University Cities as top BTL investment hotspots

When it comes to investment in the UK, there are many factors that one needs to look into before making a purchase decision – a key component would be the type of property followed by the location that would provide the best returns.   

A savvy investor would look into investments that appreciate with time and offer good rental returns. With international properties raking in high returns, striking while the iron is hot in the buy-to-let sector, would be a preferred choice for smart investors.  

TotallyMoney, a credit report company, conducted a survey of 580, 000 properties across Great Britain in order to rank buy-to-let (BTL) yields from the highest to the lowest.

The survey discovered that properties located in areas with a high density of students generated the highest rental yields.

This might not come as a surprise considering that many world-renowned universities hail from the UK: 10 of the world’s top 100 QS-ranked universities is from the UK, making it the second highest nation on the record.

The influx of students into the UK has resulted in the growing demand for commercial properties such as purpose built student accommodation (PBSA) and residential properties situated at these university cities.

CBRE’s first-ever Student Accommodation Index also revealed that capital value growth across all student properties in the UK was 6.5% as of September 2018, compared to just 4.5% the previous year. The net rents also showed a rise of 3.4% over last year.

The survey also highlighted particular regions in which the student population is noticeably high due to the presence of established universities. Cities such as Liverpool and Manchester boast some of UK’s highest rental yields.

Liverpool


Liverpool is the second best university city in the UK. Source: Liverpool Echo

With a combined student population of 70,000 and three well-known universities,  Liverpool has helped boost demand for rental properties, making it the second-best BTL  city.

Student properties near postcode L7, where the University of Kensington is located, generate an average rental yield of 9.79%, whereas accommodation near the city centre, close to the University of Liverpool, has average yields of 9.33%. A total of six Liverpool postcodes are in the top 25 best buy-to-let areas for 2018.

Liverpool was also voted as the region with the best city life in the National Students’ Choice Awards. Students describe it as being very energetic, spirited, ambitious and an amazing city overall to be in

With the rising number of international students choosing Liverpool as their preferred destination for tertiary education, BTL properties with close proximity to universities promises a better rental yield.  

Manchester


The University of Manchester, one of the top universities in the UK. Source: New York Post

With four internationally ranked universities and a combined student population of 100,000, Manchester has a strong presence in the BTL market.  The city was rated by QS ranking as the third best university city in the UK.

Manchester has an average rental yield of 7.07%. Properties around the University of Manchester – which has the largest student community of all UK universities – provides a sustainable rental yield of 6.89%.  

As the UK’s second biggest city and second most affordable city for students, Manchester is ranked 51st for affordability, hence why a substantial amount of students fly into Manchester for their tertiary education. The affordability is all the more reason why BTL properties near universities are of high demand.

Birmingham

Get bullish with Birmingham. Source: CSI Prop

Birmingham is seen as a good alternative for investors who are looking to obtain good rental returns and intend to avoid buying in cities with higher property prices.

The UK’s second largest city is home to two leading universities, Aston University and Birmingham City University, where property values have soared due to rising demand. Recent research by Urban.co.uk revealed that Birmingham has the highest returns for property surrounding a university, with an impressive 11.66%!

Adam Male, founder of Urban.co.uk believes that the northern region provides a much more attractive proposition in terms of rental yields and these areas also happen to be homes to some of the UK’s top universities.

These are some aspects that landlords should consider when choosing to invest as it gives them a more affordable, yet promising step up the investment ladder.  

Are University Cities the next big thing?


UK student housing sector is surely on the rise. Source: BSES

For investors who are looking to take advantage of the pound’s affordable rate, properties in university cities are rather attractive investments.

Mark Moloney, head of brands and communications of TotallyMoney said, “Year after year, there’s a constant flux of students looking for somewhere to bed down for the night, so it’s no surprise that university cities offer landlords the highest buy-to-let yields. Demand is high, and landlords may use this as an opportunity to drum up competition between tenants and push rental yields higher.”

He also reckoned that investors need to be well-armed before diving into the world of property investment. They need to be well aware of aspects such as the best BTL mortgage rates and to be on top of their credit rating.

