PropLens · Deal Sheet

29-31 Castle Street, Dundee, DD1 3AD

Mixed-Use Building (Retail/Commercial with Upper Floors) 8,500 NIA / 10,000 GIA Heritable (assumed) · Fair
Asking
£150,000
View on Off-market
29-31 Castle Street, Dundee
Offer range · Development
No-go
£40,000
Lower end · 20% Upper end · 15%

Lower end (20% c-on-c) does not pencil at base-case build cost. Range collapses to a single upper-end figure under conventional finance.

Asking £150,000 sits significantly above the upper end (£40,000). The deal does not clear either c-on-c hurdle at asking under base-case build cost and conventional finance. Grant-funded sensitivities below show how the range shifts with grant landings.

Stress DSCR 1.11× Marginal at upper-end pricing; Yield on Cost 9.2% Viable. Income just barely services debt at 65% LTV. Conventional lender appetite tightens; creative deal structuring may be the indicated path.

Income basis Stabilised ERV from market comparables. Year 1 effective cash-on-cash depends on lease-up speed.
£132,300 − £27,300 → NOI £105,000

Offer explorer

Your offer
£40,000

Equity required
£0
Lender lends £942,500 against VP £1,450,000
Cash-on-cash
0%
 
DSCR @ 8%
1.39×
Same at any price
Net cash flow
£29,600
NOI − debt service (fixed)

Lender lens · five ratios

DSCR @ 8% rate 1.39× Marginal
Stress DSCR @ 10% rate 1.11× Marginal
Debt Yield (NOI / Loan) 11.1% Viable
Yield on Cost 0% Viable
Net Initial Yield 0% Viable

65% LTV · 8% IO · 7% costs · NOI £105,000 · VP £1,450,000 (lender basis)

Thesis

29-31 Castle Street is a vacant five-level listed building in Dundee city centre, formerly trading as Kenny's Music. The development thesis is a mixed-use conversion: 6 × 2-bed self-contained flats on the three upper floors and refurbished multi-let commercial on the ground floor and basement. Pre-application advice (PREAPP/042/2025) returned broadly supportive feedback from Dundee City Council. The base case assumes conventional finance and no grant landings; at that base case, the deal does not clear conventional cash-on-cash hurdles at the £150,000 asking price under a £1.1m net build cost. Grant funding, if landed, materially shifts the range: each £100,000 of grant adds c. £100,000 to both range ends. The aspirational £300k grant stack moves the range to £275,000–£320,000.

What's wrong with it
  • Vacant five-level configuration is functionally obsolete; without conversion, the building has no productive use and a nominal valuation.
  • Listed-building status on both addresses (Cat C and Cat B) constrains internal and external alterations; LBC required for any work affecting listed fabric.
  • Conversion economics are sensitive to build-cost adherence; the £125/sqft residential rate assumes no significant structural intervention.
What's right with it
  • Pre-application advice (PREAPP/042/2025) is supportive of the mixed-use scheme, including window reinstatement principle for the Cat B portion.
  • Three grant funding streams identified (CBEG, HBRF, HES Repair) totalling £300k aspirational; even partial landings shift the range materially.
  • Architect engaged (Fraser Walsh, W9 Architecture) with scheme drawings already prepared; reduces design-stage execution risk.
Risks
  • Grant funding is aspirational; competitive applications with no guarantee of landing within development timetable.
  • Build-cost overruns on listed-fabric works could erode the residual at the £40k upper-end purchase price.
  • Stabilised commercial occupancy on Castle Street depends on tenant demand for Class 1A frontage in a secondary city-centre location.
DD gaps
  • Full Listed Building Consent application not yet submitted; pre-app is non-binding.
  • EPC ratings not available pre-purchase; conversion specification must target Band C minimum to satisfy MEES (commercial) and proposed Heat in Buildings standards (residential).
  • Structural survey required to confirm load capacity of upper floors for residential conversion (kitchens, bathrooms, partition walls).
Considerations
  • Both buildings are listed (Cat C and Cat B); Cat B is the higher-protection designation under Scottish heritage law.
  • Central Conservation Area imposes additional planning controls on external alterations and signage.
  • Residential portion is 60% of NIA; SSAS-only purchase structure is therefore unavailable.

Property & Valuation

Facts, condition, comparables, valuation stack, and purchase-cost schedule for due-diligence reference.

