Garage on sale for £500k: is it gold plated?

Harrods and trafficYui Mok/PA Archive/Press Association Images

Who said the property bubble had burst? Clearly no-one has told the estate agents in central London, who have just priced a garage round the corner from Harrods for £500,000. And what do you get for your money? A run-down, dirt-blackened shell.

Why would anyone pay so much for so little?

The property

The garage is in a Knightsbridge side road, called Rysbrack Street. It's nothing to write home about. There's no glass chandelier or gold-plated doors. It's just a bog standard double garage which has seen better days, measuring 6.4 metres wide by 4.75 metres deep.
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If you invest £525,000 in this property you'll have the great joy of being able to pull out of your garage into a huge traffic jam on most days of the week, entering into the congestion zone and spending another fortune while you're there.
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So why would anyone pay this?

This may be three times the average property price in the UK, but in this particular area its chicken feed. The closest thing you'll get in this price bracket is a shoebox in the sky with less than 40 years on the lease - rendering it a legal minefield. A normal one bedroom flat will set you back about £1 million, and a two bed around £3 million.

These streets largely have no off-street parking, and you pay a small fortune for the right to park in a resident's space - which are few and far between anyway. You have to ask whether anyone paying £3 million for a two bedroom flat wants to hike in from three streets away with their heavy shopping bags, or pay a fraction of their annual caviar budget for more convenient parking.

With this kind of mindset, £525,000 is a snip - especially when you bear in mind that it's very unusual for a freehold garage to come onto the market in this area so there's plenty of pent-up demand.

Overseas

This kind of maths makes it patently clear that this corner of central London has completely broken away from the rest of the market. Nicholas Leeming, business development director at Zoopla.co.uk, told AOL: " London has always been a different beast when it comes to property. It's detachment from the national market has been exacerbated by the economic downturn. The capital has been more immune thanks to high demand from wealthier buyers and property investors, so has outperformed the rest of the market."

In fact prices are well in excess of their 2007 level, and the sky appears to be the limit. Richard Barber, partner in residential sales at W A Ellis, the agency which is listing the garage sums up April in the area as: "The market in general seems to have retained its impetus – we have had at least three instances of properties going to best bids over the last three weeks, although it would seem that there is a little more supply coming to the market." Any other part of the country would give it's right arm to be able to report this sort of activity.

The answer to why is fairly straightforward. If you are paying this sort of money for somewhere relatively small, there's a good chance that this is far from your only property: it's your London pad, and you are based elsewhere in the country or the world.

There's a strong chance the woes of Sterling have made the property a bargain despite price rises, and a good chance that the region you hail from is rebounding more effectively than the UK. It's essentially a small corner of this Island which is no longer British.

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