Surbiton - utter madness

Generali

baby_boomer wrote: »

So it's still a yield of 4.35% compared to the FTSE100 yield of just under 3% and a RPI linked annuity rate for a 65 year old male of just 4.46% (with 0% return of capital).

I accept that geared property investments could unwind rapidly in the event of a crash.

But prospective buy-to-letters would also have their eye on that FTSE yield as they look to buy up stock [for retirement income] in any property downturn.


Cool.

You're not comparing like-with-like.

Firstly you're comparing the yield on the FTSE with the gross yield on the flat. You need to take off insurance, voids and depreciation. Then you should adjust for risk (e.g. if you're not leveraging if you buy an ETF or index linked fund, also the companies in the FTSE 100 are not likely to beggar off without paying your dividend).

meanmachine_2

mingymoo wrote: »

I'm amazed at the spike this year. People have latched onto the relative value in property prices before 2006 and short journey time into London Waterloo. It will be interesting to see the prices for this development since I would not be surprised to see it sold out.
http://www.surbitonplaza.com/

Well, the same rules apply to this as with all new builds - you'll be paying 20%+ for the privilege of buying new.

But thank the lord that Knightsbridge is only 13 miles away. That's my daily shop sorted.

I think that tells you how "cheap" the flats, sorry, exec apartments will be.

I'll go first - 300K for a one bed, 450K for a two bed, 1million for the penthouse.

jyonda

I grew up in Surbiton, have travelled thousands of times into central London and it's never taken only 17 minutes to get there. 27 more like. It's a nice enough place but not what it once was due to overdevelopement. Once the high street got a Starbucks that was me out.

baby_boomer

Generali wrote: »

You're not comparing like-with-like.

Firstly you're comparing the yield on the FTSE with the gross yield on the flat. You need to take off insurance, voids and depreciation. Then you should adjust for risk (e.g. if you're not leveraging if you buy an ETF or index linked fund, also the companies in the FTSE 100 are not likely to beggar off without paying your dividend).

This helps to explain why Surbiton property yields 45% more than shares.

What would you suggest is a fair long term link between dividends and rental yields?

Gingernutmeg

meanmachine wrote: »

Well, the same rules apply to this as with all new builds - you'll be paying 20%+ for the privilege of buying new.

But thank the lord that Knightsbridge is only 13 miles away. That's my daily shop sorted.

I think that tells you how "cheap" the flats, sorry, exec apartments will be.

I'll go first - 300K for a one bed, 450K for a two bed, 1million for the penthouse.

Can't wait to see who buys the penthouse with the fantastic views of Sainsbury's car-park, the YMCA and the railway line ... It's a front row seat for the fights though

Woby_Tide

I'm guessing meanmachine is readjusting his thoughts of a 20-30% crash that he was forecastinga couple of years ago, I guess it's now closer to 50%?

peter999

jyonda wrote: »

Once the high street got a Starbucks that was me out.

Oh the cosmopolitan cafe lifestyle in trendy Surbiton. :rotfl:

peter999

Generali

baby_boomer wrote: »

This helps to explain why Surbiton property yields 45% more than shares.

What would you suggest is a fair long term link between dividends and rental yields?

Good question. 3.5% is the long term average yield on the FTSE.

You'd have to work on the basis that property is quite a bit riskier (voids, nightclub risk, difficult to diversify etc) and a lot harder work (you buy shares in BP and the chairman doesn't ring you up to complain the boiler's knackered).

I'm not sure there is a single answer. The 'nightclub/bypass risk' of BTL varies from place-to-place. If you buy a place next to Heathrow and the M4 it's hard to see what can be built there to wreck the capital value of the place. If you buy a place on top of a hill in Devon, it's easier to see what could go wrong like that.

I suspect that the only fair way to value it is to set aside a certain amount for costs (voids, depreciation, insurance etc) and then only buy if the place has a high enough +ve cash flow that it can finance a long term (say 25 year) fixed interest repayment mortgage and repay your deposit to you. You'd probably want something for your time too. If you do all that then most of the risk is covered.

That's a bit of a stream of conciousness though. Be happy to hear your thoughts.

Greenfingerz

Generali wrote: »

you buy shares in BP and the chairman doesn't ring you up to complain the boiler's knackered.

True, more likely that the boilerman's ring is knackered.

The sales office for Surbiton Plaza was overflowing on to the street this morning and the appointments book for sitting down with a salesperson was completely full for the next few days.

It seems that the recent rate rise hasn't dampened peoples enthusiasm despite £1450 seeming to be the ceiling price for comparable rentals in the area (£1950 pcm for a penthouse in a private gated riverside development).

I am curious about CNM Estates, the company behind the development. They are overdue with their annual returns and haven't had to file accounts in the past as they were exempt for being so small having been incorporated three years ago.

SickStu

jyonda wrote: »

I grew up in Surbiton, have travelled thousands of times into central London and it's never taken only 17 minutes to get there. 27 more like. It's a nice enough place but not what it once was due to overdevelopement. Once the high street got a Starbucks that was me out.

fast train will do it in 17 easy. You must have always caught an all-stops