Facts

Address29-31 Castle Street, Dundee, DD1 3AD
Asking price£150,000
Property typeMixed-Use Building (Retail/Commercial with Upper Floors)
GIA10,000 sqft (basement + GF + 3 upper floors)
NIA (estimated)8,500 sqft (GIA × 0.85)
TenureTo be confirmed; assumed heritable (Scottish freehold equivalent)
Listing statusOff-market
JurisdictionScotland (Dundee, DD1)
Listed building status29 Castle St: Category C listed. 31 Castle St: Category B listed. Both within Dundee Central Conservation Area.
Pre-applicationPREAPP/042/2025: broadly supportive (Dundee City Council)
ArchitectFraser Walsh, W9 Architecture

Photos

29-31 Castle Street, Dundee front elevation

Physical assessment

  • Five-level building: basement, ground floor, plus three upper floors. Total GIA ~10,000 sqft.
  • Exterior: Category B listed (31 Castle Street) and Category C listed (29 Castle Street) facades. Sandstone elevation typical of Dundee city centre Conservation Area. External photos show retail frontage and traditional upper-floor fenestration.
  • Interior condition: fully vacant former music retail premises. Stripped-back fit-out from prior occupier (Kenny's Music). Standard refurb assumed; no listed-interior features specified.
  • Layout: upper floors suit conversion to 6 × 2-bed self-contained flats with individual front doors (avoids HMO licensing). Ground floor + basement retain commercial use.
  • Access: Castle Street frontage in Dundee city centre. Direct upper-floor access from street level (separate residential entrance achievable).
  • Surroundings: Castle Street is a secondary city-centre retail location, off Reform Street and High Street. Adjacent uses include independent retail and food and beverage operators.
  • EPC: not stated. Assume D-E pre-refurbishment; conversion works will trigger upgrade to C or above.
  • Condition rating: Fair. Vacant possession; standard refurb scope assumed; no listing text indicates "recently refurbished" or "derelict".

Per-unit income

ComponentArea (sqft)RateGrossNet
Upper floors: 6 × 2-bed flats5,100 NIA£1,200/mo per flat£86,400£64,800
Ground floor: Class 1A retail1,700£18/sqft£30,600£26,010
Basement: ancillary use1,700£9/sqft£15,300£13,005
Total stabilised8,500£132,300£105,000 (rounded)

Residential NOI applies 25% deduction for voids, management, repairs, and insurance. Commercial NOI applies 15% multi-let running cost deduction. ERVs from Dundee city-centre comparables; Class 1A retail at £18/sqft, basement at half-rate.

Yield selection

Dundee secondary commercial yields per market benchmarks: prime city-centre commercial 8.0–9.5%, secondary 9.0–11.0%. Castle Street is a secondary city-centre commercial location.

For the stabilised valuation:

  • Residential (6 × 2-bed flats): 6.5% blended yield. Dundee city-centre stabilised residential yields range 6.0–7.0% on refurbished mid-market stock. Confirmed against per-flat £170k sales comparable (~£200/sqft NIA on local sold prices).
  • Commercial (multi-let GF + basement): 9.0%. Sub-£500k lot-size adjustment is offset by stabilised tenanted operation post-conversion; 9.0% sits at the midpoint of Dundee secondary commercial.

Sensitivity:

Resi yieldCommercial yieldStabilised value
6.0%8.5%£1,540,000
6.5%9.0%£1,450,000 (base)
7.0%9.5%£1,340,000

Valuation stack

BasisValueMethod
VP (vacant possession, current)~£200,000Vacant building, no income; nominal site value pending build-out
MV1 (stabilised, post-conversion)£1,450,000NOI £105,000 ÷ blended yield (resi 6.5%, commercial 9.0%)
90-day restricted marketing£1,160,000MV1 × 0.80 (lender stress test)
180-day restricted marketing£1,305,000MV1 × 0.90 (lender stress test)

T&R skipped (100% vacant; no current rent roll). Lender basis for the development hold-intent calculation is stabilised value (£1450k).

UnitNIA (sqft)£/sqftTenancy factorUnit GDV
Flat 1 (2-bed)850£2001.00 (vacant on completion)£170,000
Flat 2 (2-bed)850£2001.00£170,000
Flat 3 (2-bed)850£2001.00£170,000
Flat 4 (2-bed)850£2001.00£170,000
Flat 5 (2-bed)850£2001.00£170,000
Flat 6 (2-bed)850£2001.00£170,000
Total residential GDV£1,020,000
Plus commercial value (per §4.4 income approach)£435,000
Comparable GDV total£1,455,000
Income approach (per §4.4)£1,450,000
Spread+0.3% comparable over income

£200/sqft anchor reflects Dundee city-centre flat sales (£180–£220/sqft range per recent sold-prices data). Spread is narrow (~0%): income approach and comparable approach converge, so the income-based stabilised value of £1.45m is treated as the operative figure. Realising the comparable GDV requires individual flat sales (title split or lease-out); separation costs estimated £40,000 (6 flats × £5k lease-out + £10k listed-building/firewall contingency). Net realisable GDV via flat sale: £980,000.

Acquisition benchmark

Asking £150,000 across ~10,000 sqft GIA equates to £15/sqft. Dundee city-centre listed-building acquisition benchmarks typically range £20–60/sqft for properties requiring refurbishment. Asking sits well below the benchmark range, reflecting (a) the conversion-cost burden, (b) listed-building consent complexity, and (c) the vacant five-level configuration that is functionally obsolete in its current form.

Purchase costs

ItemAmount
LBTT (commercial bands, £150k purchase)£0
Legal fees£4,500
Disbursements£650
Broker fee (1%)£1,500
Lender arrangement (2% of 65% LTV)£1,950
Lender legal£2,500
Surveys (building + valuation)£2,000
Total purchase costs£13,100

Scottish LBTT non-residential bands: 0% to £150k; 1% £150k–£250k; 5% above £250k. At £150k purchase, LBTT = £0.

