Sam Wright is pretty pleased with his investment. In 2003 the property developer bought a three-bedroom flat in a Georgian courtyard for £500,000. Now it is valued at £1.4m. His pleasure is not, however, derived only from the knowledge that he can hold his own in dinner party conversations about house prices.
The 37-year-old loves living in his flat in Covent Garden, central London, home to celebrity dining spot The Ivy, the Royal Opera House and countless clothes shops, theatres and bars.
“Not many people can buy a flat white coffee, see a show and buy a magic wand in the street next to their home,” he explains with a broad grin. Though there is one other aspect, he confesses, he is rather fond of: “It’s a little known fact that there are quite a lot of seagulls about and I love hearing them call out in the mornings.”
Wright is not alone in his love of the area – he says he has never had any problem finding occupants for the two bedrooms he rents out for £1,000 a month each.
While it might seem an unlikely spot for a house investment, several large property developers are turning former offices into flats, contributing to an increasingly residential profile for Covent Garden.
“We are trying to increase the number of flats. While our focus is primarily on restaurants and shops, residential is a strong market,” says Julia Wilkinson, the chief surveyor at Shaftesbury, a property investment company specialising in the West End that owns a number of buildings in Covent Garden.
“A number of properties are period buildings and suit residential much more than offices. Our residential proportion has increased as offices decreased.” This strategy started before the recession: “The residential market has been stronger in this area than the office market, which is much more cyclical,” she explains.
The area has its roots in the early 17th century, when land was redeveloped by the 4th Earl of Bedford, Francis Russell. Designed by Inigo Jones, the landscaper and architect, it is known for its theatres, dining and shopping but developers are increasingly keen to promote residential property as part of the mix. “The strategy is to create villages. You can’t just rely on tourists and people coming into work to make an area vibrant; you need to build residential property,” Wilkinson says. Moreover, the homes market is never static, she adds: “There’s always scope for development. The West End is amazing; there is always a rolling programme of development.”
There are a number of mixed-use schemes under way at High Holborn, Central St Giles and St Martin’s and Covent Garden will also benefit from a huge amount of money being put into the surrounding area. For example, Berwick Street market in neighbouring Soho is being developed, in the hope it will become a modern version of Carnaby Street, the 1960s centre of fashion.
Jamie Gunning of estate agency EA Shaw says that there are pockets of relative value in the area. “You can get a one-bedroom flat for about £425,000-£450,000, which is expensive but still pretty good. Some local authority buildings are on the property market. So very occasionally one or two come up. And the area around Charing Cross station is still relatively unknown by buyers.”
Demand, he says, is extremely high while the supply is nonetheless limited. “Anyone with a property already in Covent Garden is delighted as there is so much competition from, largely cash, buyers.” He says that at any one time there are about 30-40 flats available and 2,000 people are registered on his company’s database for the area. The result? “We often get ferocious bidding wars.”
Most of the people Gunning sells to are family men who are “looking for a pied à terre within easy walking distance of work. They tend to work as bankers, lawyers or media professionals close to the world of media in Soho.”
The profile, he says, tends to be men in their 50s who have grown-up children and a home in the countryside. “The Covent Garden property is really an extension of their office. Or they might want to buy a property for their children going to college, as a long-term investment. There are a lot of lucky children.” Moreover, most purchases are not made with mortgages, observes Gunning: “There is a huge amount of liquid cash coming into the area.”
In the recent slump accommodation was, he says, selling at about 15 per cent below quoted prices. “So there was a correction in the market but it was nothing like as bad as other hotspots.”
Now they have returned to record levels, about £1,600-£1,700 per square foot, even exceeding values during the peak before the property slump. “You are able to get property for not far off half the price of Belgravia.
“Investors are buying because of good capital growth and the weak pound.”
Since 2007, he adds, international investors have been drawn to the neighbourhood. “Interest has grown over the past few years and big prices are being achieved from both Italian and Chinese markets, though the local market is very much still there.”
Such talk of high values leaves 86-year-old Stella Cherfas, originally from South Africa, a bit cold. The retired yoga teacher, who occasionally volunteers at her local Age Concern centre, has lived in the area since 1973.
She worries that Covent Garden has become too exclusive: “It is difficult to buy property – it’s very expensive for upmarket people. It’s not for normal buyers.” She also regrets the loss of community. “Older people are a bit timid about going out. There are so many tourists gawping, lots of bicycle rickshaws and large shops. There used to be lots of little grocers and fishmongers.” Nonetheless she concedes that “it’s the same story everywhere. London’s bursting at the seams.”
She highlights the downsides of living in such a buzzing cultural hotspot: “It’s very noisy and has become a theme park. Since the licensing laws [which allowed bars to open late] came in it has become 100 per cent noisier. And what with the smoking ban, people are standing outside in clusters chatting at night.”
Nevertheless, she says wouldn’t swap her home for anything. “I love being in the area. It has everything I need: the Royal Academy, cinemas, theatres and for that I’m prepared to wear earplugs.”