Date Published 09 May 2016
Well last week was once again certainly another busy week in Marylebone, where I received many enquiries regarding investment opportunities in a number of areas; but the two sites which dominated my work last week fell within the W1H and W1U postcodes. W1U is a widely attractive prospect with potential Marylebone investors, especially with the inclusion of noteworthy sites being situated here such as Chiltern Street's widely-renown and historical firehouse, which presently operates as an upper class restaurant attracting many A-list celebrities wishing to hang out in this top-notch hotspot. On the subject of historical sites, this postcode also encompasses the impressive Wallace Collection – the former townhouse of the Seymour family; it is now home to one of Europe's finest collections of art, paintings, furniture, arms & armour and porcelain. If you thought that was all, let me tell you we've only skimmed the surface, as W1U also incorporates the highly prestigious University of Westminster (Marylebone campus), as well as the superb shopping district of Baker Street which stretches out along 1.5 miles and is perhaps most famously associated as the residence of the fictional detective – Sherlock Holmes. As for its next door rival W1H, although not as densely populated with touristic attractions, there is a good variety of important Marylebone streets, which are very well known and help to define Marylebone such as Seymour Place that stretches out to ¾ of a mile, as well as a grand selection of picturesque Central London squares such as Montague Square, Portman Square and Bryanston Square. There are also some noteworthy as well as cultural sites incorporated in around the postcode's area such as: the West End Great Synagogue – which is one of the oldest in the United Kingdom and has resultantly been given Grade I listed status. The home of the magnificent Portman Estate, one of the most influential property giants certainly in Marylebone, also situates itself within W1H – strongly aiding in the area's development with particular mention to Seymour Place and New Quebec Street, which forms part of the Portman Village. In addition, although not directly part of the W1H postcode, a good portion of the fascinating Edgware Road closely borders this Marylebone district and is so closely situated nearby that I believe it can certainly be seen as a factor and relatable in reference to W1H's investment prospects. Edgware Road's history extends as far back as the Roman era, was commuted through by Pilgrims in mediaeval times, along with sharing origins to some of the most vibrant Arab communities in the 19th century, and even London's first Indian Restaurant opened here in 1810. Undoubtedly W1U as well as W1H both offer a pleasant base to set up your investment headquarters, but just as the question posed to me by a prospective investor last week outlines: which area on the whole has a better investment outlook currently and how do important investment indicators portray each area's financial capacities? In order to explore this query, I will be looking very closely at both areas, where using 2 & 3 bedroom properties as my models, I will be exploring the investment capacities of both these postcodes – with particular attention to the average property prices, rental values, rental yields as well as the capital growth records over the last 10 years.
Property Investment in W1U:
Bickenhall Street (W1U)
2 bedroom properties: Average Property Value: £1,650,500 - Average Rental Value: £4,500 (pcm) – Predicted Rental Yield= 3.27% - Average Purchase Price in 2006: £580,000 - Capital Growth over the last 10 years (2006 – 2016) = 105%
3 bedroom properties: Average Property Value: £2,230,000 - Average Rental Value: £6,100 (pcm) – Predicted Rental Yield= 3.28% - Average Purchase Price in 2006: £790,000 - Capital Growth over the last 10 years (2006 – 2016) = 104%
Luxborough Street (W1U)
2 bedroom properties: Average Property Value: £1,156,750 - Average Rental Value: £3,200 (pcm) – Predicted Rental Yield= 3.31% - Average Purchase Price in 2006: £450,000 - Capital Growth over the last 10 years (2006 – 2016) = 95%
3 bedroom properties: Average Property Value: £1,778,000 - Average Rental Value: £4,900 (pcm) – Predicted Rental Yield= 3.30% - Average Purchase Price in 2006: £680,000 - Capital Growth over the last 10 years (2006 – 2016) = 97%
Chiltern Street (W1U)
2 bedroom properties: Average Property Value: £1,384,214 - Average Rental Value: £4,200 (pcm) – Predicted Rental Yield= 3.64% - Average Purchase Price in 2006: £450,000 - Capital Growth over the last 10 years (2006 – 2016) = 99%
3 bedroom properties: Average Property Value: £2,143,466 - Average Rental Value: £5,900 (pcm) – Predicted Rental Yield= 3.30% - Average Purchase Price in 2006: £810,000 - Capital Growth over the last 10 years (2006 – 2016) = 98%
Property Investment in W1H:
Harcourt Street (W1H)
2 bedroom properties: Average Property Value: £1,128,125 - Average Rental Value: £3,150 (pcm) – Predicted Rental Yield= 3.35% - Average Purchase Price in 2006: £432,500 - Capital Growth over the last 10 years (2006 – 2016) = 96%
