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September 30 2021

The Next Property Hotspots

September 30 2021

The Next Property Hotspots

Author: Sam BriggsCategory: UK Property
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As luxury property development increases in profitability, astute investors are looking to the future to identify the areas in the UK property market with the most growth potential. . 

The UK property and financial markets are on an upward trajectory with projected growth and promising projects across a number of investment spheres nationwide. From hotspot Manchester property investments in the heart of the media and digital powerhouse of the North, to developments in growing markets like Southampton, there are plenty of lucrative opportunities across the UK. Of course, the ‘pandemic effect’ has naturally thrown up some surprises as renters moved out of some city centres to other commuter hubs and suburban areas. As a result, the list contains some destinations that might be considered surprising, demonstrating the real breadth of opportunity right across the country

We’ve put together a guide to the UK’s next property hotspots to inform and inspire your investment portfolio. Looking at metrics including the number of local start-ups, employment rate, average apartment value, gross value added (GVA), property value growth and more, we’ve compiled a top 20 list that includes established investment locations as well as some hidden gems. 

The UK’s Top 10 Property Hotspots





The Top Five

Southampton

Topping the table, Southampton is a burgeoning hotspot for property investors. The city claimed top spot in our ranking for GVA, second place for business start-ups and took third place for both employment growth and number of businesses per capita. Southampton was also third in our 2025 forecast for the percentage of private rental dwellings, showing huge potential for investors in the coming years. 

Clearly a city with promising economic prospects and productivity, Southampton also has a huge international student population and high demand for luxury university accommodation. One in five Southampton residents are students, and the incredible success of rental properties Vita Student Richmond House and Vita Student Portswood (completed in 2014 and 2018 respectively) demonstrates the high potential ROI for rental properties in the city. What’s more, projections show that private rental dwellings will take up over 27% of property in the city by 2025, strengthening the case for Southampton to take its place as a top investment location.

Manchester

A perennial favourite for astute investors and a close second in the ranking, Manchester always presents opportunities for prosperous investment. The city boasts a desirable location for commuters in the North West, a growing status as the economic powerhouse of the north, and a top two ranking for business stock (80 FTSE 100 companies are already present in Manchester). 

Manchester’s evolution presents a huge opportunity for residential investors; the city took top spot in the 2025 rental dwellings projection, moving up from third place as of 2019. Manchester is set to outpace both Outer London (#1 in 2019) and Birmingham (2) over the next four years, demonstrating its exceptionally strong prospects for investors. 

Of course, Manchester has been a hot commodity in rental demand for several years now. For example, The Blade, Manchester development reached the 75% sold milestone in under 10 months. Similarly, all 100 apartments at Victoria Residence, Crown Street, part of Select Property Group’s investment portfolio, were rented in the first three months following completion. Now coming up for tenancy renewal, rental yield has grown by an incredible 10% in a year, showing the strength of the Manchester market and laying down a marker for the years to come, particularly as businesses return to city centre working capacity post-pandemic. Indeed, occupancy rates at the Affinity Living Riverside development reached 92% after just seven months of letting activity in 2020 – showing that despite the global disruption of the pandemic, Manchester’s rental market continues to prosper.

Outer London

A perpetual hub of commercial growth and expansion, the capital and surrounding areas benefit from huge population growth, consistently high property values and excellent business prospects – the region boasts the top spot in our ranking for both business start-ups and business stock. Rightmove recently found that 53% of renters in Inner London had enquired about moving out of the central area, perhaps suggesting a burgeoning peak of interest for properties just outside the capital’s central zones and further afield. 

There are other considerations to make when looking at any London property, however – although rental properties offer a great return, initial purchase price is vastly higher than in other areas, which can offer a significant challenge to potential investors. Higher property prices in the capital have meant astute investors are frequently looking elsewhere, particularly as cities like Manchester grow in terms of business – with over 80 FTSE 100 companies now based in the North West.

Birmingham

Birmingham, the UK’s ‘second city’,  remains a strong prospect for investors. The Midlands powerhouse has a consistently strong projected population growth, making it a reliable investment site, particularly when coupled with a strong level of start-up businesses and an upturning property market (ranked fourth in our study for apartment value growth over the past year). 

Birmingham has the largest city Gross Domestic Product (GDP) outside London and a huge demand for property – it’s estimated that the city requires 89,000 new homes to meet demand for the period 2011-2031, and local lettings firm Barrow & Forrester reported a 25.2% uplift in rental demand for the city. 

Portsmouth

Rounding out the top five, Portsmouth performs well across each of the ranking categories, landing in the top five for projected rental dwellings. The city is also in the top 10 for business stock and business start-ups, suggesting a strong economic and employment potential over the coming years. A prime location on the London commuter belt makes Portsmouth an attractive option for renters and investors alike – combining easy transport access to the capital with a coastal lifestyle and quality of life. 

A global hub for aerospace, defence, maritime and engineering industries, Portsmouth’s strong rental culture and attractive rental yield prospects makes it a strong choice for investment in South England. 

Analysing Property Hotspots

The overall top 20 ranking contains many of the UK’s largest (both in terms of population and GDP) cities – including Birmingham, London, Manchester, Liverpool, Sheffield and Newcastle). The dominance of metropolitan areas is largely unsurprising, considering over 46.7 million (83%) of the UK’s population lives in urban areas. 

The list also features some smaller cities, which earn their spots thanks to promising rates of GVA and other metrics. Coventry features in the top ten thanks to notable growth; the Midlands location has been named the UK’s fastest growing city and, significantly for luxury property developers, boasts one of the country’s fastest growing higher education institutions in Coventry University. 

Bradford leads from an apartment value change point of view, with a 14.02% increase in value over the last 12 months, while Stoke leads the table in terms of rental yield, boasting an average of 7.22% according to our study. While these figures are impressive, it should be noted that certain factors – like a smaller local economy than bigger cities (with fewer business start-ups) and a ranking of 19 and 20 respectively for projected rental dwellings – make these smaller locations a less certain prospect than hotspots higher on the list. 

Rental yield and population growth factors are worth strongly considering when evaluating an investment location, though the strength of the local economy, business growth, employment opportunities and rental demographics are vital considerations and can offer crucial context around a city’s potential for development.

We also examined search volume data around each of the locations on the list to gauge demand. Of the places surveyed, London pulled in the highest number of online searches per month for rental properties (5,400), followed by Liverpool (3,600) and Sheffield (2,900). 

Regionally, Yorkshire & the Humber comes out on top with five entries on the list, followed by the West Midlands and South East England which have four apiece. The list might serve to calm the ever contentious North/South divide debate, as England’s northern and southern regions have eight property hotspots each.

That our top five is made up of some of the UK’s larger cities suggests that prospective renters are seeking convenience and a variety of amenities close by. In fact, a study by Santander found that homebuyers would be willing to spend a premium to be closer to gyms, shops and public transport; although this report concerned homebuyers, it’s safe to assume that renters are also looking for similar amenities in their local area. 

With a concentration of universities and digital businesses around the bigger metro centres across the country, these larger cities continue to remain a safe bet for investors looking to enhance and expand their portfolios.

To be on the list to hear about Select Property’s next investment opportunities to build your portfolio, get in touch with our team.

Methodology

Select Property Group compiled the data included in this report from the following sources: 

Irwin Mitchell UK Powerhouse report

Zoopla

Home.co.uk

Centre For Cities

VInsights

Semrush

ONS

Current Investment Opportunities

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Manchester's fastest-selling new development - 90% sold in 12 months

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