Date Published 14 March 2016
A couple days back I was presented with a very interesting scenario, I received a letter from a very active property investor, primary based in Mayfair. He explained that he has been very impressed with the property exploits of Marylebone over the past few years and considering my daily involvement with Marylebone and its properties, he thought that I'd be the perfect person to approach. He wanted to understand just how far Marylebone has actually risen, as well as grasp the financial figures behind it; his underlying query orientated on whether or not he should be relocating his interests from Mayfair, and situating them firmly upon the Marylebone property market instead. I explained to him that he is certainly not alone in his query, as over the past 2 years: around 12% of buyers have moved from property investment in Mayfair to reap the financial rewards offered by modern-day Marylebone.
Since 1995 there have been great development strides in Marylebone, especially with the makeover of the Marylebone High Street as well as the rest of the surrounding area; other notable events include, the conversion of the Chiltern Fire House along Chiltern Street into a prestigious hotel and restaurant settlement. In addition, much of this modernisation has also arisen as a direct result of the Howard de Walden and Portman Estates, which between them own and manage a great portfolio of properties in Marylebone. Their commitment to the heritage of Marylebone has been paramount where they have played a vital part in the up keeping of the area's period buildings; their great wealth of experience has allowed for the specialised task of creating 21st century facilities within 18th century buildings, whilst still upholding their historical natures. Furthermore, both groups have significantly invested in the streets that make up their estates, both directly and indirectly aiding Marylebone as a whole and resultantly developing this area much quicker than what many thought practical – heavily surpassing expectations. Marylebone for a long period of time had been overshadowed by its traditionally more prestigious neighbours Mayfair – but in recent times investors have become much more price-sensitive, viewing Marylebone as a cheaper alternative, but one which still provides a prime London location as well as an impressive image. In order to aid my client, which I hope will also be of great benefit to my readers here as well, I decided to evaluate the values of 1 as well as 2 bedroom properties in both Marylebone and Mayfair, using 4 streets as our examples. I will also be illustrating the rental and buy-to-let potential of properties along these streets, highlighting the average prospective yields that can be attained.
Westmoreland Street (W1G)
1 bedroom flats: Average Property Value: £789,666 - Average Rental Value: £2,383 (pcm) - Predicted Rental Yield= 3.62%
2 bedroom flats: Average Property Value: £1,326,183 - Average Rental Value: £3,993 (pcm) - Predicted Rental Yield= 3.61%
Chiltern Street (W1U):
1 bedroom flats: Average Property Value: £728,275- Average Rental Value: £2,378 (pcm) - Predicted Rental Yield= 3.91%
2 bedroom flats: Average Property Value: £1,584,214 - Average Rental Value: £5,024 (pcm) - Predicted Rental Yield= 3.80%
Homer Street (W1H):
1 bedroom flats: Average Property Value: £612,461 - Average Rental Value: £1,956 (pcm) - Predicted Rental Yield= 3.83%
2 bedroom flats: Average Property Value: £987,333 - Average Rental Value: £3,147 (pcm) - Predicted Rental Yield= 3.82%
Park Street: (W1K)
1 bedroom flats: Average Property Value: £1,284,272 - Average Rental Value: £4,331 (pcm) - Predicted Rental Yield= 4.04%
2 bedroom flats: Average Property Value: £2,385,090 - Average Rental Value: £7,868 (pcm) - Predicted Rental Yield= 3.95%
Mount Street: (W1K)
1 bedroom flats: Average Property Value: £1,390,738 - Average Rental Value: £4,771 (pcm) - Predicted Rental Yield= 4.11%
2 bedroom flats: Average Property Value: £2,279,212 - Average Rental Value: £6,892 (pcm) - Predicted Rental Yield- 3.62%
Hill Street: (W1J)
1 bedroom flats: Average Property Value: £904,400 - Average Rental Value: £2,830 (pcm) - Predicted Rental Yield= 3.75%
2 bedroom flats: Average Property Value: £1,913,200 - Average Rental Value: £5,860 (pcm) - Predicted Rental Yield= 3.67%
From our results, we can see that properties on Mayfair demand significantly higher prices, where the average 1 bedroom property across our 3 example streets costs £1,193,136 and the average 2 bedroom property across these streets, arrives in the region of £2,192,500. When we compare this to the prices advertised in Marylebone, the average 1 bedroom property (using our 3 streets) costs around £710,134 and for 2 bedroom properties, prices circulates at approximately £1,299,243 on average. Comparing the two areas, we can see that it is much more financially viable to invest in Marylebone as even with the comparison of these 6 streets in total, we see that 1 bedroom properties on our average are a whopping £483,002 cheaper in Marylebone than they are in Mayfair and 2 bedroom properties are even more significantly cheaper by £893,257! However, as we are very much concerned with the Buy-to-let market, we must also analyse the rental possibilities, we see that in Mayfair (using these streets), properties here are expected to generate approximately 3.74% for 2 bedrooms and 3.96% for 1 bedroom flats on average. Regarding Marylebone, according to the figures generated by our 3 streets, 1 bedroom properties are expected to produce on average 3.78% and 2 bedroom properties have a prospective 3.74% yield on average. Although Mayfair expects on average a slightly higher rental yield for 1 bedroom properties than Marylebone, 2 bedroom properties between the two areas is much more similar, generating a pretty even account. Nonetheless, as we can see irrespective of the decent yields Mayfair can generate, Marylebone is certainly in line or minimally apart in this category. But as the prices are so much higher in Mayfair, the time taken to generate this prospective yield is much more elongated, where returns on investment take much longer than they would do with Marylebone properties – which also do not command as premium of rates that Mayfair does. I believe that Marylebone is certainly a much more financially beneficial and worthwhile area of investment considering the current market, and I believe an investment in a property here would provide a much more cost-effective solution than an investment in the Mayfair area - at present as well as for the future.
A last point of note, should you require any additional information, regarding the Marylebone property market, its particular properties or even further details (sticking to the topic of the article), of how Marylebone currently compares against its neighbours Mayfair, please get in touch with me. I shall gladly aim to assist you with any potential queries you may have.