Date Published 02 May 2016
Last week, I was pleasantly greeted for the second time with a call from a well-informed, conversant and most humorous gentleman, who had called in once again to discuss the Marylebone property market with me, as well as the topics recently covered in my blog – with particular note to the Howard De Walden and Portman Estates. As well as really appreciating his feedback and the time he took to offer his perspective on the direction he believes the market is heading in, I really admired a particular analogy which he passionately expressed to me, whilst referring to my own position in the Marylebone market. He suggested that the direction I should head in regarding my own ventures should mimic ‘Alexander the Great', attacking the property market head on, piercing through sharply right at its heart – just like Alexander did in his many battles, often leading immediately with a sharp blade and challenging enemy generals directly into combat - rather than systematically wiping out hoards of armies before he got to the real deal. What struck me with this analogy is regardless of how seemingly unrelated it may be, it has much commonality with the current property market and how instead of working our way around Marylebone, gradually acquiring more significant properties, in areas of rising prestige, perhaps we should strike in the heart of Marylebone. To be more specific, we should look for investment opportunities in perimeters of great influence, familiarity and those which are at the core of the area – those which to some extent help identify Marylebone, and are particularly relevant on the map. I see two such areas within Marylebone which fit this description, the first I classify as the main Marylebone tube/rail station, and the second – the widely-renown hospital district within Marylebone, which covers Harley Street with its hospitals and clinics, as well as the nearby area leading into ‘University College Hospital' and ‘King Edward VII's Hospital'. These sites, in my opinion, can be seen as the generals of Marylebone or rather two important landmarks which greatly influence nearby property prices, - but just how significant can a potential investment in either of these areas amount to? In order to help answer this question, I will be using streets in close circumference to both the Marylebone tube/rail station as well as the hospital district, focussing in particular with 2 and 3 bedroom properties – which I will be using as my demonstrations. With property investment, 4 of the chief and most imperative factors that require consideration are: average property values, average achievable rental values, prospective rental yields, as well as capital growth accounts of the last 10 years - as a good indicator. I will be illustrating 2 streets from each area, detailing the figures behind each of these important investment indicators, and their direct relation to our featured streets; resultantly these figures can help us analyse, as well as compare the two sites - and perhaps find out which area has more investment potential!
Property Investment near the Marylebone tube/rail station:
Harewood Avenue (NW1):
2 bedroom properties: Average Property Value: £1,115,846 - Average Rental Value: £4,100 (pcm) – Predicted Rental Yield= 4.40% - Average Purchase Price in 2006: £485,000 - Capital Growth over the last 10 years (2006 – 2016) = 84%
3 bedroom properties: Average Property Value: £1,456,388 - Average Rental Value: £5,450 (pcm) – Predicted Rental Yield= 4.49% - Average Purchase Price in 2006: £581,000 - Capital Growth over the last 10 years (2006 – 2016) = 92%
Balcombe Street (NW1):
2 bedroom properties: Average Property Value: £1,112,430 - Average Rental Value: £4,000 (pcm) – Predicted Rental Yield= 4.31% - Average Purchase Price in 2006: £480,000 - Capital Growth over the last 10 years (2006 – 2016) = 84%
3 bedroom properties: Average Property Value: £1,395,969 - Average Rental Value: £5,200 (pcm) – Predicted Rental Yield= 4.47% - Average Purchase Price in 2006: £570,000 - Capital Growth over the last 10 years (2006 – 2016) = 90%
Property investment near the Marylebone hospital district:
Harley Street (W1G):
2 bedroom properties: Average Property Value: £1,459,283 - Average Rental Value: £4,450 (pcm) – Predicted Rental Yield= 3.65% - Average Purchase Price in 2006: £502,063 - Capital Growth over the last 10 years (2006 – 2016) = 107%
3 bedroom properties: Average Property Value: £1,650,112 - Average Rental Value: £5,000 (pcm) – Predicted Rental Yield= 3.63% - Average Purchase Price in 2006: £595,987 - Capital Growth over the last 10 years (2006 – 2016) = 102%
Weymouth Street (W1G):
2 bedroom properties: Average Property Value: £1,218,168 - Average Rental Value: £3,600 (pcm) – Predicted Rental Yield= 3.54% - Average Purchase Price in 2006: £494,000 - Capital Growth over the last 10 years (2006 – 2016) = 91%
3 bedroom properties: Average Property Value: £1,416,700 - Average Rental Value: £4,200 (pcm) – Predicted Rental Yield= 3.55% - Average Purchase Price in 2006: £576,400 - Capital Growth over the last 10 years (2006 – 2016) = 90%
