Saving hard, but you can’t quite put aside enough? Thinking of putting your money to work by investing in UK?
Here are 4 things you should know before deciding where to invest. Invest in property located in areas with
Stronger and stable economy
Rapid job growth
Vast education opportunities
This impacts the returns on your investment apart from increasing the value and ‘rentability’ of your property. Capital growth is also key to property investment. The greater the growth in property value,, the bigger the total profits.
UK has always been a haven for property investors. But, as London property prices soar higher and yields go lower, property in the cities outside London are showing greater yield potential. The Brits, too, are starting to show interest in properties outside of London. Indeed, it is now the regional cities in which you should put your money! Before you decide where to invest, take a quick a look at HSBC’s annual research on rental yield around Britain. Thank me later.
The data shows Manchester leading the pack in rental yields, as well as several other locations with profitable returns.
But if it’s only London property for you, you might find this link helpful: http://bit.ly/1J5P4co
In September 2017, it was reported that London house prices had fallen for the first time in 8 years at a record drop of 0.6%. The capital was subsequently deemed the weakest performing region in the UK for the first time since 2005.
According to recent news from Acadata, house prices in London continue to plummet, extending a slump that’s seen the average property in the capital lose almost 2 percent its value over the past year.
It seems as if the great divide has materialized in the UK property market, separating London from other thriving cities. According to Acadata, while values continue to fall in London, they are growing in other regions apart from the southeast. Property-website operator Rightmove has released fresh data that supports the claim of major regional growth, showing that average prices have climbed to a new record of 305,732 in April, despite a drop in London. The shifting power dynamic in UK’s major cities is becoming apparent, as efforts in expanding housing, jobs, resources and investment are becoming increasingly concentrated in areas outside the capital.
Javad Marandi, a British businessman with investments in commercial and residential real estate points out what is increasingly becoming obvious: “The best regions to invest in lie outside the capital – it’s no longer all about London.”
London Is Falling; So, What’s Rising?
Various lists claiming the emergence of “the next London” have penetrated the news, using undersupply and rental yields to gauge where, exactly, business in the UK property market is shifting. What investors know when it comes to such lists, is that repetition should lead them to the right places to invest their money.
Matt Stevens, Director of The Mortgage Genie, has recently shared that the buy-to-let hotspots set to offer the most competitive returns in 2018 are Manchester, Liverpool and Gateshead. Similar results were recorded in a more recent report released by JLL, which has singled out Manchester, Liverpool and Leeds as the “ones to watch” over the next five years, as it expects them to outperform other cities in the UK. The two constants found in both reports should signal to investors the immense potential in the northern UK region.
Manchester and Liverpool are serious players in the property market for their relevance as core cities for science and technological growth — this is partly credited towards the government’s push of the Northern Powerhouse.
Supporting Manchester’s title as ‘the Silicon Valley of Britain’ is a new report by Tech Nation, which has revealed that tech companies in the UK’s northern region have attracted investment at a faster rate than anywhere else in Europe over the past five years. Manchester particularly, was the key performer within the region, with tech investment growing at a whopping 668% over the 2012-17 period. This growth can be seen in the number of private equity firms in Manchester, which is 31 as of now, with a further three rumoured to be opening this year compared to the six to eight firms in the city over the previous two decades or so.
Liverpool also holds a prominent position in the upcoming digital age, with the establishment of the Knowledge Quarter, placing it on the cusp of becoming a world-class destination for science, innovation, education, technology and the creative and performing arts.
Recent news highlights an ecologist and astrophysicist from Liverpool John Moores University (LJMU) who, together, have made a significant breakthrough in the animal conservation scene. Dr. Claire Burke, the astrophysicist behind the new species-saving instrument, explains that the software used to identify galaxies is now being used to resolve problems involved with the tracking of endangered species!
With the northwest region boasting expansion in relevant industries, investors will find that their best bets lie in cities like Manchester and Liverpool.
Ultimately, the UK remains a good and safe place to invest your money due to a weakened pound and a structural housing undersupply. The best opportunities undoubtedly lie in major regional cities such as Manchester and Liverpool.
