One in every eight pounds spent by the Great British shopping public apparently goes to Tesco, Britain’s favourite grocer. Now comes news that not only will Tesco cater to your every household whim and need, it will sell you a home in London above the store. No more need for the big weekly shop in the 4x4, specially equipped for London’s gruelling gradients, just pop downstairs when you’ve run out of milk or champagne, day or night. Rumour has it that lonely Londoners find romance in the supermarket aisles. If you live above Tesco, “come up and see me some time” could take on a new urgency and remove the need for speed-dating. Tesco’s first venture into private housebuilding, paradoxically, will be in Clapham, London’s self-proclaimed “nappy valley”.
Living above the shop is nothing new. In the Far East (Asia, not Barking), the shop house is a classic lifestyle formula. Londoners, too, live above all sorts of non-residential uses on lower floors, including offices, schools, hotels, pubs and restaurants, petrol stations and car showrooms, fire and ambulance stations and even railway stations. Nor is it just the poor who find themselves above an activity that some might consider to be a bad neighbour. The rich pay handsomely to live above petrol stations, in Park Lane, Mayfair, St John’s Wood and Victoria, for example.
The idea of living above a highly accessible, excellent supermarket has enormous lifestyle logic in London. Not the brushed steel, cocktails and shimmering sunset lifestyle that the developers love to peddle, but the grinding reality of being a young professional: long working days, crowded transport, little leisure time and new developments that dismally fail the pint-of-milk test. When I recently visited a newly completed Docklands scheme of 700 homes, the concierge helpfully pointed me in the direction of a distant petrol station as the nearest place to buy my pinta, or anything else.
All too often in recent years, developers have built large schemes in locations that have poor transport and little — if any — community amenities, flogged flats off-plan to investors and then disappeared with indecent haste once the sell-by date arrives. There is already evidence that investors in such schemes are seeing their properties underperform in comparison with more rounded developments. Tesco already has two major living-above-the-shop developments to its credit in London, at Brook Green near Hammersmith, with 104 flats, and Cromwell Road in Kensington, with 75 flats. Both these schemes provide affordable housing, managed by housing associations, but both schemes would appeal strongly to private-sector residents, be they owner-occupiers or renters. The most recent example of new private housing above a very large supermarket actually comes from J Sainsbury, at Pimlico, where the store has opened months in advance of the housing being completed. The store is fantastic, providing welcome competition to Tesco in every respect.
It is not inconceivable that Tesco, Sainsbury’s, Waitrose and other retail groups could evolve as major housing brands. For the time being, Tesco is big enough but modest enough to recognise that its retailing expertise does not yet fully extend to building and marketing homes. Its Clapham scheme, with 77 private flats and 27 affordable homes, is being undertaken as a joint venture with Grainger Trust, a long-established property investment company that is busy reinventing itself as one of the most progressive property companies in London. Grainger Trust is also Sainsbury’s partner in Pimlico, proving once again that there is no limit on the number of loyalty cards you can use.
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Buy-to-let has become a very high-risk investment sector in London. With net rental returns running — if you’re lucky — at about 4 per cent on new-build flats, the investment will not cover its costs for several years. That said, living above the shop could well be one of the safest buy-to-let options. The flats at Clapham will certainly let well, combining all the lifestyle strengths discussed above. My own staff, typical young professionals, assure me that living above Tesco will be fine in terms of aspirational living.
Against this wider background, there are two key factors that will determine the performance of the investment. The first is price, the second is long-term management. In the longer term the latter will be as important as the initial price. Tesco will be responsible for the management and, as it is a company that has to polish and protect its good name every day, I take this to be a big plus. In terms of price, one-bedroom flats will sell from £195,000 to £260,000, and those with two bedrooms at about £350,000. FPDSavills (020-7409 9998) has already quietly sold about 25 to its favoured clients at home and abroad. More flats are likely to be released soon on the open market, and might well appeal to owner-occupiers as well as investors.
Geoff Marsh is director of London Residential Research and a visiting professor at the University of Westminster.
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LIKE MANY homeowners who have had to compromise in order to afford their own place, Paula and Peter Klapproth live above a shop. But the shop isn’t a newsagent, a dry cleaners or a fried chicken takeaway. It’s a giant 24-hour Tesco in Kensington, West London.
Paula has lived in the Royal Borough most of her life. So when she decided to give up her council home in Notting Hill and buy her own place five years ago, she did not want to move far. Finding somewhere affordable in one of the priciest parts of the capital proved tricky, however.
“We saw lots of unsuitable places,” says Paula. “Here everything is brand-new. The balcony and the large open-plan kitchen really sold it to us. And being above a shop means you are high up, even though most of the other flats are above us.”
The couple bought the property through a shared ownership scheme with the Notting Hill Housing Group, which means that they own only half the two-bedroom flat. Having a smaller mortgage means that they have more money left each week to spend on groceries.
“It’s handy to live above a supermarket. Sometimes too handy. Although I always do a weekly shop, I pop in almost daily to pick up fresh food.”