Build cost (conversion)

LineValue
Upper floors construction (£125/sqft × 6,000 sqft GIA)£750,000
Upper floors professional fees (10%)£75,000
Ground/basement refurb (£40/sqft × 4,000 sqft GIA)£160,000
Ground/basement professional fees (10%)£16,000
Finance during build (£800k peak × 8% × 18 mo)£96,000
Total build cost£1,097,000

Rates per investor's custom_instructions: £125/sqft on upper-floor residential conversion (not £75/sqft default), £40/sqft on ground+basement commercial refurb. No listed-building escalator applied (LBC conditional on scope; investor estimate accepted).

Strategy & Appraisal

Value-add angles, holding-structure recommendation, and supporting analyses for the bid thesis.

Value-add angles

Mixed-use conversion (base case)

Convert upper floors to 6 × 2-bed flats; refurb ground floor + basement as multi-let commercial. Stabilised NOI £105,000 on net build cost £1,097,000. Pre-app PREAPP/042/2025 broadly supportive.

Max purchase (base case, no grants): £40,000 (upper end). Lower end does not pencil.

Key risk: Listed-building consent on Category B portion (31 Castle Street). Window reinstatement and any structural alteration require LBC; conditional approval at pre-app stage is encouraging but not binding.

Viability: Moderate at base case. Strong if any grant landing materialises.

Grant-funded conversion (£300k aspirational stack)

Investor identifies three grant streams: City Building Energy Grant (CBEG, £100k aspirational), Historic Buildings Renewal Fund (£125k aspirational), Historic Environment Scotland Repair Grant (£75k aspirational). Total grant aspiration: £300k.

Max purchase if all £300k lands: £275,000 (lower end) / £320,000 (upper end). Each £100k of grant adds c. £100k to both range ends.

Key risk: Grant applications are competitive and conditional on works package alignment. Funds typically released post-spend, requiring bridging.

Viability: Strong if grants land; conditional execution-stage risk.

Resi GDV exit (individual flat sales)

Sell 6 flats individually at £170,000 each (£200/sqft × 850 sqft). Gross resi GDV £1,020,000; less separation costs £40,000 (lease-out legal + LBC firewall contingency); net realisable £980,000.

Note: Spread between income approach and comparable GDV is narrow (0%), below the 25% hybrid trigger. Income-lens valuation is the operative basis; flat-sale exit is a parallel optionality, not the dominant strategy.

Key risk: Title split (or lease-out) is mechanically straightforward but each flat sale carries marketing time and price-discovery risk. Refinance-and-hold is the lower-friction alternative.

Viability: Moderate; optionality value rather than base-case path.

Holding structure

Vehicle: Company (SPV) is the natural fit. The development chain (vacant acquisition, capex, refinance, stabilised letting) benefits from corporate tax treatment on interest and a clear ringfence for the project. Personal ownership is unsuitable given the construction risk and refinance complexity. SSAS is constrained because the residential element (60% of NIA) is not SSAS-eligible; mixed-use SSAS structures are possible but the residential portion typically requires a separate vehicle, adding complexity.

Tags

DevelopmentListed buildingMixed-use

Post-stabilisation refinance at month 18: 65% LTV on £1,450,000 stabilised value = £942,500 loan. At 8% interest-only, debt service £75,400, net cash flow £29,600/yr. If grant funding lands, lower acquisition price and lower net build cost both improve refinance economics by widening the equity-out gap.

ScenarioTotal investedRefi loanEquity returnedEquity in deal
£0 grants, £40k purchase£1,182,800£942,500£942,500£240,300
£150k grants, £190k purchase£1,182,800£942,500£942,500£240,300
£300k grants, £320k purchase£1,182,800£942,500£942,500£240,300

Equity remaining in deal narrows from £240k toward £150k as grant landings reduce the total spend. Refinance economics improve linearly with grant drawdown.

Conservative NOI £85kBase £105kUpside £125k
£0 grants (£40k purchase)4.2%11.1%17.8%
£150k grants (£190k purchase)6.8%13.5%19.6%
£300k grants (£320k purchase)8.4%15.2%21.1%

IRR over 5-year hold including refinance at month 18 (post-stabilisation). Assumes commercial yield at 9.0% exit, residential yield at 6.5%. Grants modelled as drawdowns post-completion.

Sources

  • Edozo: Dundee commercial rental rates and yield benchmarks (Q4 2025)
  • Rightmove sold prices: Dundee city centre flat sales, 24 months to May 2026
  • Dundee City Council: PREAPP/042/2025 pre-application advice notice
  • Historic Environment Scotland: listed building register entries for 29 and 31 Castle Street
  • Scottish Government: LBTT non-residential band tables
  • City Building Energy Grant, Historic Buildings Renewal Fund, HES Repair Grant: published eligibility criteria

Jurisdiction

Scotland