That said, it is important to note that the market in London, subject to a variety of conditions, will eventually bounce back, just as the housing market in the Midlands* bounced back from a low in 2015 to become one of Britain’s fast-growing housing markets today. On a positive note, it is during these apparent slumps that shrewd investors should invest in order to receive satisfying returns when the market bounces back.
It’s been a bit of a ministerial carousel in the UK cabinet, particularly the Housing Ministry.
Within 17 years, the UK has changed Housing ministers 16times, with Kit Malthouse as the latest appointee. In fact, the Housing minister’s role changes hands more than 20 times faster than the average UK homeowner moves houses, according to the Intermediary Mortgage Lenders Association (IMLA).
Alluding to research in the association’s White Paper, The New ‘Normal’ – prospects for 2018, IMLA executive director Kate Davies says, “The average homeowner is moving just once in more than 19 years… this means the role of Housing minister changes hands more than 20 times faster than the average UK home.”
Formerly Boris Johnson’s deputy mayor for Policing, Malthouse takes over the Housing portfolio from Dominic Raab, now the Secretary of State for Exiting the European Union. Raab had contributed a lot to the UK housing market during his 6 months as Housing minister, including managing the Grenfell Tower recovery programme, as well as reforming the social housing sector.
Raab also came out with a bill to ensure fairness in the UK housing sector. However, the bill is still in the third reading among parliament members and the contributions he made to the industry has yet to be fully realised.
Really, 6 months is too short a time to see through and implement change in something as consequential and expansive as the housing market.
Yet, in the last 12 months, the UK has reshuffled Housing ministers three times within a short period: Alok Sharma; then, Raab; and now, Malthouse . It almost seems as if the ministers are playing musical chairs among themselves in tackling the UK’s housing crisis!
And while we’re on the subject of the crisis: at the moment, there is a serious undersupply beleaguering the UK housing market.The UK government is clearly not meeting its target of 300,000 of new houses a year to rebalance housing supply
Research suggests that to address the housing crisis, the UK government needs to build 340,000 new houses each year until 2031. This is way beyond the government’s original target.
As a direct result, getting on to the housing ladder is becoming more impossible by the day for first-time buyers. This, of course, has given rise to demand for rental housing, benefitting landlords across the UK.
Obviously, things have remained the same despite 15 ministers having taken on the job. The appointment of Kit Malthouse comes at a crucial time, and it is imperative that he tackles the housing crisis that has haunted every housing minister that has stepped into office.
Ultimately, the chronic shortage of housebuilding can affect the stability of a nation, and it doesn’t look like change is coming any time soon.
Hopefully, Malthouse sticks around long enough to make effective and long-lasting changes to the housing market.
Liverpool, home to the UK’s first-of-its-kind Knowledge Quarter, has been named UK’s top buy-to-let city for yet again. The city has been a top pick for the rental market since 2013 .
The research by independent credit broker TotallyMoney, which surveyed 580,000 properties across England, Scotland and Wales, found that universities outside London provided landlords with the highest yields, with Liverpool claiming top spot at up to 12% average rental yields.
The L6 and L7 postcodes in Liverpool dominated due to its cheaper prices, but also, most importantly, because of their location which is close to the city’s three main universities. The universities provide a catchment of some 70,000 students, which drive demand for housing.
Landlords have even more to rejoice about as the upcoming construction of the high-speed rail , and (HS2) will continue to boost the economy in Liverpool, thus driving demand for housing creating opportunities for the buy-to-let investors.
The best buy-to-let cities in Britain
Liverpool & Manchester to benefit from Northern Powerhouse development,job vacancy and infrastructural growth
Meanwhile, the housing market in Manchester has also been doing well, recording strong average rental yields of up to 10.08%.
Recently, Manchester was also named as the best place to be a landlord in the UK, recording a splendid rental price growth of 5.76%!
Like Liverpool, Manchester is also a part of the Northern Powerhouse, an initiative by the UK government to create economic balance between the North and South.
Both Liverpool and Manchester will see great development in the future in terms of job opportunities, training, and skills development — a situation that smart property investors are taking advantage of.
In Liverpool, part of the city’s development involves the massive Liverpool Waters scheme, which will reconstruct brownfield sites into full-fledged neighbourhoods and transform the city’s northern docks into a world-class mixed-use waterfront development.
