Date Published 06 June 2016
Since last Monday's article, I've had a lot of enquiries concerning 2 and 3 bedroom properties – especially Mews properties and flats in particular, but over the last couple of days I've received a number of requests outlining interests of varying degrees towards larger property investments in Marylebone – namely 4 and 5 bedroom residences. A specific and most memorable instance of this relates to a meeting I had with a local Marylebone entrepreneur, who has come into some money recently; he openly and straightforwardly asked me whether properties above the most typical 1-3 bedroom dimensions were worth investing in. I honestly replied that Marylebone for a good while now has been enjoying a most profitable investment period and quite frankly most property investments, (be it at the right price and in the right location) could make fantastic investment opportunities. In addition, I explained to him that this element of profitability would definitely be applicable to the investment ambitions he was portraying to me, where he was looking to invest in a property of precisely 4 or 5 bedrooms. Naturally, the financial returns associated with bigger properties in Marylebone would undoubtedly be more rewarding than let's say a studio or 1 bedroom flat. But this local entrepreneur was very interested in understanding just how much more lucrative these properties could be, and specifically wanted to understand the proportions associated between a potential initial investment and the prospective future returns he should be expecting. I assured him that I would get straight into investigating 4 and 5 bedroom properties in greater detail, in order to help him decide whether he should stick to the most common investment choices revolving around 1, 2 and 3 bedroom properties, or whether he is correct in believing that 4/5 bedroom properties have positive investment prospects. Furthermore, as a personal favour to him, I will also be cross-examining the two property types – 4 and 5 bedroom properties, against one another in order to also see whether larger property types possess good investment potential in general, but also to uncover which larger property type in specific forecasts a sweeter financial outlook. In order to carry out this examination, I will be using 4 and 5 bedroom properties as my models and a selection of 5 different Marylebone streets, where I will be searching up the average valuations of both these property mammoths, as well as outlining their rental expectations along with their anticipated rental yields. I will also be supporting these figures, with a report of the capital growth rates of the last 10 years; which will not only help us understand past and present price trends, but will also help us predict just how much our potential property investment could rise to in the future.
Outlining the investment potential of 4 and 5 bedroom properties across various Marylebone streets:
Seymour Place (W1H)
4 bedroom properties: Average Property Value: £2,445,111 - Average Rental Value: £7,450 (pcm) – Predicted Rental Yield= 3.65% - Average Purchase Price in 2006: £965,000 - Capital Growth over the last 10 years (2006 – 2016) = 93%
5 bedroom properties: Average Property Value: £3,727,120 - Average Rental Value: £10,250 (pcm) – Predicted Rental Yield= 3.30% - Average Purchase Price in 2006: £1,450,000 - Capital Growth over the last 10 years (2006 – 2016) = 95%
George Street (W1H)
4 bedroom properties: Average Property Value: £2,587,165 - Average Rental Value: £7,750 (pcm) – Predicted Rental Yield= 3.59% - Average Purchase Price in 2006: £1,000,000 - Capital Growth over the last 10 years (2006 – 2016) = 95%
5 bedroom properties: Average Property Value: £3,782,343 - Average Rental Value: £11,200 (pcm) – Predicted Rental Yield= 3.55%- Average Purchase Price in 2006: £1,500,000 - Capital Growth over the last 10 years (2006 – 2016) = 93%
Blandford Street (W1U)
4 bedroom properties: Average Property Value: £2,900,666 - Average Rental Value: £7,700 (pcm) – Predicted Rental Yield= 3.18% - Average Purchase Price in 2006: £1,120,000 - Capital Growth over the last 10 years (2006 – 2016) = 96%
5 bedroom properties: Average Property Value: £3,987,555 - Average Rental Value: £11,400 (pcm) – Predicted Rental Yield= 3.43% - Average Purchase Price in 2006: £1,530,000 - Capital Growth over the last 10 years (2006 – 2016) = 96%
Nottingham Place (W1U)
4 bedroom properties: Average Property Value: £3,033,877 - Average Rental Value: £8,650 (pcm) – Predicted Rental Yield= 3.42% - Average Purchase Price in 2006: £1,100,000 - Capital Growth over the last 10 years (2006 – 2016) = 102%
5 bedroom properties: Average Property Value: £4,125,111 - Average Rental Value: £13,200 (pcm) – Predicted Rental Yield= 3.83% - Average Purchase Price in 2006: £1,600,000 - Capital Growth over the last 10 years (2006 – 2016) = 95%
Queen Anne Street (W1G)
4 bedroom properties: Average Property Value: £2,953,557 - Average Rental Value: £7,850 (pcm) – Predicted Rental Yield= 3.18% - Average Purchase Price in 2006: £1,175,000 - Capital Growth over the last 10 years (2006 – 2016) = 93%
5 bedroom properties: Average Property Value: £4,112,111 - Average Rental Value: £11,450 (pcm) – Predicted Rental Yield= 3.34% - Average Purchase Price in 2006: £1,580,000 - Capital Growth over the last 10 years (2006 – 2016) = 96%
From our results, we can see that both 4 as well as 5 bedroom properties do in fact perform sufficiently in the property market and achieve respectable figures; there are certainly viable investment opportunities to be found with these property types. If we turn our attentions to the average property values, we can see that the average price of a 4 bedroom property across our chosen streets arrives in the region of £2,784,075; for 5 bedrooms the average valuation increases dramatically to an estimated £3,946,848 – a striking difference of £1,162,773! The most expensive properties out of our list were located along Nottingham Place for both 4 as well as 5 bedroom residences – closely followed by Queen Anne Street in 2nd regarding properties of these types; the cheapest street for both 4 and 5 bedroom properties was calculated to be around Seymour Place. Regarding the rental side of the equation, the average rental price for 4 bedroom properties approximates towards £7,880 (pcm), and £11,500 (pcm) for the larger 5 bedroom accommodation. Correspondingly, the average rental yield for 4 bedroom properties comes to 3.40%, whereas 5 bedroom properties generate a slightly more optimistic 3.49% yield. Dissecting these averages, the street that commanded the largest rental worth on average was Nottingham Place for both 4 and 5 bedroom residences. However, whilst Nottingham place also achieved the highest rental yields on average for 5 bedroom properties at 3.83%, Seymour Place outperformed their competition for 4 bedroom properties with an average yield of 3.65%. As for our last investment indicator, regarding capital growth rates over the last 10 years, 4 bedroom properties achieved an average growth rate of 95.8% - with the highest achiever Nottingham Place once again with 102%; for 5 bedroom properties this growth is minimally smaller with 95% on average, with the joint top rate achieved on Queen Anne Street and Blandford Street with 96% on average respectively. On the whole, I would say that both 4 as well as 5 bedroom properties portray some very good investment criteria and in most cases the figures certainly do live up to expectations. Although 5 bedroom properties outperform their 4 bedroom counterparts with regards to rental yields, 4 bedroom properties do minimally outdo them with capital growth rates (over the last 10 years). However, with such a significant price difference between the two property types, I would definitely say that should you be searching for a larger property investment, 4 bedroom residences would make a more than suitable investment choice, whilst allowing you to remain cost-effective on your initial purchase price. But should your budget suffice, purchasing a 5 bedroom property would produce an even higher rental income for your future, and in another 10 year period - the growth in value of your prospective 5 bedroom property could be lucrative!
If you wish to enquire further about 4 as well as 5 bedroom flats situated in and around Marylebone, feel free to contact me at your own convenience and I will not only do my best to answer any potential questions you may have, but I will also provide you with my honest, professional opinion and advise you accordingly.
