The Waitrose effect

A recent study commissioned by Lloyds Bank shows that houses in close proximity to a Waitrose, Marks and Spencer, Sainsbury’s or Iceland are most likely to gain a higher house price premium than the town average in which they are located.

Properties close to an M&S have the second highest premium at £29,992 than hoes further away.  Proximity to a Sainsbury’s add £26,767 and Iceland £22,767.  Waitrose reigns supreme, however, with a typical £36,480 uplift.

On average walking proximity to a supermarket adds an average 9% according to the study, with Aldi, Lidl, Morrison’s or Asda adding on average £21,400.

Regular readers will recall that in a recent article I outlined changes that I expect to see in Oxford’s private rented sector, with tenants renting for longer periods of their life and increasing demand for homes that allow their young families to grow with 3 beds, and proximity to schools and supermarkets.

The Lloyds report is a two-edged sword for Oxford’s landlords, as it suggests there will be a cost premium to buy properties that will be demanded by this group of tenants, but equally landlord’s should have confidence that that premium will be maintained over the medium to long-term, most likely increasing demand from tenants and allowing a premium rent to secured.

Owners of central Oxford properties should hope that a similar ‘John Lewis’ effect will be felt once the Westgate development completes.  Experience from Cardiff where a comparable John Lewis-led development occurred, suggests that the John Lewis effect could be even more significant than the Waitrose effect.  Owners of properties in Oxford Castle, Tennyson Lodge, Empress Court, The Lion Brewery and Castle Mews should see an uplift in capital values once the new apartments in Mill Stream Edge are sold-out.