Unlike many of our commercial property acquisitions in London, this deal strayed out of the central zones into another busy part of the city.
South Norwood (SE25) is an area of London that is seeing significant change in social demographics, largely due to the influx of young professionals being priced out of the residential markets in Clapham, Balham and Streatham.
This increasingly affluent migrating population meant that a well-geared commercial property investment in a retail unit by a well-known brand gave great investment security and high potential for capital gain.
The property, let by Sainsbury’s for a 15-year period from summer 2012, had an annual rent of £77,000, with yield increases linked to the RPI and a capped increase range of between 1% and 3.5%.
The property, a ground floor unit, came with a lease of 999 years and a negligible ground rent. It was purchased in 2012 for £1.17m.