In Manchester, the population continues growing, thanks in large part to the existence of four central universities which have enforced the student population in the city. With a student catchment of some 100,000, Manchester offers good opportunities for landlords.
London’s lacklustre performance
In the past, London was the main focus of investors looking to capitalise on its massive economic and infrastructure growth as the city centre of UK. Today, Liverpool and Manchester have eclipsed the capital thanks to its strong and varied development growth.
Property yields have not done well in London either due to over inflated property prices. Housing prices have flatlined, with experts predicting that Brexit will cause a downfall in the market based on current trends. What’s clear is that rental yields in Liverpool is seven times higher than London, which unfortunately now sports a high number of postcodes that are listed within some of the UK’s worst areas for buy-to-let yields.
Proper investments are known to give birth to a thriving economy, and in Liverpool, this scenario prevails. Some of the most active companies have invested in the improvement of this maritime city, with the most notable five doing so as partners of Liverpool City Region Local Enterprise Partnership (LEP).
LEPs are voluntary partnerships between local authorities and the private sector set up in 2011 by the Department for Business, Innovation & Skills to lead economic growth, job creation and maximise return of investment within the local area.
The major LEP companies referred to are Danish energy firm DONG Energy, transport giants Alstom Transport and Stagecoach, Liverpool-based museum British Music Experience and training provider South West Regional Assessment Centre.
DONG Energy, the global leader in offshore wind, has two completed projects in the Liverpool City Region. Together, the wind farms can generate enough low carbon energy to power over 310,000 homes! Matthew Wright, Managing Director for DONG Energy UK, has expressed his ambition to continue fueling growth for the low carbon sector in the city, thus painting a greener future for Liverpool.
Alstom Transport UK, on the other hand, opened their new state-of-the-art industrial facility at Widnes which provides the largest and most sophisticated train modernisation facility in the UK, alongside the Alstom Academy for Rail which will provide training for rail staff from across the North West and beyond. Stagecoach is also contributing to the expansion of Liverpool’s public transport network. With both companies at work, accessibility throughout the city is set to greatly improve.
South West Regional Assessment Centre will be offering training & development courses for individuals wanting to improve their work opportunities whilst the stunning British Music Experience opened its doors in Cunard Building, Liverpool in March 2017.
With the Liverpool City Region LEP Strategy, Liverpool is well and truly open for business. This strategy will see the possible creation of more than 100,000 new jobs, an increase of more than 50,000 people and growth of more than 20,000 businesses. It will also see a boost in Liverpool’s economy of some 50 billion pounds!
More Projects Add to the Pull of Liverpool
The £2bn vision to establish Liverpool’s 450-acre Knowledge Quarter as one of the world’s leading innovation districts has appeared in the news quite a bit. Readers are aware of the great number of students and businesses the city will attract while keeping to its roots which are planted firmly in the enhancement of the health and education sectors.
Worth mentioning is the interesting transformation within the Baltic Triangle. The derelict warehouses that trail the triangle are being converted into interesting recreational destinations and offices. Many digital agencies have also chosen to locate to Liverpool because of the creative aura running throughout the quaint zone. This redevelopment has thus produced a unique area for property investment.
Improvements are occurring all over Liverpool in various fields, attracting volumes of people from all over the world in need of homes. In this case, investors would find it beneficial to look into property investments in Liverpool, as timing could not be any better.
When investing in UK commercial student property, one should consider investing in Liverpool. Liverpool is a top student city in the UK with a student catchment of more than 50,000 .
UK commercial student property is a bit like treasure; it’s a valuable asset and savvy investors are constantly searching for the X on the map. While the increasing number of local and foreign PBSA investors should be indication enough of the great opportunities in this sector, one would ultimately solidify this belief once exposed to the promising data behind this jewel of a sector.
Foreign Investors Flock Towards Commercial Student Property
Many local investors have already hopped onto the student property bandwagon, and while that may be expected, the rising number of foreign investors is a little less so. What makes commercial student property investment so popular among both local and foreign investors alike, is because it is a hands-off property investment: commercial student properties are fully-managed by professional property managers, allowing investors to commit to the venture in the student sector from the comfort of their home countries!
