The mainstream mortgage market may be lurching from one crisis to another, but the high net worth home loan sector has been immune to such struggles and continues to prosper. As the Eurozone uncertainty rumbles on, foreign investors are pouring into London’s prime property arena in their droves and asking prices are edging up each month while average residential values remain stagnant. But while top end estate agents and mortgage brokerages are revelling in this boom period, they are also restricted by the finite number of prime properties in London’s premium postcodes and are struggling to keep pace with demand. Occasionally new prime developments come onto the market like the penthouses at the top of the Shard or the apartments at One Hyde Park, but they are few and far between meaning that property specialists are struggling to accommodate waiting lists of wealthy buyers as many other established top-end properties stay in well-to-do families for generations.
An increasingly common way round this conundrum is to think outside the box and consider properties that may not be large family dwellings in their current state. It is possible to purchase buildings which house a number of apartments or flats and convert them into single abodes, but this is a logistical nightmare. Apart from the obvious difficulty in having to buy out all the existing tenants – many of whom won’t want to move – these types of developments often fall foul of council planning departments who are reluctant to reduce the housing numbers in their area.
Instead, savvy speculators are snapping up low yielding commercial units and earmarking them for future residential use. It may not be immediately possible to convert the usage of such listings, but developers in the know are acquiring such properties with a short lease, sitting on them until this contract runs out, then converting them to residential properties once this occurs. While councils can often be reluctant to allow residential buildings to be converted into commercial units, there is rarely any opposition when the conversion is in the opposite direction.
While the high-end boutiques and bakeries which line Mayfair’s streets haven’t felt the global financial squeeze’s pinch as hard as their high street contemporaries have in the same way that the prime property market continues to outpace its mainstream peer, there are still ample opportunities for development in the right locations. The kind of wealthy investors behind such conversions aren’t often used to taking no for an answer, so there are often ways to make projects work after some monetary and logistical negotiations.
As with any obstacle in business, there are ways round the problem if you consider alternative approaches and that is just what property developers are doing in and around London’s prime heartland. No sector or company likes to turn away potential customers because they can’t give them what they need, so by undertaking commercial to residential conversions, canny contractors are helping to meet record demand for prime property.