Hot property

Mark Edmonds

WITH the stock market in turmoil, could there be a better time to put your money into property? If you use your head, the risks are low, provided that you don't expect an instant return. But where exactly should you buy that second home — the one in which you will never live but from which you will simply grow fat?

In the area of north London in which I live, conveniently close to Kentish Town but not as close to Highgate as I'd like it to be, it was possible 30 years ago to buy a swanky, three-storey, ivy-covered villa for just £10,000. It might not have been in the best state of repair, but it was five minutes' walk from Hampstead Heath — or at least Parliament Hill, its slightly windier, more bohemian adjunct — and it guaranteed you interesting neighbours. They were among the first gentrifiers, the first exponents of the colour-supplement lifestyle. They had names such as Jocasta, Benji and Sophie, and soaring property prices meant that they were to become rich.

Those houses, in the better streets close to Parliament Hill, now sell for about £1 million apiece: in anyone's book, that's an attractive return. So what is around these days? Is there anywhere in London that hasn't been gentrified?

Any would-be gentrifier should first arm himself with plenty of information about property prices. Because news editors know that their indolent readers are fascinated by the prospect of their homes making them richer without their lifting a finger, a whole new branch of PR, based on the 'analysis' of these prices, has developed.

The Land Registry puts out figures, as do the Halifax and the Nationwide, and even the Royal Institution of Chartered Surveyors offers its monthly market report. All of these get a regular airing in the public prints and on the Internet, but I don't trust any of them. Often their information is out of date, or unreliable, simply because it is based on a small sample of the market.

If I were putting my money into property, I'd rely instead on the Cappuccino Index. This, more than any other form of research, will tell you which areas are going up and, more importantly, which are going nowhere.

Why Cappuccino? It may sound implausible, but I would challenge anyone to come forward with a more potent symbol of gentrification. The sudden availability of frothy, good-quality Italian coffee produced from proper chrome machines is a copper-bottomed indication of an imminent middle-class presence in any area. Buy into an area that is just beginning to change and property prices will be low; buy into an area that has already changed and prices will be ludicrously high.

Put simply, the equation on which the Cappuccino Index is based is this: more cafés equals more cappuccino equals more money in the area. Ergo, if you buy a flat or house in a district that is in its cappuccino infancy — perhaps with one or two machines in an otherwise grim-looking parade of launderettes, funeral directors and Conservative committee rooms — you may be lucky and see the area, and your investment, taking off.

Remember, the people making the decision to install those expensive cappuccino machines (a basic Gaggia model costs about £5,000) are taking a calculated risk: do they really want to open an upmarket café in an area populated entirely by dossers, crack addicts and pimps?

In a few years' time, when the cappuccino trickle has become a flood, you will be laughing: property prices are guaranteed to rise just like the crema on a cup of bitterstrong espresso. But if the flood has already started, buy elsewhere. Look at Soho, where coffee in all its forms seeps from almost every orifice. A one-bedroom flat in Old Compton Street costs at least £150,000: it's far too late to regard Soho as a viable investment area.

So where in London is there a genuine shortage of cappuccino? Well, the problem with gentrification these days is that there are precious few areas left in which to practise it. What part of London isn't up-andcoming? How many Victorian artisans' cottages actually contain artisans, rather than bankers or wheeler-dealer corporate lawyers?

This is, of course, an issue that exercises almost anyone bent on making money out of property in the capital. And even if you do manage to identify a likely area, you are faced with a further dilemma: if you have, say, £150,000 to invest, should you opt for a garage in Chelsea or a terraced cottage in Walthamstow for the best return?

My money would be on Walthamstow, since it has a good train service and is handy for Stansted airport. But I wouldn't want to live there myself. King's Cross, which can't be shabby for ever, is an altogether different prospect and a good longterm bet.

The trick with gentrification — as with much of business, for that matter — is to buy at the bottom of the market and sell at the top. Modern business pundits are always banging on about 'first-to-market advantage'. A crude version of this thinking holds true in the property game. You must make your investment long before chipboard fascias have been stripped from the original fireplaces. If the street you have earmarked already contains more skips than beaten-up Mazdas, you may be too late.

So keep an eye on what is happening in the cafés and pubs of the areas in which you are interested. Try to chat up the local

planning officials, who are obliged to give out as much information as possible about planning applications. If you find that an old decaying pub, last full on VE Day, is about to become a Starbucks, it may well be time to buy the flat next door.

Unfortunately, Starbucks themselves aren't really prepared to help the gentrifiers. A spokesman talked about his company making efforts to regenerate urban areas in the United States, but he wasn't willing to give me a list of imminent openings in London.

Apparently, in America the company is consciously opening outlets in what the spokesman described as 'high-need areas', such as Harlem, in the hope that a gleaming new coffee store will encourage others to invest in the area. So far, there are no plans to take a caffeine fix to any of our own multitudinous 'high-need areas', but the company will not rule it out in the future.

In the meantime, however, I can reveal an exclusive piece of information which may benefit anyone who is considering making the most of the Cappuccino Index: there is a Starbucks in Croydon.

Mark Edmonds is editor of assertahome.com.