two bathroom home at 1130 sq. ft. This adds more than 50% to the existing sq. ft.
The planners have confirmed that in their opinion planning will be granted.
The Doctor and his friend saw all of this and liked the deal. They were supposed to use the lawyers that held the contracts, and pay us our normal fees. However, over the weekend they had sent quite a firm email dictating the terms they wanted, which included switching lawyers at the last minute, and paying us a reduced fee. As this deal required quick action, and no dilly dally, we placed the deal on Monday morning to another party, who invested without seeing it.
We have negotiated a long four month completion, and applied for planning permission which we expect to be granted. The property has now been placed in Auction, for the 19th July 2017, in an attempt to resell the deal prior to completion. This only works if you leave enough fat on the deal for an incoming investor, in other words you cannot be too greedy.
The property may sell at the price we want, and it may not. If it doesn’t then it will be developed and kept, until the market strengthens and then it will be reassessed.
It’s a funny market at the moment, some things are selling way below what they should be, and others in excess of what they should be. A house I went to see, which was available at £2.7m, went into a bidding war and the price was agreed at £3.25m, £300k above the asking price.
Suresh Vagjiani