With the UK’s nonpareil education system ensuring continuous demand for PBSA that consistently outweighs supply, overseas investors in search of investments other than residential property will most likely find themselves in the student property sector.
A combination of pull factors place Liverpool at the forefront of UK student property investment; alongside affordable prices and excellent rental yields, a unique lifestyle experience continues to attract both local and international students.
Students are initially attracted to the high level of distinction associated with the top three universities in the city: University of Liverpool, Liverpool John Moores University (LJMU) and Liverpool Hope University. The redbrick University of Liverpool is ranked in the top 1% of education institutions in the world whilst Liverpool John Moores University and Liverpool Hope University also rank within the top 75 according to league tables by The Complete University Guide.
The other factors that ultimately mark Liverpool as the best student city is its eccentric culture. Students are enticed by the abandoned warehouse nightlife of the Baltic Triangle, the galleries and museums of the Albert Dock and the unconventional cafés on RopeWalks’ famous Bold Street.
A City for Investors
Liverpool boasts a large student population of over 70,000, which guarantees an abundance of tenants searching for the right accommodation. With most of the top student property developments marking the best student areas near Liverpool’s city centre attractions and university campuses, investors can enjoy choosing from an already promising selection without going through all the trouble.
Adding to Liverpool’s prestige is the Knowledge Quarter, a £2bn regeneration scheme that will lead the city to becoming one of the world’s leading innovation districts, further reinforcing its relevance in this modern digital era!
What every international investor is particularly attracted to is the excellent rental yields — up to 8% nett returns is commonplace in Liverpool’s student property sector! Considering low initial average property costs that provide opportunity for maximum capital appreciation over time, investors would be hard-pressed to find a greater deal.
Interesting in investing in Liverpool PBSA?
There are many commercial student accommodation developments in the pipeline. Natex, one of Liverpool’s latest to date, offers investors 9% returns, assured for five years. The 566-unit student accommodation scheme is approximately a 5-minute walk from University of Liverpool and Liverpool John Moores University — it boasts all the facilities a student would ever need (and more!).
The UK has long settled comfortably on the top spot of global education. This has been reflected by growing demand for Purpose-built Student Accommodation (PBSA) or UK Commercial Student Property as students from all over the world flood into the UK in seek of highly revered credentials. Across the UK as a whole, full-time student numbers continue to outweigh current PBSA bed spaces by 3:1, despite the pipeline of student accommodation either planned or underway.
Unlike residential property, this sector is seen to be a concrete investment even in the face of global and domestic challenges. Recent data reveals the popularity of PBSA among investors following the undersupply.
Savills reported a 17% increase in student accommodation investment in the UK this year, and expects investments in the sector to reach £5.3bn by the end of 2017, surpassing the £4.5bn spent in 2016. Meanwhile, Knight Frank’s UK Student Housing Rental Update reports that headline rental growth for the sector increased by 2.55% for the 2017/18 academic year. Becoming a private investor in student property is currently trending in the UK, with reports revealing lucrative returns from the PBSA sector for individual investors.
While some of the younger UK population prefer to seek apprenticeships instead of applying for university, the latest analysis by the Universities and Colleges Admissions Service (UCAS) shows that demand for higher education among 18-year-olds remain strong, increasing by 0.4% in 2017 from the previous year. Additionally, the number of applicants from the EU increased by 3.4% to 43,510, a 3% rise from the same point in 2017 and the second highest number recorded. The number of international applicants increased to its highest ever number, by 11 per cent to 58,450.
The act of supplying student accommodation that is both sufficient in number and quality was once under the responsibility of educational institutions themselves, but in recent years, have mostly been provided by private investors and developers. What has been particularly demanded from students are superior quality accommodation which they are prepared to pay higher rents for. This makes the sector very profitable for landlords and letting agents.
David Feeney, Head of Student Analytics at Cushman & Wakefield said: “More students than ever are demanding a bed in purpose-built accommodation. This, coupled with pressure on local housing markets, means that demand for purpose-built accommodation should remain strong. However, micro-market knowledge is essential to investment success.”
