It's difficult to examine Leeds for property investment,without also taking account of the fact that it sits at the heart of the wider Leeds City Region. This is the largest regional economy outside London, and the biggest contributor to UK GDP within the Northern Powerhouse.
To put some numbers to that, it has an economy worth £69 billion, 109,000 businesses, a population of 3 million people, and a skilled workforce some 1.4 million-strong. It's home to nine universities and Britain's densest concentration of professional services businesses outside of London. Notably, it's also achieving the highest rate of employment growth anywhere in the UK.
Small wonder, then, that the city region is one of Britain's leading recipients of foreign and direct investment and why, for the property investor, Leeds boasts a wealth of attractive destinations. In all, it encompasses 10 separate districts, which beside Leeds include: Barnsley, Bradford, Calderdale, Craven, Harrogate, Kirklees, Selby, Wakefield and York. Several of these are interesting property investment locations in their own right, but there's little doubt that Leeds itself stands as the chief attraction.
A City Success Story
In recent years, Leeds has attracted huge sums of investment and seen a great transformation of its economy and infrastructure. According to Leeds City Council, it is now Britain's fastest growing city, and its business communities are thriving. It hosts more than 32,000 VAT-registered businesses, over 6,000 SMEs, and considerably more large companies than the UK national average. Some of its major employers include Asda, First Direct, Centrica, BT, Direct Line and Yorkshire Bank - all supporting workforces of a thousand-plus.
What's more, many of these businesses - from small to large - are doing very well indeed. Taking a measure of firms that have achieved 20% or higher growth in each of the last three years, Leeds is in the national top 3, behind only London and Cambridge.
Strategically, Leeds occupies an important central position within the City Region, and within the UK more generally. It is the region's economic centre, it is well served by the motorway network and it boasts easy rail links to other economic hotspots including Glasgow, Edinburgh, Manchester, Sheffield, Birmingham and London. On top of all that, Leeds Bradford Airport is reported to be Britain's fastest growing regional airport.
Inward investment in Leeds has been a key driver of all this success in property investment.The city has seen more than £3.9 billion pumped into major regeneration schemes over the course of the last ten years, and a further £7.3 billion is either in progress or yet to be spent. Such an influx of money can only accelerate Leeds' growth within property investment and improve its fortunes, particularly given that much of that spending will inevitably percolate down through local supply chains and into local communities. The net result is likely to be rising employment, higher average disposable incomes and steadily improving standards of living.
Property Investment in Leeds
This is all very good news for those with an interest in property. More money in the hands of potential tenants usually means that more people will be looking to move into better quality housing, and they will be prepared to spend more for the locations and facilities they want. That has positive implications for both house prices and average rental values.
A burgeoning economy also tends to attract increasing numbers of workers to an area - and this is a phenomenon that Leeds is certainly witnessing. This adds to demand pressures on the housing market, the natural consequence of which is that prices should rise still further.
However, despite Leeds’ property investment appeal, properties in Leeds remain decidedly affordable. According to Zoopla, "The average price for property in Leeds stood at £221,265 in October 2019. This is a rise of 1.75% in the last three months (since July 2019) and a rise of 4.00% since 12 months ago." By contrast, the average price for the UK as a whole, again according to Zoopla's October figures, stood at £309,373, so local prices are well below the national norm.
In short, properties in Leeds tend to be inexpensive by national standards, although prices are now rising steadily. That's one good indication of a potentially sound investment, particularly if your principal concern is capital appreciation.
If your interest tends more towards rental yield then, once again, Leeds looks to be an attractive proposition for property investment. Describing Leeds as one of the UK's top performers, Totally Money notes that it is "home to four universities, including Leeds Beckett University and the University of Leeds. The latter currently ranks within the top 100 universities in the world. For the highest rental yield, look within the LS6 postcode (7.43%). This area includes Headingly, a cool suburb with good commuter links to both universities."
This reference to universities is important; the city's robust student population is another reason for Leeds’ property investment appeal. In the notes accompanying its most recent UK Buy-to-Let Yield Map, Totally Money notes: "For a buy-to-let safe bet, start looking for properties in university cities. Locations with a high student population, like Nottingham, Liverpool, Manchester, Leeds and the North East, boast some of the UK’s highest rental yields."
Earlier this year (February 2019) the Yorkshire Evening Post quoted new research by JLL, noting that: "Leeds is now rated as the UK’s top prospect for house price and rental growth... JLL believe that house prices in Leeds will grow by 17.1% by 2023 while Manchester could see a 15.9% rise and Liverpool a growth of 12.6%. Rental growth in Leeds is also forecast to rise 17.1% over the next five years compared to 16.5% in Manchester and 15.9% in Liverpool."
Looking Ahead for Property Investment in Leeds
It's easy to be seduced by the latest headlines but, from the perspective of property investors, Leeds does indeed look to have a strong and sustainable appeal.
Partly, there's the sheer amount of money it's receiving. In local economic terms, that really makes a difference. It means more jobs, more prosperity and more big businesses building SME supply chains that go on to sustain yet more jobs and economic growth. It can quickly become a virtuous circle that creates the ideal conditions for residents and property investors alike.
Partly, too, it's the nature of the new employment that's being created. Much of it is happening in forward-looking, knowledge-based industries such as digital technologies, advanced manufacturing, life sciences, and financial and professional services. These are high-growth sectors that attract professional workers, who, in turn, add weight to demand for higher quality, high-yielding rental accommodation.
Ultimately, there's simply no arguing with the facts. The city's economy is worth around £18 billion per annum, and it's grown by nearly 40% over the last decade. Add to that the billions more now in progress or ring-fenced for forthcoming infrastructure improvements and it's clear that Leeds is on an upward path.
The implications for property demand, rental yields and capital appreciation are all very promising for property investment in Leeds.Moreover, with prices rising but still relatively affordable, now is an excellent time to be thinking about all the new Leeds’ property investment opportunities now arising in the city.
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If you have questions about property investment options in Leeds or any other destination, please call one of our advisory team on 01244 343 355.