the harrods effect

THE HARRODS EFFECT
THE HARRODS EFFECT
KEY RESEARCH
FINDINGS
133% – £ per square
foot (£psf) premium for
properties located within
a 5 minute walk of Harrods
compared to London as
a whole
£2,149 – £psf average
for proper ties sold
within a 5 minute walk
of Harrods
(Lonres: Jan 2011- March 2014)
£561 – £psf fall in value
for properties located
within a 20 minute walk
from Harrods compared
to those within a
5 minute walk
2
£2.4 million
– average sales price of
a property in Q1 2014
within a 5 minute walk
of Harrods
£1.24 million
– average sales price of
a property in Kensington
and Chelsea
(Land Registry: March 2014)
THE HARRODS EFFECT
INTRODUCTION
Harrods is both a British institution and a global icon. Nearly
1 in 5 tourists would include visiting Harrods in their top
three activities if they visited Britain, placing it third after
Buckingham Palace and Stonehenge (Source: Visit London).
Tourists spend around £4.5 billion, or
25% of their total expenditure on
shopping, proving its importance to the
economy. Harrods was the first independent
store worldwide to record over £1 billion
of sales, and in employing more than 5,000
people, it has 64% of all those employed
in wholesale and retail trades who reside
in the Royal Borough of Kensington and
Chelsea. (Source: Census 2011)
However, does such a landmark institution
also have any impact on property prices
within its vicinity? This newly commissioned
research by Harrods Estates examines
property sales across Prime Central
London over the past three years to
determine whether or not there is any
discernible difference in property prices
within 5, 10, 15 and 20 minutes’ walking
distance from the Harrods store.
Welcoming over 300,000 visitors daily
across its 330 departments, and with over
one million square feet (sq ft) of retail
space, its impor tance to life in Prime
Central London cannot be underestimated.
COMPARED TO LONDON AS A WHOLE...
133% £ PER SQUARE FOOT PREMIUM
FOR PROPERTIES LOCATED WITHIN
A 5 MINUTE WALK OF HARRODS
3
THE HARRODS EFFECT
CONTEXT
RESEARCH
METHODOLOGY
Originally founded in Southwark in 1824
by Charles Henry Harrod, Harrods has
occupied its present location in Brompton
Road, Knightsbridge in the Royal Borough
of Kensington and Chelsea for the past
165 years. The current Grade I listed
building, one of the most visible and
recognisable landmarks of the Capital,
will celebrate its 110th birthday next year.
In order to establish the value of the
Harrods effect, Dataloft analysed a sample
of over 27,500 records of property sales
across Prime Central London from January
2011 to the end of March 2014 sourced
from the Lonres database. 2011 census
middle super output areas were then used
to create a fine grain map based on £ per
square foot values.
Surrounded by stunning architecture,
proximity to open spaces (Kensington
Gardens and Hyde Park), and with ease
of access to the City of London and
West End, average property prices across
Kensington and Chelsea are the most
expensive in London at £1.24 million, a
staggering 199% higher than the Greater
London average. (Land Registry: March 2014)
Middle super output areas are
geo-demographically engineered census
areas rather than postal geographies, which
give relatively homogenous neighbourhood
characteristics with a minimum of 2,000 and
a maximum of 6,000 households per area in
2011. To produce more detailed analysis, we
applied network modelling criteria from
Harrods (postcode SW1X 7XL) to produce
a hot spot map of sales within a 20 minute
walking distance.
The location of Harrods within the
Borough undoubtedly enhances its appeal
for residents, but does this have any impact
on property prices?
FIGURE 1:
1,969 sales have taken place within a
WALKING DISTANCE
FROM SW1X 7XL
WALKING TIME
FROM SW1X 7XL
NUMBER OF UNIT
POSTCODES
NUMBER OF SALES
BY UNIT POSTCODE
2011-2014
0 - 360 m
up to 5 minutes
61
215
360.1 - 720m
5.1 - 10 minutes
160
440
720.1 - 1,080m
10.1 - 15 minutes
222
588
1,080.1 - 1,440m
15.1 - 20 minutes
267
726
20 minute walking time of Harrods since
the beginning of 2011 and the resulting
analysis in this report is based on these
walking boundaries.
FIGURE 1
4
THE HARRODS EFFECT
This map is based on postcode unit data. Modelling was based on walking accessibility and distance along
network lines determined from an Ordnance Survey 1:25,000 Vector Map, with extra main walking paths digitised and
added by hand. Walking speed has been assumed as an average of 1.2 metres per second (4.32 kilometres per hour)
to create four time based boundaries.