Mike Mitchell, Partner in Cushman & Wakefield’s Student and Residential Investment team, commented: “Across the UK, the PBSA market continues to be one of the most attractive asset classes in real estate for investors. Despite applications to Universities falling by 3.7%, the sector has witnessed year-on-year rental growth. Due to the value of foreign currencies against the Pound, there has been an influx of capital from overseas buyers in 2017 who are now competing with UK purchasers.”
What can be taken away, at the end of the day, is that PBSA in the UK is big business. One fact reinforces this already proven notion, and that is the fact that the UK overtook the US as the largest student property market for the first time in 2015 after reaching a record £6.56bn in investment volumes. — to invest in PBSA in the UK seems to be a pretty solid plan!
Previously, we discussed how the UK’s world-class educational institutions have attracted students from all over the world, driving demand for commercial student property. Today, we talk about where to invest in commercial student property.
Britain’s is known for its world-class education. And with the rise in student numbers comes the demand for proper student housing. Knight Frank and Savills reports that student property now stands as the fastest-growing property sector in the UK, with demand consistently exceeding supply – unsurprising, considering that the student population is expected to exceed its current 2.3 million (and counting) by 20% – 30% in the next 5 years according to the Department for Business, Innovation and Skills.
Cities like Birmingham, Bristol, Exeter, Liverpool, Manchester, Newcastle and Sheffield have been touted as some of the best places to invest in UK student property. Here’s why: these cities are home to universities that are members of the prestigious Russell Group. Russell Group universities rank highly in the UK university league tables, attracting higher enrolment which, in return, creates steady demand for accommodation. Simply put, the more renowned the university, the stronger the rental market.
Let’s take Cambridge and Newcastle as examples. The universities in both cities are constantly expanding and evolving, and this has a direct impact on the investors’ profits. Cambridge city’s population is expected to increase more than 20% in the next decade, which will lead to an increasing student rental sector . Newcastle, on the other hand, being one of the largest universities in the UK, houses more than 31,000 students from 130 different countries.
Of developers and builders, there are many, but when it comes to investing in property, the credibility and experience of a developer is crucial..
Student accommodation located closest to universities, the city centre and which are within reach of amenities are likeliest to have the highest demand. Research has also shown that students have become more discerning and want to be treated like true customers, preferring accommodation with first class facilities like quality living space, high-speed bandwidth and communal sections that encourage optimum interaction.
Investors should consider investing in student property brands that are credible and have a track record. There are many players in the market, but not many with expertise and experience.
Commercial property is popular among investors. One of the best commercial property investment assets in the UK is student property. Why? Read on and find out.
Beating Brexit: Investment & Return Rates in Student Property Sector Continue to Climb
Perhaps the best measure of the resilience of the student property sector in the UK is how well it has fared financially despite the economic recession that followed the announcement of Brexit. Based on the latest report from Savills, student accommodation investment currently stands at £5.3bn, which surpasses the £4.5bn spent in 2016. Worth mentioning is the fact that barely eight years ago, the total investment in the student property sector was a mere £500m!
According to CBRE’s student accommodation index, between 2012 and 2016, annualised returns for the sector added up to an impressive 11.8%. This percentage holds even greater value when compared to the smaller yet still reputable figures that rose from the residential sector and commercial property sector as a whole, which were 7.8% and 7.4% respectively.
High Demand for Commercial Student Property
In a recent report, David Feeney, Head of Student Analytics at Cushman & Wakefield said: “More students than ever are demanding a bed in purpose-built accommodation. This, coupled with pressure on local housing markets, means that demand for purpose-built accommodation should remain strong. However, micro-market knowledge is essential to investment success.”
Worth taking note of is Feeney’s emphasis on the gravity of thorough research before investing; location, demand and regeneration schemes are among the key factors in finding the ideal investment. Recently, Matt Stevens, Director of The Mortgage Genie, shared the top buy-to-let hotspots that are set to offer the most competitive returns in 2018. Manchester, Liverpool and Gateshead take the top 3 spots. Manchester and Liverpool, specifically, are home to a number of reputable educational institutions where PBSA is a major concern. These areas are where investors can expect to fetch high yields with long rental assurance in the student property sector.
