The Right City or Area to Invest? Don't leave decisions to chance

Up until around 10 years ago, maybe a little more, it was very simple, if you were an overseas person coming to work in the UK, a graduate finishing their courses and looking for the good jobs, a high flyer looking to progress in the business world then you went to the bright lights of London.  Also, if you were a business or new company that had visions of being a player on the global, European or UK market then it was seen as very advantageous to have a London postcode – to paraphrase a famous song, although not about London, if you had made it there, then you can make it anywhere.

What does that have to do with property investment? 

With the above comes growth, and the above basically highlights how a City grows, and ultimately how an investor sees their assets grow in demand and value, the earlier you see these patterns, then the lower the price you pay and ultimately you get the best options for location – the early bird catches the worm so to speak.

When you have a City that has this demand then the following happens, an influx of people leads to demand for new property, when more people come then more business comes in, when more businesses and people come in the infrastructure improves and areas get regenerated to cater for the demand and then more people follow – and this repeats.  The City grows, new areas go from “inner city” to cosmopolitan and chic and the outer suburbs become popular as they perform as perfect for those that cannot afford the inner city.  For an investor, their property prices increase, their rents increase and they have equity to enable them to reinvest.

At some point the above comes to a slow down, it gets harder to find the new areas and the new deals – if you look at this heatmap https://www.primelocation.com/heatmaps/ you will notice that London and the suburbs are red, and the red highlights the areas where this limit has been reached.

This coupled with a lack of potential, and with the fact that the world was getting smaller when it came to how we integrated and did our business, things started to change, commercial rents were expensive, the brain resource was depleting and the technology and social communication was done online, and the concept of The Northern Powerhouse was in the pipeline.

The 3 “second” biggest cities, Birmingham, Manchester and Leeds had already been growing in reputation and creating their own scenes, socially, economically and entrepreneurial.  A new breed of young, trendy and forward thinking businesses were seeing potential in taking advantage of lower rents, a good creative brain source and recognised new areas for new potential by using online as a business and not relying on a postcode to do business.

These cities were becoming the Silicon Valleys of the UK, whilst London was still the old fashioned business and financial centre, Manchester, Birmingham and Leeds were starting to become homes for the new breed of business.

Of those 3 cities, it was Manchester where the penny really dropped and it started dropping around 6-7 years ago, companies like Google, Amazon, Freshfieds, LLP and Microsoft opened offices in Manchester – and then you had the ground-breaking move of the BBC to Media city UK in Salford which was one of the biggest commitments and signals the confidence in the Northern promise.

The incredible transformation of MediaCityUK has turned it into an international hub for innovation, technology, and creativity. ITV, Ericcson, dock10, and Kellogg’s, along with over 250 other media and digital businesses have chosen the new state of the art site as a base, boosting Manchester’s reputation for new and innovative businesses, Talk Talk is another major corporation that relocated to Salford from London along with its staff.

If you take the formula for the growth of London, then you then put those same factors into the equation and you have the last 6 or 7 years growth Manchester has experienced,  now we have two cities that have shown the same patterns and outcomes.

However and from my personal opinion, I would say that we have now reached the cut off for “value” in Manchester – new projects are on the high side and I would say it is above the point where it becomes investor friendly, not to say its not a good place to have an interest, but I feel there are other Cities that will follow the same patterns now that the standard has been set, and businesses know that students aren’t leaving for London anymore, the overseas brain talent is going to London, they are venturing further afield.  For more information on Manchester, please visit our Property Investment in Manchester location page.

They can get the same role, in the same company in various cities in the UK, have a great time and have more disposable income – so instead of being 40 and sharing in London you have your own 2 bed apartment in the City Centre.

Then it comes to the question, and that is "where is next?" Where can I find these places that have shown that growth still works and by getting in early can work for me and I can get a good price with the confidence that in 5 years I have bought in a prime location and at a good price? Where are the places that have the same infrastructure, regeneration and population growth?

Another important factor in growth is having the places to grow, the areas of London and Manchester that grew the quickest were the industrial areas that were filled with car parks, warehouses unused, historically industrial and dilapidated – these are the easiest places to convert, which makes sense when you think about it.  A lot of these areas were on the fringe of the City Centre as they supplied the historical Centre, and the fact is that if the postcode boundaries changed now, then the historical ones would be defunct.

Here are 3 cities and in particular AREAS and POSTCODES that we see have all the factors above to see this happen – both for regeneration. Population growth and new economies with major regeneration projects in the pipeline.


