Inspecting the investment potential of Marylebone vs. South-Eastern neighbours Soho... let`s magnify these two iconic London areas and find out how they compare against one another in the property market!

Date Published 13 June 2016

Over the past month, I have intermittently encountered questions regarding Soho in relation to Marylebone as property investment destinations, but over the course of the last week these enquires have become slightly more frequent, and this has prompted me to discuss the two areas in today`s weekly article. Choosing one particular client`s series of queries relating to the topic at hand, I can tell you that this enthusiastic individual, who has numerous international contacts and is regularly involved with those seeking overseas investment in London, has been very interested in both Soho as well as Marylebone. Knowing that I am frequently occupied with the Marylebone property market, he sought my expertise to argue Marylebone`s case, but he also wanted me to provide him with a neutral, non-biased analysis regarding the investment capacities of both perimeters, so that he could advise his own overseas clients accordingly. But first let me indulge you with a brief overview of our two areas, their distinctions as well as similarities... Regarding the two areas` topography, Soho is quite a close neighbour to Marylebone, located in the South East, which also includes Fitzrovia to the North, Mayfair to the West and Covent Garden to the East. Marylebone with its fine dining, boutique shops, fashionable streets and host of attractions has in distant memory always been an ever-present iconic London area. But with great developments involving new & existing buildings as well as a significant cash influx in recent times, from the Howard De Walden and Portman Estates in particular, Marylebone has received an even wider element of recognition and is now seen as one of the most desirable property investment locations in Central London. On the other hand, the area encompassing itself within Soho has always been a well-known district in London, particularly for its rich & diverse entertainment and has been home to a range of iconic representatives including: Mozart, Karl Marx and the Sex Pistols. Simultaneously but less flatteringly, Soho has historically also possessed quite a seedy reputation for its nightlife and has even been referred to as a base for the sex industry. However, comparable to Marylebone, Soho has become the beating heart of Central London, transforming its neighbourhood as well as its reputation to become a great property investment option, where although it doesn`t offer quite as wide an array of property choices as Marylebone, it nonetheless hosts a good selection of converted period buildings and a range of contemporary housing developments. Now to return to the task at hand, in order to carry out a thorough examination, I am going to be checking out 3 streets from each area - broadening out my search to reach a range of different postcodes, which fall within the two districts` neighbourhoods. I will also be assembling the average values of 1 & 2 bedroom properties within these chosen streets and evaluating other key investment indicators such as: the capital growth rates of the last 10 years, along with the average rental values, and the sort of predicted rental yields that we should be expecting from these properties.

Property Investment in Marylebone:

Devonshire Street (W1G):

1 Bedroom properties: Average Property Value: £749,571 - Average Rental Value: £2,070 (pcm) – Predicted Rental Yield= 3.31% - Average Purchase Price in 2006: £295,000 - Capital Growth over the last 10 years (2006 – 2016) = 94%
2 Bedroom properties: Average Property Value: £1,321,777 - Average Rental Value: £3,600 (pcm) – Predicted Rental Yield= 3.26% - Average Purchase Price in 2006: £510,000 - Capital Growth over the last 10 years (2006 – 2016) = 96%

Paddington Street (W1U)

1 Bedroom properties: Average Property Value: £721,400 - Average Rental Value: £2,000 (pcm) – Predicted Rental Yield= 3.32% - Average Purchase Price in 2006: £330,000 - Capital Growth over the last 10 years (2006 – 2016) = 78%
2 Bedroom properties: Average Property Value: £1,454,000 - Average Rental Value: £4,050 (pcm) – Predicted Rental Yield= 3.34% - Average Purchase Price in 2006: £640,000 - Capital Growth over the last 10 years (2006 – 2016) = 82%

Crawford Street (W1H)

1 Bedroom Properties: Average Property Value: £741,000 - Average Rental Value: £2,275 (pcm) – Predicted Rental Yield= 3.68% - Average Purchase Price in 2006: £280,000 - Capital Growth over the last 10 years (2006 – 2016) = 98%
2 Bedroom Properties: Average Property Value: £1,314,604 - Average Rental Value: £4,050 (pcm) – Predicted Rental Yield= 3.69% - Average Purchase Price in 2006: £460,000 - Capital Growth over the last 10 years (2006 – 2016) = 105%

Property Investment in Soho:

Marshall Street (W1F)

1 Bedroom Properties: Average Property Value: £799,071 - Average Rental Value: £2,200 (pcm) – Predicted Rental Yield= 3.30% - Average Purchase Price in 2006: £320,000 - Capital Growth over the last 10 years (2006 – 2016) = 92%
2 Bedroom Properties: Average Property Value: £1,460,777 - Average Rental Value: £4,125 (pcm) – Predicted Rental Yield= 3.38% - Average Purchase Price in 2006: £630,000- Capital Growth over the last 10 years (2006 – 2016) = 84%

