Britain’s booming capital has long been the focal point for UK property investment, benefiting from a steady demand for housing and consistently rising property prices. But is London still the best city for investment? In fact, attention is progressively turning to property investment outside of London, with regional cities such as Manchester and Birmingham at the forefront.
There are several reasons why buyers from around the globe are increasingly investing not in London, but in thriving British cities in the Midlands and the North.
With more affordable entry points but rapidly growing economies, there are long-term growth prospects. The emerging urban landscapes of these key cities also offer a greater number of off-plan developments for potential investors – especially in prime city centre locations, where demand is consistently high.
According to Savills most recent residential forecast for 2025-29 London is expected to be the worst performing region in the UK over the next five years, with a forecasted growth of 17.1%. This is a significant performance drop compared to the North West, the strongest performing region, which has a forecasted growth of 30% over the next five years.
This article explores the best places to buy property outside of London and the top five factors driving investors to look outside of the capital. Read on to discover what makes cities like Manchester and Birmingham top choices for buyers seeking to maximise their investments.
1. Accelerated capital growth and rental yields
While property prices are rising nationwide, they’re growing at a far slower rate in London vs the North and the Midlands, creating excellent mid- to long-term return on investment potential in cities outside of the capital.
The rising demand for accommodation in these areas is not only driving up property prices – it’s also creating opportunities for impressive rental yields. Cities North of London generally have a lower cost of living, while still boasting great transport links to other major cities, abundant amenities and thriving job markets.
According to the most recent JLL Big Six Residential Report, Birmingham is currently leading the pack with the highest average annual rental growth at an astounding 12.5%, while Manchester is close behind at 9.4%. Return on investment is particularly high for off-plan developments, of which there are plenty on offer in these fast-growing cities, with multiple opportunities available at Select Property.
2. New city centre developments
Another reason buyers are drawn to property investment outside of London is the growing number of industry-leading buy-to-let opportunities in prime city centre locations.
An example of this is Select Property’s latest development: One Port Street. This brand-new premium residential development not only boasts first-class amenities and cutting edge designs, but it’s also situated in the iconic Northern Quarter – Manchester’s world renowned creative centre. Once ‘up and coming’, the Northern Quarter is officially ‘here and now’, and is an area with consistently high demand – and correspondingly higher rental prices.
This recent rush of residential skyscraper construction has given Manchester the tallest skyline outside of London – and it is now a well established and popular city. But it’s not just Manchester, the UK’s Second City is also an appealing prospect, with a brand new, luxury development under construction currently: Edition Birmingham. The first of its kind, Edition Birmingham boasts 14,000 sq ft of amenity, offering a luxury unmatched living experience in Birmingham. With a predicted yield of 6%, Birmingham is a secure investment hotspot.
Rapid growth of this kind, with the promising ratio of risk to reward these developments offer, simply can’t be found in London.
3. Major regeneration projects
The UK property investment landscape is being dramatically reshaped by ambitious regeneration projects. Many large-scale initiatives are breathing new life into previously-overlooked UK cities, making the most of these regions’ industrial heritage and attracting increasing numbers of residents and investors.
Sites in prime locations, once previously neglected, are being reshaped and rebuilt into vibrant new communities with abundant residential, commercial and public spaces. City centres are also being transformed, with disused industrial spaces being reshaped into fantastic new amenities – creating a uniquely appealing blend that appeals to many young renters.
Regeneration projects in Birmingham, and Manchester, highlight why investing not in London, but in the Midlands and the North, appeals so much to forward-thinking buyers. Birmingham’s Big City Plan stands out as a prime example, as does Manchester’s Northern Gateway, an ambitious scheme aiming to deliver 15,000 new homes over the next 15-20 years.
4. Better price per square foot
Property prices in the UK have always been uneven, with higher prices typically concentrated in the South East and London vs the North and the Midlands. Price per square foot in London hit £1,428 in 2023, but the more important statistic is the price from the year before: just a few pounds less at £1,425. This represents a large year-on-year drop in real terms during a year of high inflation.
Investors can often find far better value for money outside of the capital – for example, prices reach around £400 per sq ft in Manchester and £470 in Birmingham. A cheaper price per square foot offers a lower capital entry point, opening up options for buyers new to the property market.
5. Strong student retention driving demand
The UK’s prime university cities, such as Birmingham and Manchester consistently appeal to young adults internationally. Today, these universities are bigger than ever, with student populations to match. Birmingham, for example, is home to around 100,000 students, and under-25s make up 40% of the city’s overall population. In cities such as these, demand for high-quality, well-appointed city centre flats is higher than supply, which is a key reason why they’re some of the best places to buy property outside of London. Young professionals are eager to acquire a luxury apartment, and enjoy the lifestyle the city has to offer.
The high student retention rates seen in key cities outside London also contribute to their investment appeal. After graduation, an enormous 50% of students in Manchester and 49% in Birmingham choose to continue living and working in the area, attracted by the nightlife, amenities and thriving job markets. With relatively affordable living and housing costs compared to London, it’s easy for young professionals to set down roots – great news for property investors.
Is London the best city for investment in the UK?
These factors all add up to a perhaps surprising conclusion: London is not necessarily the most lucrative city for rental yields and capital growth in the UK. Compared to fast-growing cities such as Birmingham and Manchester, the capital now ranks among the worst regions for rental yields and return on investment. With accelerated capital growth, property price and rental growth forecasts – as well as a greater selection of promising central developments with a lower price per square foot – cities in the Midlands and the North undoubtedly offer more profitable returns for investors around the globe.
Ready to explore lucrative property investment opportunities beyond London? At Select Property, we specialise in matching buyers with exciting developments across the UK, and pride ourselves on delivering the strongest returns for global investors. With exciting developments in both Manchester and Birmingham, we have a range of opportunities to suit personal preferences. Contact us today to discover how you can capitalise on the exciting growth potential in prime UK cities outside London.