Birmingham – B12 - Digbeth

Over the last 5 years the population growth of Birmingham has increased by over 3% per year, which would mean that by 2025 the population increase would be over 200,000

Regeneration projects – HS2, Smithfield Regeneration and new transport infrastructure

Digbeth – Industrial area on the fringe of the current City Centre that is home to The Custard Factory which is the hip location and the area is primed for total development.

2 bed price £275k

Relevant links: https://channels.theinnovationenterprise.com/articles/is-birmingham-the-new-london-in-the-uk

https://www.ukconstructionmedia.co.uk/news/construction-news/500m-birmingham-smithfield-regeneration-plan-launched/

More information on property investing in Birmingham can be found on our Property Investment in Birmingham location page 


Leeds – L10 – Hunslet

Over the last 5 years Leeds has seen a rising increase year on year and that continues to increase

Regeneration projects – Southbank regeneration, HS2, need to double the size of the City Centre, green innovation areas

Hunslet – same as Digbeth, situated on the river which is going to be regenerated to use the waterfront, industrial area that is earmarked for major growth on the City Centre edge.

2 bed property £200k

Relevant links: https://www.leeds-live.co.uk/news/leeds-news/real-excitement-six-tv-production-16038056

https://southbankleeds.co.uk/


Preston – Winckey Square – PR1

Preston is much smaller than the other 2 cities but has seen constant increases in population due to its centrality and great transport links.

Regeneration projects – Expansion of the university which is the cities 5th largest employer, Preston and Lancashire City Deal.

Winckley Square – A green park area in the middle of the City Centre, just 100 metres from the main shopping are and around 5 minute walk from the train station.

2 bed property £120k

Relevant links: https://www.winckleysquarepreston.org/

https://www.lep.co.uk/news/politics/how-much-preston-chorley-and-south-ribble-councils-are-borrowing-and-what-they-are-spending-it-2451375

More information on property investing in Preston can be found on our Property Investment in Preston location page 


Below are 4 more areas that are ones to watch for the future, personal opinion based on all the factors mentioned above


Nottingham 

Nottingham is bizarrely missing from the radar of most property investors. When you look at its central location and what it has to offer in terms of employment and leisure, its prices are just too low.

The city centre is a great place to live, and – much like Leeds – there has been minimal new construction. It also has a well-balanced economy with major employers in multiple industries, as well as having two major universities with tens of thousands of students.

The effective and extensive tram network offers opportunities outside the city centre too. Yields are strong both in and out of the centre, but price growth is likely to be strongest in the city itself.

More information on Nottingham can be found on our Property Investment in Nottingham location page


Sheffield

Sheffield is another contender for the Manchester ripple effect. Of all the cities we’ve looked at so far, it’s probably the furthest behind in the property cycle.

This means that prices are low – shockingly low, when you look at what you can buy an apartment for in the city centre. The centre itself has already improved dramatically, and there’s a lot more on the way: The Moor shopping centre alone is having £480 million spent on it, HSBC is opening new offices, and there are two luxury hotels being developed


Rochdale

With its great location, fantastic connectivity, access to a wide catchment of skilled employees and a range of business parks superbly located along the M62 corridor, there are many reasons to choose Rochdale if you’re looking to invest.

In 2012, Rochdale saw more business start-ups than ever before. While in the last five years, the area has attracted over £200m of investment and seen four million square feet of space taken up in the district.

Kingsway Business Park has been recognised as one of the UK’s most active projects, benefitting from excellent connectivity to the national motorway network. At under one hour’s drive from the cities and airports of Manchester, Leeds and Liverpool, the business park has direct access to major markets and a large, skilled workforce.

Rochdale is booming, that’s why companies such as Swedish manufacturer Camfil Farr, American-owned INX International, JD Sports and ASDA/Wincanton have selected Rochdale as a base for their business.

 

Blackpool

A £1 billion Growth & Prosperity Programme is taking place across Blackpool with major regeneration schemes in the town centre, the new Central Leisure Quarter and Blackpool Airport Enterprise Zone.

Over £570m has already been invested in the past decade to transform Blackpool and town leaders are dedicated to implementing the next phase of development with new town centre schemes that will continue to transform and revitalise Blackpool. These include a new £26m Conference and Exhibition Centre, an extension to the Hounds Hill Shopping Centre, development of Talbot Gateway Phase 2, a new tramway extension, a new train station underpass, an IMAX-style cinema complex and new restaurants and hotels including Blackpool’s first five star hotel, a Quality Corridor refurbishment project and a new museum.


For more information on where and how to invest in property to suit you and your investment needs and goals please contact our advisory team on 01244 343 355 or email sales@residential-estates.co.uk 

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