House prices: What are you prepared to pay to live above your favourite shops and bars?
Living above a shop, once the domain of shopkeepers and students, has shaken off its seedy image to become the height of property fashion.
Traditionally, you would pay 10pc less to buy a flat on top of a corner shop, clothes store or restaurant than for another home of the same size, in the same area.
But a new generation of buyers is now desperate to buy period flats above high-end restaurants and designer outlets, and new build complexes where residents, brands and customers are all neighbours.
Despite recent data from the Royal Institution of Chartered Surveyors (RICS), which reported that the London housing market had cooled, living above shops market has taken on a life of its own.
Flats in the West End of London, including areas such as Covent Garden, Mayfair and Soho, now average £2.5m, but wealthy workers and overseas investors, looking for a buy-to-let property or a pied-à-terre, are prepared to pay a 20pc premium to live above a famous restaurant such as Scott’s of Mayfair.
According to new research conducted by London estate agent Peter Wetherell, buyers are fighting over the apartments that line Sloane Street, the capital’s prime address for designer shopping.
And fashion lovers are prepared to pay double to buy a home above boutique stores such as Gucci, Chanel or Armani, the report reveals.
“Historically there has been a premium for living in an entirely residential building. There was also a stigma attached to living above a shop, often due to worries about noise, cooking smells and their connections to shopkeepers rather than affluent Londoners,” says Wetherell. “Now, however, a new generation of boutique developments is being built across Mayfair and the wider West End which offer homes located above luxury brands. Buyers no longer see these homes as being above retail, instead… something desirable and chic, hence the transformation in values in the above-shop sector,” he says.
Of the 447 new homes scheduled to be built in Mayfair, nearly half will be built above local retail outlets, luxury brands and smart restaurants.
But “above-shop living” is not just to the taste of the super-wealthy.
Property agent Becky Fatemi took a risk on this marketplace nearly 10 years ago and bought a two-bedroom flat in Marylebone as a buy-to-let investment.
“At the time, flats above shops were often looked down on, and homes above shops tended to sell for around 20pc less than ordinary London homes,” she said. “What has really changed across inner London over the last 10 years has been the retail market. “Marylebone’s Chiltern Street, the high street in St John’s Wood and Westbourne Park used to be littered with charity shops, discount shops and small independents. These were not sexy or smart places to live above.”
The Wetherell research shows that some retail units such as betting shops can lead to a price discount of 20pc, and Fatemi warned that buyers should be wary of investing in property above takeaway joints or sex shops. But Jamie Gunning, a director at property group CBRE, says professionals looking for an occasional, midweek home love the “real” Soho.
“The Salt House, on the corner of Peter Street and Berwick Street, was in the heart of the red-light district, but we had lots of barristers and advertising executives after apartments there,” he says. “They loved the hidden parts of Soho and the character created by the old sex shops.”
With development space at a premium in supply-stricken central London, and a seemingly insatiable appetite for apartments, the only way is up and over shops.