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The hidden gems of the London property market

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London has plenty of office and retail spaces to offer but non-traditional commercial properties might be the key to success. 

According to Knight Frank's Capital Markets Partner Shaun Roy, helping with alternative sector deals in the recent past has led him to believe that there are hidden gems within the London property market.

Mr Roy says in light of the high rents and shorter leases, which have plagued the mainstream sectors of late, he has focussed on looking at areas where "value has been trapped". Such properties are either those that have long-term low rental agreements or seldom used buildings that are located in up-market and affluent areas.

He quotes the example of one such acquisition -  a student housing block on Chiswell Street, right at the edge of the city in the posh suburb of Islington. It had been leased out to the university on a long-term basis around 10 years ago - the rents were around 40 per cent lower than what they should have been. 

For example, a newly build sport hall boasting the largest indoor football pitch in London was sold recently by Knight Frank. Mr Roy says its is second-to-none in terms of creating an impressive property development portfolio.

True, at first the prospect of investing in such assets may not seem so attractive - but when you weigh the risk in terms of the long-term return you can expect, it is a win-win.

In the words of Mr Roy: "It is no surprise that long term thinking funds are buying these deals but when you analyse the risk you are actually taking the risk adjusted return on these types of deal is excellent. Boring perhaps but they work and the next generation will be delighted to get their hands on the sites VP [Value Proposition] in years to come!"

Date Published: 26 May 2015
Category: General News

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