2016 Top UK Investment Hotspots: the Ones to Watch

by Jonathan Stephens, Managing Director of Surrenden Invest, a London-based property consultancy specialising in high yielding buy-to-let investments:

Birmingham

Second only to London in terms of population, with over 1.1 million residents today, Birmingham makes for the ideal buy-to-let location. It is a city that is on the up, with growing numbers of young people choosing to relocate to the city for its financial, cultural and leisure opportunities and recent employment statistics reflect this. Overall employment figures grew by 2.1% in the year from 2013 to 2014, according to the Birmingham Economic Update from the City Council, showing that private sector employment expanded by 5.7%, making the city the top provider of private sector jobs.

Not only this but Birmingham’s City Centre Masterplan, that takes the city up to the year of 2030 and encompasses a development budget of £10 billion, is set to expand the size of the centre by a quarter, incorporating 50,000 newly created jobs and 5,000 new homes. The Masterplan is also improving Birmingham’s infrastructure, with a £600 million redevelopment of New Street Station to support the doubled rail passenger numbers over the last decade. The planned HS2 project, set to have a huge impact on investment prospects in the north, will also extend to Birmingham come 2026, linking the Midlands hub with London. With independent research revealing that the project could create 26,000 new jobs in Birmingham / Solihull this could equate to a £4 billion increase in economic output each year.

This economic and infrastructural uplift for Birmingham has led to a housing shortfall of almost 38,000 properties, meaning that it is a prime location for buy-to-let investment. As such, England’s second city is undergoing a process of transformation and elevation to the next level. Therefore, for investors with a keen nose for future success, Birmingham is definitely the place to be.

London

According to the last Census, 50.4% of households in London are renting and amidst the chronic housing shortage and growing population this means that opportunities for buy-to-let are ample. This, combined with the shortfall in average wages compared to growing house prices (a disparity of some £110,000 for an average first-time buyer in the city, according to Go Compare), has resulted in a huge demand for rental properties and in fact a growing shift towards London as a population of renters rather than home owners.

According to Land Registry figures at the close of 2015, the average property price in the capital stood at £514,097 but there are locations within London with a far lower entry point, meaning that those who look strategically can still enjoy impressive capital growth as prices rise, as well as rental returns. Knight Frank, for example, is predicting central London house price cumulative growth of 20.5% in the period up to 2020. This will be trumped further still by prices on the city’s fringes and commuter belt, where 23.4% growth is predicted.

The prestige of being the owner of a London property is also an unavoidable key reason as to why the capital is a hugely desirable location of choice for property investors today. The world’s most visited city, according to the MasterCard Global Destinations Cities Index that revealed London was to host 18.82 million visitors in 2015, there is certainly credence to being a London property owner. All these reputational aspects combined, along with the still untapped pockets of potential in the market, mean that it is set to remain a popular choice for 2016 and beyond.

Manchester

Manchester is becoming a truly global city. Having been ranked in 2014 as a beta world city by The Globalization and World Cities Research Network, placing it second only to London, Manchester is taking a firm stance on the world stage.

At the heart of the government’s ‘Northern Powerhouse’ policy, focusing investment and expansion on the north in order to redress the north/south divide, Manchester is already seeing the positive effects of this focus. A central beneficiary of the HS2 which will cut Manchester to London journey time by an hour, the city is also experiencing immediate improvements in its transport network, cultural and sporting sectors and city centre regeneration, all supported by the impressive amounts of Foreign Direct Investment (FDI) pouring into the city.

With a very strong economy, Manchester is currently witnessing a hugely significant expansion of its population, having added almost 50 new residents a day during 2013 to 2014, according to the government, growth outpacing overall UK growth significantly. And this is not set to be the end of such growth. In fact, there has been a forecast of 20% population growth given for the period up to 2025, great growth that will have an unprecedented impact on prospects for property investment. It is not surprising therefore that Manchester was named by LendInvest/Zoopla as one of the UK’s top five areas for buy-to-let according to yield for 2015. And this looks only set to continue, full-throttle, this year and for the future.

Liverpool

The ancient city of Liverpool today provides the perfect blend of old and new, tradition and modernity, the ideal mix of leisure, culture and economy. The thriving metropolis heavily incorporates service sector industries into its economic universe, with banking, public administration, finance and insurance workers making the city home. One of the most resilient economies in the country, Liverpool’s is bristling with an air of entrepreneurial spirit, with Santander amongst many other companies to have made the city their very first business incubator hub.

Alongside this, much regeneration is taking place, including the £35 million Lime Street project and the proposed deep-water port. Tourism is also a huge factor in the regional economy, with Liverpool welcoming 54 million visitors each year. Supporting over 49,000 jobs and generating £3.8 billion, this makes a huge contribution to the national economic coffers too.

The UK’s ninth largest city in terms of population, this is expanding at a rapid pace, with an increasingly youthful demographic emerging as increasing amounts of young talent descends on Liverpool. This, in-turn, is altering the local property market, with a flourishing rental market becoming commonplace. Buy-to-let is therefore big business in Liverpool, presenting very many opportunities for those looking to purchase. City centre locations are key, new build properties are proving hugely popular with the young entrepreneurs of today, and the interest is steady and sustained looking forwards. LendInvest’s Buy-to-Let Index has revealed the city is the UK’s second best buy-to-let location and Zoopla has shown that property prices have risen by 3.16% in the past year alone. All in all, the future for Liverpool is very bright indeed.

For more information, visit www.surrendeninvest.com or contact Surrenden Invest on 0203 3726 499.