Spa towns energise market
Buyers are prepared to pay premium prices for homes with character in historic parts of Britain, writes Peta Tomlinson
Investors taking the plunge into British spa towns are enjoying healthy benefits. According to the latest research by Lloyds TSB, owners of homes in spa towns across England and Wales have seen property values rise by an average of 88 per cent over the past decade, equivalent to a monthly increase of £1,077 (HK$13,200) or 0.5 per cent.
The research found that these consistent price hikes are not deterring buyers, who are prepared to pay an average of £50,000 more for the privilege of living in a spa town.
Suren Thiru, housing economist at Lloyds TSB, says the lure is just too appealing. "Homes in spa towns continue to command a substantial premium over their neighbouring areas, with the quality-of-life benefits and sense of history that typically characterise such locations still resonating among homebuyers."
The attraction dates back centuries when well-heeled visitors would flock to bathe in the therapeutic mineral springs, seeking medical cures. "Taking the waters" was a popular pastime for Londoners during Georgian times, while it became the height of fashion to affluent Victorians. The spa towns, especially Bath, evolved into the playgrounds of high society, characterised by their grand, stately homes, sculptured parklands and community gathering places.
Lucian Cook, director of residential research at Savills in London, agrees that the appeal of spa towns is reflected in rising property values. He cites Land Registry data that shows house prices in Bath carry "a strong premium" of 52 per cent over Somerset as a whole.
"We think transactions are a good indicator of the strength of the market. On this measure, the Bath market has been relatively robust and is the strongest performer in the southwest of England," Cook says.
He says the performance of Britain's spa towns reflects the quality of housing stock and the living environment they afford, given their affluent history and retention of a strong character largely undiluted by modern development.
"Nowhere is this more so the case than in Bath, given its Unesco World Heritage status."
History also shows that Bath property prices are closely pegged to the "gold standard" performance of the capital, tracking at just under 70 per cent of London prices since 2005, and peaking twice at 75 per cent (in June 1995 and November 2006). Little wonder, then, that the present price differential of 65 per cent - equivalent to the previous low point of January 2002 - is pulling buyers from London.
The talk of the town is Somerset Place, a rarely available authentic Georgian crescent set in a prime, elevated location overlooking the heart of Bath. Behind the classical sweep of original Bath stone, ornate iron railings and inherent grandeur of this Grade 1 listed building lies a precious blank canvas. As a result of bombings during the second world war blitz, which damaged part of the internal structure but amazingly left the façade untouched, the usual redevelopment restrictions have been eased.
The building, built between 1792 and 1800, had languished for years as student accommodation for Bath Spa University until it was spied - and bought - by Johnny Sandelson, a British property entrepreneur who views Somerset Place as "the architectural jewel in Bath's crown". Sandelson's company, Strategic Iconic Assets Heritage Acquisition Fund, paid £50 million for the property and is spending a further £60 million, working with Bath-based Future Heritage and architecture practice ORMS, to restore the crescent as a series of bespoke houses, apartments and maisonettes. Completion is scheduled for 2014.
Although a seasoned developer, Sandelson is clearly delighted by his mandate to restore an entire listed crescent. "We've done a lot of schemes, but none have the feel of this extraordinary project. To restore one of the key buildings in Bath and set a mark of quality in the development world - we feel quite proud to be involved in that," he says.
Since news of this once-off opportunity broke, inquiries have been phenomenal, Sandelson says. As noted by Sandy Mitchell, founder and director of RedBook Agency, which is pairing Somerset Place buyers with a tailor-made fit out, these heritage homes will "come up like a new penny". "They are authentically Georgian, with the potential for the stylistic features of a new build," he says.
The properties - just 20 in total - range in size and layout from 1,600 sq ft to 2,800 sq ft, many opening to gardens or roof terraces, and all with scenic, green views. Architect Oliver Richards, equity director at ORMS, describes the feeling as living in a "grand, palatial home with the countryside rolling in".
Through this development, Sandelson is tapping a lifestyle trend. Savills' research shows that twice as many Londoners are upping stumps for a home base in Bath, lured not only by the high-quality lifestyle but also by value for money.
"You could pay £20 million for a crescent house in Notting Hill or £2 million to £3 million for one at Somerset Place with 100 sq ft private gardens," says Luke Brady of Savills' Bath office.
Inquiries are also coming from around the world - the "vast majority" from Asians, for whom Bath's reputation for high-quality primary, secondary and tertiary education surely adds to the appeal.
