Preston stands alongside better-known cities such as Manchester, Liverpool and Birmingham as one of the country’s most rewarding buy to let investment markets. To explain why, we have produced a downloadable guide that considers:
Download the full report Property Investment in Preston – A Guide by completing the form below:
There is no great secret to why Preston is such an attractive property investment destination. Simply put, the city meets all the most important investment criteria.
In 2019, the Centre for Cities published its annual Cities Outlook report, which listed Preston in its top 3 best-performing cities for employment. It recorded that Preston was “the only city outside the south of England to feature in the top 10.”
Preston’s £7.4 billion economy has been making headlines on the strength of its exceptional recovery. This is manifesting itself in a host of multimillion-pound regeneration projects.
The City Deal agreed in 2013 has been prompting rapid regeneration. Local planners have set themselves a target of creating 20,000 new jobs and boosting the local economy by £1 billion before the end of the decade.
As a major stop on the West Coast Mainline, Preston is also well placed to benefit from improved HS2 connections. Economists suggest that if the city is able to capitalise on the associated opportunities, HS2 could prompt £3.5bn of GVA growth, creating 11,000 extra jobs by 2050.
These and other schemes make Preston an excellent destination for property investors. Rising employment should draw in more residents, boosting rental demand, and business growth should put more money in tenants’ pockets, thereby helping to sustain healthy rental returns.
Inward investment has been one of the most obvious signs of Preston’s continuing economic success. Over £100 million of urban regeneration projects are currently in progress, with numerous others scheduled to come online shortly. Some of the most important new and recent developments include:
The Stoneygate Masterplan
A 15-year regeneration scheme that will improve connectivity between four city districts.
The Winckley Square Heritage Initiative
Winckley Square is a city park that has benefited from a £1.1 million refurbishment. It has also spurred new commercial and residential developments in adjoining streets.
The Market Quarter
Preston’s old indoor market was recently demolished to make way for a new £50 million leisure and retail development. This follows a £3 million renovation of Preston’s Victorian-era Covered Market.
Bus Station Square Project
Preston’s iconic bus station has seen an £11.4 million refurbishment. The award-winning scheme coincides with the creation of a large public square with new paving, lighting and street furniture.
Transport Improvements
In March 2020, Lancashire County Council secured £40 million from the Transforming Cities Fund to help improve public transport and cycling infrastructure. The award follows over £70 million of funds already ringfenced for highway improvements.
New Enterprise Zones
A £20 million research facility will soon be taking shape at the Samlesbury Aerospace Enterprise Zone. Home to a large BAE Systems facility, Samlesbury is the focus of a massive UK supply chain employing over 13,000 workers. Another Enterprise Zone is located at nearby Warton, which is home to another BAE Systems facility. The Warton Aviation Enterprise Zone boasts a £2.3 million Training and Simulation Integration Facility, which is part of a larger £10 million investment by BAE Systems.
These new Enterprise Zones are projected to create up to 6,000 skilled jobs, and up to 7,000 more in local supply chains specialising in aerospace and defence.
University of Central Lancashire Masterplan
Over just five years, UCLan is committing around £200 million of funding to new projects that will revitalise key parts of the city. Early progress includes a newly created public plaza, which will be dominated by a new Student Centre. The combined scheme is valued at £57 million. Additionally, the masterplan has seen the creation of the £35 million Engineering Innovation Centre (EIC). This state-of-the-art teaching and research facility will foster links between the university and local businesses.
Since 2018, Preston has seen a pronounced surge in business growth. Some of this has been on the part of well-known organisations such as BAE Systems, Baxi, Booths and EDF, but much more has arisen from grass roots level. This success is at least partly due to the public sector’s policy of local procurement. By prioritising local suppliers, the City and County Councils moved hundreds of millions into the local economy, resulting in steady growth in business numbers and employment.
Unlike many cities, Preston is seeing growth across a broad spread of sectors rather than just a few key industries. BAE Systems is certainly supporting job growth in aerospace, defence and related areas, and nuclear fuel production is another important local industry.
Other major employers include food distributor James Hall & Co.; the food packaging business Huntapac; Eric Wright Construction; customer contact specialists HGS; and the insurance company Homeserve, which has its claims management centre in Preston.
More generally, Preston is witnessing strengthening performances in industries including:
Tourism in Preston is worth an estimated £330 million per annum. In 2018, the city attracted approximately 7 million visitors but improvements to transport infrastructure, retail facilities and attractions such as the Harris Art Gallery & Museum should see numbers rising further.
Preston is a well-established stop on the West Coast mainline. Its railway station has recently benefited from a £1.5 million investment by Virgin Rail, and as a result of the electrification of the Preston-Manchester line, journey times have been greatly reduced. However, HS2 is likely to have the biggest long-term effects. By 2027, journey times to London should be reduced from 2 hours 8 minutes to just 78 minutes, and the journey to Birmingham will take only 44 minutes. On its website, HS2 states that the new scheme “could mean 75,000 extra visitors a year (for Preston), adding £3.3 million to the city’s economy.”
Preston has never been an over-priced property market. Prices today are well below national norms, so investors can pick up some excellent rental properties for a very affordable price.
According to Zoopla, the average home in Preston cost £192,119 in February 2020, compared against a UK average of £319,967. This is obviously good news for investors. So too is the widespread expectation that property prices will rise fastest in the North West in the coming years. Savills expects to see prices in the region rise by around 24% over the next 5 years, and Preston is better placed than most to achieve that.
Download the full report here: Property Investment in Preston – A Guide
Demand for rentals in Preston is very strong. Tens of thousands of students play a part in that, of course, but so too do a rising population and growing employment rates. By some accounts, rental demand rose by 7% over the course of 2019 and the longer-term outlook is excellent.
For buy to let investors, the signs are very promising. According to a March 2020 PropertyData report, average gross yields in the central PR1 postcode have been running at 6.6%. Higher yields can be achieved on certain well-chosen properties, particularly off-plan schemes, which might also be supported with rental guarantees.
The student rental market is big business in Preston. Yields can be rewarding and the market produces very dependable demand. However, a good deal of new construction has taken place in recent years, creating modern, purpose-built student accommodation (PBSA). Investors who are new to the market might be well advised to opt for higher quality rental properties that are conveniently located close to the city centre.
Considering all the investment taking place in Preston, coupled with its strong economy, there is every reason to expect the rental market to produce excellent returns in the months and years to come. Preston has delivered very solid yields over recent years and, as more young professionals settle in this fast-regenerating city, those returns are only likely to improve.
Nationally, there is confidence that prices will rise steadily over the first half of this decade at least. However, there will be considerable variation between regions; some will gain and some will lose. Fortunately, for Preston, all the signs are that it is going to be one of the big success stories of the 2020s, and many property investors are already seeking to benefit from that.
For more information, please download our guide: Property Investment in Preston – A Guide. by completing the form below:
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