From these results, we can see just how diverse and varied the current Marylebone property market is at the moment, where each of our 4 streets offer a different investment outlook from the next and vary in all 4 of our chief investment indicators – property prices, rental values, rental yields and capital growth. Taking a look firstly at the Marylebone hospital district, we can see that the average price for a 2 bedroom property (using our 2 example streets as our models) arrives in the region of £1,338,725; for 3 bedroom properties this average price stands at £1,553,406. Comparing these figures to the area circling the Marylebone tube/rail station, we see that 2 bedroom properties here next to the station are much cheaper for both 2 and 3 bedroom properties – where the former stands at £1,114,138 and the larger 3 bedroom property attracts average price tags of around £1,426,178. However, we must also keep in mind that these figures are also affected by and reflect the high volume of terraced houses nearby the Marylebone Station - especially along Harewood Avenue, where these types of properties generally attract higher rental prices and in turn generate better rental yields. To expand on and illustrate this point, we can see that 2 bedroom properties on our two featured streets, around Marylebone Station's circumference, have an average rental worth of £4,050 (pcm); this is naturally even higher for 3 bedroom properties, which have an average rental capacity to earn £5,325 (pcm). The average rental yield is also of a very superior nature, with great buy-to-let potential – 2 bedroom properties here generate an amazing 4.35% yield on average, whereas 3 bedroom residences rate even higher with a 4.48% rental yield on average. In direct contrast, when we view Harley Street & Weymouth Street (our Marylebone hospital district representatives), we see quite similar rental values for 2 bedroom properties - £4,025 (pcm) on average, and although at the slightly lower worth of £4,600 (pcm) for 3 bedroom properties, this can still be viewed as a similar pricing bracket. But what really stands out is, while the rental values are comparable, the relatively modest rental yields found in Marylebone's hospital district, are nonetheless noticeably lower; for 2 bedroom properties this stands on average at 3.59% and for 3 bedrooms coincidently enough a yield of 3.59% can also be expected in equal proportion. Conversely, although the area covering the Marylebone Station is shown to slightly edge the hospital district thus far, capital growth rates are actually much more productive and profitable in the latter's domain. With regards to the area surrounding the Marylebone Station, 2 bedroom properties over the last 10 years have generated a capital growth of 84%, while 3 bedroom properties have produced a growth of 91%; conversely Marylebone's hospital district boasts capital growth rates in the region of 99% for 2 bedroom residences, and 96% for 3 bedrooms. As you can calculate, capital growth ratings are quite high amongst both our areas, but the streets within the hospital district certainly have an edge here, with 15% more growth than its neighbour for 2 bedroom properties and a more narrow, but significantly enough 5% more growth for 3 bedroom properties. An investment in Marylebone as a whole would certainly be a fantastic decision, with the entire perimeter's investment strength of a high performance. But magnifying our two areas again, terraced houses are more abundantly located near the Marylebone Station, whereas the hospital district is dominated much more by flats, which makes house types a matter of personal decision. However, in terms of the investment potential involved, those looking to purchase a property with high capital growth expectations should certainly be more swayed towards the hospital district, whereas others who are more interested in buy-to-let aspirations should focus their attentions around the Marylebone Station area. Nonetheless, there is room for manoeuvrability in both areas, although rental capacities for properties near Marylebone Station have illustrated themselves as generally higher, demand from tenants are usually more prominent in the hospital district, with a greater range of services and job opportunities available here. Similarly, great investment deals can also be found around the Marylebone Station, with high capital growth capacities (even ones to rival the hospital district) – it is simply a matter of finding a property at the right price, in a positive location, which can make all the difference not only on the initial deal's strength, but also the profitability of the property investment in the long run!
Should you require any further information with respect to property investment in either the perimeter circling the Marylebone Station, the hospital district located in Marylebone, or even any specific part of Marylebone that you may be looking to invest in, please give me a call and I would be happy to discuss your individual circumstances with you.