R
PA
K
LA
N
E
2
HYDE PARK
KENSINGTON
GARDENS
HYDE PARK
CORNER
KNIGHTSBRIDGE
KNIGHTSBRIDGE
G
GREEN PARK
RO
SV
EN
1
O
R
PL
AC
RO
A
D
E
5 MINS
N
MP
TO
SLOA
REET
NE ST
BRO
10 MINS
SOUTH
KENSINGTON
SLOANE
SQUARE
15 MINS
RO
A
D
3
VICTORIA
FU
LH
A
M
20 MINS
N
KI
GS
RO
AD
OFFICES
Harrods
1 HARRODS ESTATES – KNIGHTSBRIDGE, 82 BROMPTON ROAD, LONDON SW3
2 HARRODS ESTATES – MAYFAIR, 61 PARK LANE, LONDON W1
3 HARRODS ESTATES – CHELSEA, 58 FULHAM ROAD, LONDON SW3
87-135
BROMPTON ROAD
LONDON SW1
KEY PROPERTY SALES 2011 - 2014
UPTO 5 MINUTES WALKING
RECENT SALES PRICES FOR
From £2,000 to £4,000+ (average psf)
APARTMENTS WITHIN 5 MINUTES
TO THE HARRODS STORE
UPTO 10 MINUTES WALKING
From £1,500 to £3,000 (average psf)
ONE HYDE PARK
– £6,287 psf
199 KNIGHTSBRIDGE
– £5,680 psf
TREVOR SQUARE
– £4,585 psf
UPTO 20 MINUTES WALKING
THE LANSBURY
– £3,844 psf
From £500 to £2,000 (average psf)
10 LANCELOT PLACE
– £3,378 psf
(Source: Lonres)
(Source: Harrods Estates)
UPTO 15 MINUTES WALKING
From £1,000 to £2,500 (average psf)
COPYRIGHT HARRODS ESTATES AND DATALOFT
5
THE HARRODS EFFECT
WALKING DISTANCES
AND HARRODS
Proximity to Harrods adds a premium to
property prices. The average £psf price
achieved for properties sold within a
5 minute walking distance of Harrods was
£2,149, a staggering 133% higher than the
average £psf for all properties sold across
London (£921) and a premium of 20%
compared to the average £psf price of all
properties sold within a 20 minute walking
distance of Harrods (£1,786).
FIGURE 2:
Average £psf values based on walking
distances, and premiums associated with
close walking proximity to Harrods.
Properties located 5-10 minutes walk
from Harrods commanded a 10% premium
while those located more than 15-20 minutes
away from Harrods achieved £psf values
11% lower than the average for all properties
sold within a 20 minute walk, yet still 72%
above the London average. 16% of all
properties sold within a 5 minute walking
distance have commanded £psf values of
over £3,000.
Walking time from
Harrods Store
Up to 5
minutes
5-10
minutes
10-15
minutes
15-20
minutes
Average £psf
(property sales 1st Jan
2011-31st March 2014)
£2,149
£1,969
£1,761
£1,588
Premium over London
average (£921)
133%
114%
91%
72%
Premium / discount over
average of all properties
located within a 20
minute walk time (£1,786)
20%
10%
-1%
-11%
% of sales commanding
over £3,000 psf
16%
6%
5%
1%
FIGURE 2
Properties sold up to a 5 minute walking
distance from Harrods commanded average
£psf values 9% higher than those living
5-10 minutes away, 22% higher than those
living 10-15 minutes away and 35% higher
than those living within a 15-20 minute
walk to the store.
6
Thirteen apartments have been sold within
a 5 minute walking distance of Harrods in
Q1 2014, at an average selling price of
£2.4 million.
THE HARRODS EFFECT
FIGURE 3:
Premiums compared to average £psf of
all properties sold within a 20 minute
walking distance and London as a whole
(Lonres: Q1 2011 – Q1 2014)
FIGURE 4:
£psf by walking distance from Harrods
FIGURE 3
FIGURE 4
All properties within a 5 minute and 5-10
minute walking distance were located in
the prestigious London areas of
Knightsbridge (SW1X), Chelsea (SW3)
and South Kensington (SW7), with
properties in these areas plus Belgravia
(SW1W) a 10-15 minute walk away.
7
Properties in Mayfair (W1J, W1K and
W1S) and those in South Kensington and
Chelsea account for the greatest proportion
of sales within a 15-20 minute walk.
