- Yields and rental growth are better in the North
- Leeds has an exceptionally strong economy
- The city region is seeing massive inward investment
- New jobs will drive further demand for rentals
- Capital appreciation is likely to be more sustainable
For some considerable time now, the traditional division of fortunes between North and South has been reversed, at least with respect to the UK property investment market. Overheated prices in central London have long made healthy yields difficult to achieve and, in recent months, average rental incomes have fallen sharply in the capital.
By contrast, the more reasonably priced properties of Northern England and Scotland have continued to deliver solid returns for investors. Yields are considerably better, rental incomes are still on the up and, because prices started from a much lower base, there is still considerable room for capital appreciation.
Of course, it is never wise to generalise about entire regions. Market conditions vary not merely between regions, cities and towns, but even between neighbourhoods. As ever, the key to making a successful investment is to take advantage of detailed local research.
In this post, we won’t be attempting to point you to towards any specific opportunities, but we would like to draw your attention to the rising fortunes of one particular city, which should now be on the radar of any serious investor.
As an investment market, Leeds is notable for having a strong and thriving economy and, more significantly, for having secured a staggering amount of inward investment. The influx of literally billions of pounds of public and private sector money is having a transformative effect on the city and on local employment. The implications for property demand, rental yields and capital appreciation are all looking extremely promising.
According to data published by the Leeds City Region Enterprise Partnership, Leeds itself makes a very compelling investment proposition. Its economy is worth £18 billion per annum, a figure that has grown by almost 40% over the course of the last ten years. Much of this activity is the result of the 25,000-plus businesses that are based in the city, which boasts the highest private-to-public jobs ratio in the country.
A modern, well-connected city, Leeds is witnessing rapid growth in many high-value industries including advanced manufacturing and the financial sector. Indeed, Leeds is now the country’s second largest financial centre after London, employing more than 14,000 people in banking and a further 46,000 in related professional services. The Local Enterprise Partnership notes that “The financial and professional services sector in the city is highly skilled and set for significant growth (50% by 2022).”
Leeds can boast a number of other exciting growth sectors – electronics, retail, call centres, digital industries and media to name just a few – but one of its most important is healthcare. The LEP describes Leeds as: “the UK’s health and innovation city, with a unique and influential health eco-system that is unrivalled globally. Four out of five NHS national offices are based here, including NHS England, the largest single health commissioner in the world.”
Leeds City Region
It is also useful to consider the city in its broader regional context because here again, it exhibits important strengths for the forward-looking investor. Crucially, it is located at the centre of the rapidly expanding Leeds City Region, which is the UK’s largest city region economy. Recent figures put the value of its economy at £60.5 billion, which in economic terms puts it comfortably ahead of the GDP of nine EU countries.
Some headline figures give a good sense of the region’s importance:
- 3 million residents
- 1.4 million workforce
- 35% of the working population educated to degree level
- 109,000 businesses
- 8 world-class universities
- The UK’s largest manufacturing base
- 127,422 employees in manufacturing
- 37,813 employees in advanced manufacturing
- Accounted for 5.6% of all foreign direct investment into the UK (2016)
- FDI has risen by 145% since 2013
- Its £6.3bn visitor economy has grown by 50% in the last decade
- Over £1 billion investment secured for skills, growth and infrastructure
- Over £5 billion of additional investment secured
Leeds City Region will also be a key player in the planning of the Northern Powerhouse strategy, and it will be a prime beneficiary of the proposed HS2 rail link.
In recent years, Leeds has benefited from some substantial investment projects. Its retail economy, for example, has been buoyed by the development of the £350 million Trinity Leeds shopping centre, which attracted over 22 million shoppers in its first year. Similar schemes have included the £60m First Direct Arena, and the £150m Victoria Gate development which is now home to major brands such as John Lewis.
The eastern line of the HS2 rail project will prompt the creation of a new state-of-the-art station in the city centre and this, in turn, is expected to stimulate further investment and employment. In addition to York Central Station, there will be new stations at White Rose Office Park, Thorpe Park and Leeds Bradford International Airport Parkway.
The region has sought to cement its position as the country’s second largest economy by developing the Leeds City Region Enterprise Zone. Launched in 2012, just two miles from the city centre, it boasts 142 hectares of prime development land. It is served by the East Leeds Link Road; a £32 million dual carriageway that connects the city centre to the M1 motorway. According to the Local Economic Partnership, the zone “is expected to deliver £550 million of additional economic output and over 9,500 new jobs to the region once it’s fully developed.”
Moreover, the Leeds City Region Enterprise Zone is just one of three such enterprise zones in the region, so expansion is being supported throughout the area. In a recent survey of senior executives from over 500 of Europe’s largest corporations, Leeds was named as one the best places in Europe for business relocation.
Leeds Bradford Airport
In April 2017, Leeds Bradford Airport published its masterplan for the next 13 years of development. Called ‘Route to 2030,’ it sets out how the airport will realise its ambition of serving an estimated 7.1 million passengers by 2030. Key elements include a new road link, the Airport Parkway railway station and a new economic hub featuring three zones: an airport village, an air innovation park and an air freight park. These zones may well be accompanied by new industrial and office space.
Jobs and Economic Growth
In light of all this frenetic economic activity, the local economic partnership has developed a Strategic Economic Plan that sets some impressive targets. It intends to deliver more than £5 billion of economic output by 2021, and to create 62,000 additional jobs.
For the property market, all the signs are therefore very good. A thriving economy means more jobs, of course, and that inevitably translates into rising demand for conveniently located accommodation. That will suit landlords offering either traditional rentals or serviced apartments. What’s more, the city’s focus on creating skilled, high value jobs implies that a significant proportion of that demand will be for high quality properties that meet the needs of higher-paying professional workers.
As for the longevity of demand, Leeds once again delivers grounds for confidence. It is seeing not just fleeting, one-off investments by relocating companies, but rather wholesale improvements to its infrastructure. With the city and the wider region repositioning themselves to become a truly modern business destination, property investors can be confident that economic growth and demand for accommodation will remain healthy and sustainable for many years to come.
With all this in mind this is one reason why our latest investment project offering for our clients is Rivermill Court
Located circa 2.5 miles from Leeds city centre, Rivermill Court provides an exceptional opportunity to acquire a contemporary unit – perfectly catered towards the city’s large student population.
· 27 Beautifully restored apartments in a converted historic mill
· A mixture of studios, mezzanines, 1 and 2 bedroom apartments
· Studio and Mezzanine apartments already completed
· 1 and 2 Beds to be completed by November this year, 2017
· A mixture of 6 and 7% NET rental yield guarantees (Depending on which apartment selected)
· Cash buyers receive a 2 year guarantee and finance buyers receive a 1 year guarantee
· Fully furnished
· 250 year lease from January 2015
· Kirkstall Riverside location
· 2.2 miles from the University of Leeds
· 0.52 miles from Headingly train station
· 65,000 students studying in Leeds, spread over 3 premier Universities
· According to the Independent, Leeds was recently named the UK’s best student City
· Studio apartments from: £89,995… One beds from £99,995… 2 bed from £149,995
For more information on Rivermill Court or any other investment projects please contact our office on +44 1244 343 355 or email email@example.com