According to the Halifax House Price Index, the average house price in the UK has risen by 241% over the past two decades, with London recording a stunning growth of close to 500%. In contrast, the FTSE100 over the same time period has returned a cumulative 223%, with considerably more volatility. With new tax legislation being introduced and the uncertainty surrounding a potential Brexit, investors may be looking to diversify their portfolio to other property hotspots outside London. In this case, investors need to be focused on rental income and long-term capital growth potential; factors which are closely aligned with the underlying socio-economic dynamics of a local area. There are four key cities whose economic, social and infrastructural improvements offer the necessary catalysts to secure substantial long-term residential investments for investors.
Birmingham’s regeneration has made it stand out from other UK cities. This has ranged from the £600m upgrade to Birmingham New Street station, to John Lewis opening on of its largest stores outside London in the new Grand Central shopping precinct, the HS2 project, a £150m leisure scheme opening this spring with Resorts World Birmingham. Work has also started on a mixed-use development, Paradise Circus in January, which is a scheme covering 17 acres between Centenary and Chamberlain Squares.
Add to this that Birmingham has 33,000 businesses – the largest concentration outside London – and a growing population of young people, that makes it the youngest city in Europe, with under-25s comprising 40% of its population.
These fundamental features fuelling the city’s regeneration perfectly position the city as a positive site for investment for the foreseeable future.
With a buoyant rental market and strong yearly increases in property prices driven by population levels that could rise by as much as 80,000 people in the coming fifteen years, Manchester offers a wealth of property investment opportunities. Meeting the demands of a surging population will require an estimated £5 billion of investment over the next decade. Escalating property prices has heightened the pressure on the city’s highly sought after rental properties, as demand outstrips supply at all price points.
Education continues to be the number one force influencing Manchester’s rental market. Three top-quality universities attract over 100,000 students to the city each year, with an increasing number deciding to remain in Manchester after completing their studies. The
boost of young affluent professionals in Manchester hikes up the demand for high-quality, purpose build accommodation.
Manchester’s appeal for property investors is reinforced by Manchester economy, which is now considered to be the biggest UK economy outside the capital. The city has more than 2,000 overseas businesses providing a hub for a plethora of international investments. As more blue chip and financial companies continue to move into the area, Manchester’s reputation as a key player in national and international business is significantly bolstered. Lastly, with a significant proportion of well-skilled, highly-paid jobs available, Manchester has been able to successfully draw in significant crowds of young professionals that shore up the city’s attraction to property investors.
Reading is the capital of Thames Valley Berkshire, the most advanced sub-regional knowledge economy in Great Britain, outside inner London. Its location, connectivity, skilled work force, research University and vibrant town centre have attracted both global companies such as Microsoft and Oracle Corporation to base themselves there, as well as a strong cadre of SMEs, who see a Reading location as integral to growth.
Of great importance to property investors looking at Reading is the impending Crossrail station. Combined with broader regeneration plans and residential development, Reading has greatly enhanced its appeal and prospects to property investors looking to capitalise on the opportunities presented by London’s outer commuter belt. Property investors are set to reap the benefits of professionals saying goodbye to London in favour of more affordable commuter towns.
Southampton is a city of opportunity underpinned by a city centre undergoing important transformation. Southampton’s Master Plan, launched in 2012, has instilled businesses and investors with confidence that the city’s burgeoning ambition is matched by a clear vision and ability to deliver. Just one look at the skyline shows the beginnings of an impressive chance, with towering construction cranes and a tangible sense that change is happening.
But, it’s not all about buildings and development. Southampton is widely recognised as the business hub along the UK’s southern coast having been cited as the second best city in England for Good Growth and named the Transport City of the Year. Southampton’s international status is being amplified by an increasingly popular airport with 1.8m passengers passing through in 2014 and an offering of 40 European destinations with links for onward worldwide journeys.
As a city full of ideas, where ground-breaking research and a fresh approach to implementing ideas in the workplace are helping Southampton to position itself as a leading city of innovation when it comes to life sciences and cutting edge research. Property investors benefit from the city’s strong rental sector propelled by a large student population and demand from young professionals and families.
By Tal Orly, Founder and CEO of Cogress