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The Waitrose Effect
 
Most of us know about the Waitrose effect - it is commonly believed that if a Waitrose opens in your area, house prices will rise. However, it’s not just Waitrose that can affect the value of local homes, it seems a whole range of shops and brands can have an effect too.

So which are those shops? And what’s behind it all?
Research by Lloyds Bank suggests the Waitrose effect adds as much as 12% or £26,000 to the value of the average home.

Commercial agent Savoy Stewart and Journalistic.org analysed the effect 21 different high street brands had on local property prices in Hertfordshire and the results make for some very interesting reading. They put the Waitrose effect at 8%, which is way down the list compared to upmarket Italian restaurant chain Zaza, whose mere presence in the local area is claimed to boost prices by an extraordinary 42% or £91,351 for the average home! At the opposite end of the scale, as you might guess, is McDonalds, who the researchers found depressed prices by 24%, or an average of £52,200.
Other notable booster brands include; M&Co clothing, which adds 39%, Carluccios, which adds 18% and Marks & Spencers, which adds less than you’d think but 1% more than Waitrose at 9%. Primark is the second most detrimental brand at -23%, Asda is next at -22% and Poundland and Iceland are less of a turn-off than you might expect, at -16% and -14% respectively.

It’s not just the individual brands that have an effect, it is also the overall character of the local shops. Yet more research, this time by American Express, shows that if your local high street is populated by a good selection of independent shops, house prices will rise faster than other areas. Back in 2013 Amex claimed properties close to a good, independent high street had risen by 54.6% over the previous 10 years compared to 46.5% for other areas.

Okay, if so much money is involved, why couldn’t all the local residents just get together to pay for a premium store or restaurant, such as Zaza, to relocate to an area or pay another to go away?
The truth is, upmarket and down market brands are more of an indicator of an area’s value rather than a driver of it. The primary motivation for any of these brands to open a local store is, having done their research, they believe there are sufficient numbers of their target customers in the vicinity to make money from it. However, if an up and coming area gets its first premium brand moving into the high street, then its presence may reinforce the idea that the area is moving upmarket.

McDonalds is a more interesting case, as its appeal is universal, despite being seen as a down market product. You can find McDonalds in plenty of highly affluent areas, such as Richmond in Surrey and Kensington High Street in Prime Central London, but it is unlikely its presence has had an adverse effect on local property prices. Conversely, if McDonalds opened a new restaurant in an already rundown area, it may exacerbate the problem and could bring down prices.

Article by Guy Fisher

 


 

 

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