THE HARRODS EFFECT
APARTMENTS
VERSUS HOUSES
The £psf differential in values within a
5 minute walk of Harrods varies by type
of property and is substantially more for
apartments than houses. Apartments sold
within a 5 minute walking distance of
Harrods attract a 14% £psf premium
over those 5-10 minutes away and a 60%
premium over those 15-20 minutes away.
For houses, the premiums are 1% and
15% respectively.
FIGURE 5:
£psf premium or discount by property type
compared to average £psf of all properties
located within a 20 minute walking time of
Harrods (Lonres: Q1 2011 – Q1 2014).
FIGURE 5
When sales values are considered, the
values are more variable. The average sales
price of an apartment within a 5 minute
walk of Harrods is £2.99 million, compared
to £1.87 million for apartments sold 15-20
minutes away. The average price of a
detached property within a 5 minute
walking distance is £5.3 million, compared
to £4.86 million for those 15-20 minutes
away. However, only 31 houses have been
sold within a 5 minute walk of Harrods
over the last three years and none so far in
2014. Detached properties within a 5-10
minute walking distance have attracted the
highest average selling price of £6 million,
with 19 properties here selling for over
FIGURE 6:
Sales by type of property
(Lonres: Q1 2011 – Q1 2014).
FIGURE 6
8
£10 million since Q1 2011. The most
expensive property sold, a 20 bedroom,
22,500 sq ft property on Lowndes Square
sold in 2013 for £51.5 million.
Apartments accounted for 72% of all sales
within a 20 minute walking distance of
Harrods, with houses accounting for the
remaining 28%. This is in comparable to
sales across London as a whole, where
73% of all sales were for apartments and
27% for houses.There were more apartment
than house sales within a 5 minute walking
distance from Harrods. But house sales
accounted for the highest proportion of
sales within a 5-10 minute walking distance.
THE HARRODS EFFECT
SIZE OF PROPERTY
In a similar vein to both £psf values and
the types of property, there is also variation
between the sizes of properties dependent
on their walking distance from Harrods.
The overall average size of properties
located within 20 minutes walking distance
of Harrods is 1,570 sq ft; 1,171 sq ft for
apartments, with houses over double that
size at 2,609 sq ft. This offers significant
premiums over London as a whole.
Apartments within a 5 minute walking
distance command a 29% size premium
over London as a whole, where the average
apartment size is 910 sq ft, and a 25%
premium compared to the average size of
houses (2091 sq ft). All properties located
within a 20 minute walking distance of
Harrods are significantly larger than the
London average.
FIGURE 7:
Average size of properties (sq ft) based
on walking distance from Harrods
FIGURE 7
9
Apartments in close proximity to Harrods
are slightly larger in size, while houses are
smaller. The average size of an apartment
within a 5 minute walk was 1,234 sq ft,
8% larger than for those sold 15-20 minutes
away (1,146 sq ft). For houses, the
differentials are reversed. The average size
for houses sold within a 5 minute walking
distance was 2,399 sq ft, 5% smaller than
those located 15-20 minute walk away,
which have an average size of 2,526 sq ft.
The largest detached properties are located
within a 5-10 minute walk, with an average
size of 2,766 sq ft, with 17 properties having
sold that offered over 5,000 sq ft of space.
Indeed, two had over 20,000 sq ft of space.
THE HARRODS EFFECT
CONCLUSION
As a luxury department store and retail
icon, the economic value of Harrods to
the local economy is unquestionable.
However its sphere of interest extends
beyond the celebrities, royalty and High
Net Worths who come to Knightsbridge
to shop.
Our report shows property values in the
immediate vicinity of Harrods (within a
5 minute walk) carry a 133% premium in
£psf terms compared to the average for
Prime Central London, and even within a
20 minute walk property values are 70%
above the average £psf for Prime Central
London.
10
Our analysis also shows the ratio of
apar tments to houses is approx. 6:1
within a 5 minute walk of the store, whilst
the average for Prime Central London is
under 3:1, and that the average apartment
within a 5 minute walk of the store is
25% larger than the average for Prime
Central London.
It would seem the Harrods Effect is not
just a retail one.
SHIRLEY HUMPHREY
Director
SIMON BARRY
Head of New Developments
020 7893 8933
020 7225 6700
[email protected]
[email protected]
HARRODS ESTATES - KNIGHTSBRIDGE
82 BROMPTON ROAD, LONDON SW3
HARRODS ESTATES - MAYFAIR
61 PARK LANE, LONDON W1
HARRODS ESTATES - CHELSEA
58 FULHAM ROAD, LONDON SW3