3 bedroom properties: Average Property Value: £1,726,000 - Average Rental Value: £4,850 (pcm) – Predicted Rental Yield= 3.37% - Average Purchase Price in 2006: £590,000 - Capital Growth over the last 10 years (2006 – 2016) = 108%
Hampden Gurney Street (W1H)
2 bedroom properties: Average Property Value: £1,119,666 - Average Rental Value: £3,250 (pcm) – Predicted Rental Yield= 3.48% - Average Purchase Price in 2006: £425,000 - Capital Growth over the last 10 years (2006 – 2016) = 97%
3 bedroom properties: Average Property Value: £1,573,750 - Average Rental Value: £4,650 (pcm) – Predicted Rental Yield= 3.52% - Average Purchase Price in 2006: £510,000 - Capital Growth over the last 10 years (2006 – 2016) = 113%
Homer Street (W1H)
2 bedroom properties: Average Property Value: £957,333 - Average Rental Value: £3,147 (pcm) – Predicted Rental Yield= 3.94% - Average Purchase Price in 2006: £390,000 - Capital Growth over the last 10 years (2006 – 2016) = 90%
3 bedroom properties: Average Property Value: £1,680,000 - Average Rental Value: £5,100 (pcm) – Predicted Rental Yield= 3.64% - Average Purchase Price in 2006: £560,000 - Capital Growth over the last 10 years (2006 – 2016) = 110%
If we begin to unravel and expand upon some of these figures then, we can see that the average property prices vary considerably between the different Marylebone streets; for W1H (taking into account our model streets) 2 bedroom properties range around £1,068,374 on average and 3 bedroom properties have an estimated average price of £1,659,916. Whereas, with regards to the W1U area, the streets we have gathered amount to £1,397,154 on average for 2 bedroom properties and a much higher premium of £2,050,488 on average for 3 bedroom properties. The fact that property prices for both 2 as well as 3 bedrooms are higher on average in the W1U postcode than in the W1H area goes to show that the great touristic sites, which we outlined in our introduction, really do reflect themselves upon a property's worth and the demand for this block of space is in general typically higher. Regarding rental prices and yields, 2 bedroom flats within W1H can expect to generate around £3,182 (pcm) on average and rake in an average yield in the region of 3.59% annually; for 3 bedroom properties here rental worth's of around £4,866 (pcm) can be expected and yearly yields float around the 3.51% mark. On the neighbouring W1U side, although 2 bedroom flats have higher rental capacities of around £3,950 (pcm) they submit a slightly lower average annual yield of 3.40%; for 3 bedroom residences this trend continues where a much higher average rental capacity of £5,633 (pcm) can be expected, but again a slightly inferior annual yield of 3.29% can be predicted on average. Taking a look at our last investment indicator next – capital growth over the last 10 years, for W1H this comes to 94.33% for 2 bedroom properties and 110.33% for 3 bedroom properties; with regards to the W1U area, both 2 and 3 bedroom flats have achieved a capital growth of approximately 99.66%. Even though we see that the W1U perimeter has outperformed W1H's capital growth by 5.33%, the opposite has occurred with respect to 3 bedroom properties where W1H has grew 10.67% more in the last 10 years than its competitor W1U. In overall, we see that both areas can be seen as great investment choices, with the results of our investment indicators being almost equally distributed to both the W1H and W1U areas. W1H can be associated with lower property prices, slightly higher rental yields, and possessing a better capital growth performance over the last 10 years than W1U with regards to 3 bedroom properties. Conversely, W1U encompasses a greater quality of tourist attractions and sites, which naturally has increased their property prices, but residences here also generate higher rental prices, which means a heftier income each month for a potential investor and also the area has outperformed W1H on the matter of capital growth relating to 2 bedroom properties; it seems as if we have a tie at 3 points each! A decision between these two postcodes will often reflect an investor's budget, their preference of location, the levels of tenant supply and demand during the time of investment and their buy-to-let ambitions – whether they are more focussed on rental prices or specifically prospective capital growth rates. One thing is for certain however, whether you decide to invest within W1H or W1U you can rest assured that investing in Marylebone generally will undoubtedly provide you with a great assurance of future income and an undoubtedly sizeable increase on your initial investment in the years to follow.
After reading this article, if you would like any additional information regarding either the W1H or W1U areas in Marylebone, or perhaps if you would like to venture towards any other specific Marylebone postcode, please get in touch with me and let me know; I will always aim to deliver upon any requests made by my readers.
