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Repurposing Retail for a High Yield

Editor Richard Bowser talks with developer-landlord Andy Babbayan

Andy Babbayan is an ex-Royal Engineers Officer who over the last eight years has established a full-time career as a property investor-landlord and developer of both residential and commercial property. Back in 2013, I met Andy when he was creating a portfolio of student accommodation HMO properties and he was featured here in the August edition of that year. In the intervening period he has bought, developed, held and sold a considerable number of properties both for himself and clients of his companies.

I met with Andy recently in Hove, Sussex to learn more about his recent progress and in particular just how he is repurposing out-dated commercial premises back into viable use and what is the core aim behind this approach.

“We have moved onwards since 2013 and it’s now a group of associated companies,” said Andy, “with one focusing on land and development, another one which focuses on sourcing and Sussex Property Partnership, which is the lettings agency. The main business Target Five, sources and develops properties for both ourselves and for others. Since 2013 we have done over 350 projects and that’s not just units as in individual rooms, but the number of actual projects.

“Around 50% of these had been student HMOs but more recently, although our focus is still firmly on high yield and build-to-hold stock, we have turned away from mainly converting houses into HMOs and now do a greater variety of property types in particular with commercial property. We have done some flips/buy to sell, but it’s not the core strategy but we are just starting on an ‘air-space’ project with six flats to be sold.

“Despite that comment my own portfolio shows that I still have the majority as a student landlord and in our lettings management company we now have over 60 HMO properties in that sector. For the upcoming academic year we still have 17 properties still to let and its very important on a daily basis to ensure that we get these agreed as soon as possible. By May you don’t want to have many un-let student rooms or else you are having to consider slashing rents. It has become a more difficult market locally as the number of students has plateaued.

“There was positive real growth in student numbers here in Brighton and Hove from 2010, and there was a real shortage of supply, particularly of better quality product but that has now changed. It did get a bit silly, as houses which previously would have sold for £300,000 were being valued at £500,000 as 6-bed student HMOs.”

I ask Andy what is the primary driver behind a new purchasing decision.

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