Brewer Street (W1F)

1 Bedroom Properties: Average Property Value: £782,125 - Average Rental Value: £2,150 (pcm) – Predicted Rental Yield= 3.29% - Average Purchase Price in 2006: £316,000 - Capital Growth over the last 10 years (2006 – 2016) = 91%
2 Bedroom Properties: Average Property Value: £1,225,763 - Average Rental Value: £3,400 (pcm) – Predicted Rental Yield= 3.32% - Average Purchase Price in 2006: £469,500 - Capital Growth over the last 10 years (2006 – 2016) = 96%

Dean Street (W1D)

1 Bedroom Properties: Average Property Value: £835,000 - Average Rental Value: £2,250 (pcm) – Predicted Rental Yield= 3.23% - Average Purchase Price in 2006: £335,000 - Capital Growth over the last 10 years (2006 – 2016) = 92%
2 Bedroom Properties: Average Property Value: £1,576,000 - Average Rental Value: £4,350 (pcm) – Predicted Rental Yield= 3.31% - Average Purchase Price in 2006: £605,000 - Capital Growth over the last 10 years (2006 – 2016) = 96%

Judging by our results, we can see that both Marylebone and our South-Eastern neighbours Soho, both demonstrate very creditable investment potential, where our whole host of postcodes, with W1G, W1U & W1H in Marylebone and W1D and W1F in Soho, all portray attractive financial figures to varying degrees. Regarding the average property values in our two areas, for 1 bedroom properties in Marylebone (according to our chosen streets) the average worth appears in the region of £737,323, whereas 2 bedroom properties naturally command a much higher average figure circling the £1,363,460 mark. In relation to Soho, the average price for 1 bedroom residences across our 3 model streets is to some extent higher - estimating at around £805,398 (a difference of £68,075); similarly 2 bedroom properties also follow this proportional increased worth at £1,420,846 – £57,386 more expensive on average than properties in Marylebone. Next up for the rental analysis, the average rental worth of 1 bedroom properties in Marylebone calculates to around £2,115 (pcm), whereas the average rental value for 2 bedroom properties reaches £3,900 (pcm); as for Soho 1 bedroom properties have an average rental worth of £2,200 (pcm) and 3 bedroom properties have the potential to achieve £3,958 (pcm) on average. Although Soho is shown to possess higher rental capacities for both 1 as well as 2 bedroom properties, Marylebone still has the upper hand as rental yields for both these property types (1 & 2 bedrooms) equally share a prospective average rental yield of 3.43%; whereas Soho is only able to manage a 3.27% yield for 1 bedroom residences and a slighter higher 3.33% rental yield for 2 bedrooms homes. With property investment, the best choice is not always the property with the highest rental capacity, but it is much more financially beneficial to find a property with a superior rental yield – one where the initial price paid and the prospective rental worth go hand in hand to grab you the best deal! Last but not least, to cover our capital growth readings, for 1 bedroom addresses in Marylebone there is an average capital growth rate of 90%, which improves with 2 bedroom properties to 94.33%. Soho on the other hand benefits from a slightly more rewarding capital growth rate for its 1 bedroom homes with 91.66 %, whereas its 2 bedroom counterparts fall slightly short (in comparison to Marylebone), achieving a growth rate of 92%. In overall, with cheaper prices on average for its 1 and 2 bedroom properties, its superior expected rental yields and a share of the capital growth competition, Marylebone certainly portrays itself highly in this analysis and proves once again why it is one of the most desirable investment areas currently in Central London. Nonetheless, although slightly overshadowed by Marylebone in my opinion, both by its quantity and quality of investable properties, Soho is still an enviable and popular area to set up an investment camp, where even in our analysis it was shown to possess particularly higher rental prices, and notably with 1 bedroom properties - capital growth rates are certainly doing well and illustrate above average readings. At the right price and in the right circumstances either area could prove a worthy base for any budding investor, you`ve just got to keep your eyes peeled, so that when a promising property arrives on the market, you can be ready to swoop in and enjoy the future rewards.

Should you feel the urge to explore either the Soho or Marylebone areas in greater intensity, please be advised and feel assured that I am more than happy to aid you with any potential enquiries you may have. Choosing the right property investment usually requires great deliberation and time, so if you would like to weigh down your load, allow me to offer you an unbiased second opinion that you may or may not use, but nonetheless it might aid you with your overall investment choice.