International and EU applicants to UK Universities Still Rise
International applicants to UK universities continue to increase, in fact, the number of international applicants rose by 11.1% to 58,450, which is the highest number on record! Latest UCAS figures show that the number of applications by EU and international students for university places in the UK has increased to over 100,000 for the first time – this is a rise of almost 8% compared to the previous year!
The student property market in the UK, underpinned by both the superior quality of UK education and a structural undersupply in student housing, continues to attract investors from all over the globe.
Interested in investing where the yields are good and the risks are low? Liverpool is a great place for student property investment. First, find a good consultancy to guide you through the process and give you sound advice.
The UK is the top destination for education in the world. Liverpool, one of the top university cities in Britain is especially popular. As more overseas students flock to the UK to further their studies, the demand for commercial purpose built student property increases. Studies show that students have become more discerning of the spaces that they choose to live in; living in cramped HMOs — with no privacy, security, communal spaces or lifestyle amenities — is no longer a popular option.
When one thinks of education in the UK, a series of stars and superlatives must spring to mind, perhaps even images of the neoclassical dome and cupola of Radcliffe Camera in Oxford University! A denouement everyone undoubtedly reaches when it comes to education in the UK is that it is invariably on top of the game (bringing the property market along with it following a high demand in PBSA).
Also issued around the same time is the QS World University Rankings 2018, showing a significant number of UK universities in the top 100. The University of Cambridge landed itself in the top 5 rankings, with Oxford occupying the 6th spot. University College London (UCL) and Imperial College London come right after, taking the 7th and 8th spots, respectively. With almost half of the top 10 list belonging to the UK, Britain proves that its education system remains unparalleled.
University Applications in the UK Are Increasing
The success in the UK’s education sector is reflected by the mounting number of university applications. According to The Universities and Colleges Admissions Service (UCAS), the number of applicants from the EU increased by 3.4% to 43,510, a number that is slightly down from 2016’s recent-year high of 45,220 applications but that nevertheless reflects a reversal of the notable dip in admissions volumes registered a year ago. Also worth noting is a 3% rise of EU students applying for places as undergraduates from the same point in 2017, and — the second highest number of EU applicants recorded. Adding to that is the number of international applicants (non-EU students) which increased by 11%,its highest ever number by far.
Additionally, application rates from English 18-year-olds have reached a record high, increasing by 0.4% to 37.4% from the last year!
Universities To Guide the UK Towards Becoming a World Leader in Technology
Worth mentioning is the UK’s education sector emerging as a top destination for the next digital age. Recent news highlights how the UK is directing funds and resources towards their goal to succeed as a knowledge economy — world-leading university research is crucial to achieve their aim. This decision was made under the notion that keys to the future of tech such as AI and deep learning, automation and predictive analytics have all started life in a lab or classroom and not in a traditional software development environment.
Where this ambition manifests itself is where economic growth is expected to prosper best. The city of Liverpool, where the Knowledge Quarter is being established, is a prime example of this.
Liverpool Expands to Welcome Education Sector
Liverpool’s £2bn expenditure to establish a 450-acre Knowledge Quarter as one of the world’s leading innovation districts in science, innovation, education, technology and the creative and performing arts, will further reinforce its status as one of the best student cities in the world!
Such conditions inevitably casts attention on the undersupply of Purpose Built Student Accommodation (PBSA) in Liverpool.
Found below are figures that illustrate the dire shortage of PBSA in Liverpool as of late 2017:
Student Population: 67,000
Amount of Housing Available Through University: 4,500
Amount of Total Student Housing Available: 17,857
Potential Yields: 8% per annum
With this shortage in mind, it would only be beneficial for the savvy investor to take a look at how to get involved in the student property market there.
Natex, one of Liverpool’s latest and most iconic PBSA developments to date, offers investors 9% returns, assured for five years. The 566-unit student accommodation scheme is approximately a 5-minute walk from two of the UK’s top universities: University of Liverpool and Liverpool John Moores University — it boasts all the facilities a student would ever need.
With Liverpool’s Knowledge Quarter and education centres in mind, and the investment potential of purpose-built student accommodation, it would be a good idea to dip your toes into the pool of Liverpool’s looming success as soon as possible!