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Here’s what to look out for when choosing the best location for UK property investment – including a look at three top-performing cities.
It’s long been renowned as one of the world’s most trusted assets.
And UK property investment has never been as important as it has in 2020. With its ability to deliver a regular income and long-term growth – even during times of wider uncertainty – it’s no surprise that it consistently remains one of the most in-demand global assets.
So, as more people look to invest for the first-time, or add more properties to their portfolio, here’s one of the most important questions – where are the best places to invest in UK property?
There are a number of factors that help make a city a good proposition for property investment.
Those cities that have strong price growth and the best rental yields in the UK all have several things in common:
From new infrastructure projects, to businesses opening new offices, a thriving economy should be one of the first things you look for when choosing a city to buy UK property.
Economic growth creates more jobs – which means more people moving to live in the city. Choosing a city with positive population growth projections will also ensure you don’t buy in a location that’s likely to become oversupplied of property.
The best cities for investment have a tangible undersupply of property versus demand from potential buyers and tenants. This ensures you can achieve premium rents and high asking prices.
Having prestigious universities and institutions nearby will not only sustain population growth, but a high graduate retention rate of students remaining after their studies have finished will also have long-term economic benefits for the city.
Easy access to international airports and major rail and road networks will not only increase a city’s attractiveness as a place to live, but it will also ensure high leisure and business tourism levels, too.
It’s one of the most in-demand cities in Europe. Manchester investment property continues to attract huge levels of interest from global buyers.
The city’s population has grown from just 3,000 in 2001 to over 60,000 in 2020. Over 2,000 foreign-owned companies have a base in Greater Manchester, while the city’s economy is growing at a faster rate than the UK collectively.
All of this growth is having a sustained impact on Manchester’s property market. JLL forecasts show that Manchester city centre needs 2,500 new-build residential properties each year just to meet current demand, yet over the last 10 years 1,150 new properties have been delivered each year.
In the rental sector, data from Zoopla in Q2 2020 highlighted a 5:1 demand to supply ratio for rental homes in Manchester.
By 2024, property in north-west England is forecast to have the strongest price growth of any UK region. Manchester, as the North West’s largest city, will be at the heart of this sustained period of growth for investors.
Purpose-built student accommodation (PBSA) is one of the most resilient property sectors in Europe. And in Cardiff, investors are enjoying some of the highest yields and long-term returns from student property in the UK.
Home to three universities, including the prestigious Cardiff University, the city has a rising student population. It’s also increasingly cosmopolitan; almost a quarter of all students at Cardiff University are from overseas.
PBSA – modern, luxury student developments that are increasingly becoming the preferred choice for university students – is favoured by international students. In Cardiff, there’s been a 137% increase in PBSA demand since 2010/11, yet there’s a 2.5:1 student to PBSA supply ratio in the city.
Knight Frank classes Cardiff as an “emerging market” – a city that’s “characterised by good universities but low PBSA stock availability”. As a result, annual student rents in Cardiff grew 8.5% in 2017/18; the steepest increase in the UK.
Cardiff investment property – particularly in the PBSA sector – is becoming one of the fastest-growing choices in the UK for global investors.
Like Manchester, Birmingham investment property is a popular choice for investors looking to buy outside of London and into a high-performing regional city.
Birmingham city centre’s population has recorded huge growth over the last two decades. Centre for Cities research states that Birmingham saw a 163% rise in the number of people living in the city between 2002 and 2015.
With its location at the heart of the country, coupled with excellent domestic and international transport links, many global brands and businesses are building a presence in Birmingham. The city’s economy has expanded faster than the wider West Midlands regional economy during the last decade, and is forecast to continued to do so over the next 10 years, too.
Furthermore, the development of the UK’s High-Speed 2 (HS2) rail line is likely to have a significant impact on Birmingham’s continued prosperity. With the city a major hub at the heart of the new line, initial data for the project forecast a £4 billion increase in economic output per year for the West Midlands as a direct result of HS2.
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