It is important for investors to focus on property investment in areas that can give them the highest yield and hence, generate ample revenue. The current state of properties in university cities – high demand coupled with good rental yields, undoubtedly makes Liverpool, Manchester and Birmingham a hotspot for BTL investment.

Image Source: http://www.toptravelingsites.net/news/best-university-cities-to-visit-in-uk.htm

Manchester: A Regeneration Hub

Manchester is the UK’s fastest-growing city and Europe’s second largest tech hubs. A key region of the government’s Northern Powerhouse initiative, Manchester is home to some of the world’s most brilliant minds. It is one of the world’s most connected cities, boasting efficient and convenient travelling within, to and from the UK. Manchester is a creative force with a booming reputation only set to get bigger.

With a rich talent pool of over 110,000 thinkers from four leading universities, Manchester has a high graduate retention rate of 58%, making it the second highest in the UK with a working population of 680,000. This city is the sanctuary for millennials due to its promising job prospect, growing employment rate and a lavish lifestyle that no young person could refuse.

This assertive, flourishing city has levels of job creation predicted to outpace cities such as Berlin, Tokyo and Paris, between 2015 and 2020*. Manchester airport serves more destinations than any other in the UK, outside of London making it the third busiest airport in UK.  

Forecasted to be the UK’s strongest performing city both in terms of GVA (2.4%) and employment growth (1.2%) from 2017 to 2020, Manchester is the preferred destination for millenials and the brightest minds with a world-class proposition for business and investment.

The Bustling Manchester Lifestyle


The attractive Manchester city. Source: Manchester Evening News

Apart from being a productive and dynamic city, this urban sanctuary is also a great place where extravagant lifestyle transpires.  

Whether one is on the hunt for bargains or a must-have piece, an avid foodie, or a sports enthusiast, there is something to suit everyone in this city.

Shopping in Manchester is a real treat. Visit King Street to indulge in the latest collections from world-renowned designers. Manchester is also home to a number of luxury departmental stores, such as Harvey Nichols and Selfridges.

The famous Trafford Centre is as much a theme park as it is a shopping destination, and there is plenty to keep the whole family entertained here. Afflecks in Manchester’s Northern Quarter is the go-to place for indie commerce, where shoppers will find everything from clothing outlets to old-style record stores and retro gaming shops.


The famous Trafford Centre. Source: VisitManchester

Manchester has a bustling and eclectic nightlife scene for those who enjoy a drink after a long day. Whether one prefers the classic atmosphere of a traditional English pub, or the stunning views of a rooftop bar, the city has it all.

For the millenials, the party never stops in Manchester, partygoers don’t need to wait until the weekend to have a good time. Manchester’s club scene is vibrant and varied making it the obvious top UK party destination.  

Manchester is gaining popularity for its good food, and residents are spoiled for choice when it comes to dining. At eateries in Manchester, one can find exquisite cuisine from around the world to whet your appetite. With a growing number of restaurants, delis and artisan cafés sourcing their produce locally, diners are ensured of fresh and seasonal delights.

Home to two of the world’s most iconic football teams, the people of Manchester take great pride in their shared passion for sports. Whether you support red or blue, the National Football Museum, right at the city centre, is a must to visit.


The famous City of Manchester Stadium where many legendary matches have taken place. Source: Wikipedia

Why Invest in Manchester


Affordable houses in Manchester. Source: Manchester Evening News

Manchester’s staggering development with a rising population growth makes it an attractive place for investors looking for the next big thing to invest. Property, in particular, is a solid choice as there is a growing demand for housing in the city.

With generation rent on the rise, Manchester has a soaring demand for residential and commercial properties that potentially gives promising returns. One of the key findings of the Manchester 2025 report was that the population of Greater Manchester, the metropolitan county that includes the city, will grow by 125,000 to reach 2.87m


The increasing population size in Manchester. Source: Urban Echo

To meet the substantial demand for housing this increase would bring, research suggests that the city needs to build around 11,254 new homes each year. Of this, 3,120 – just over a quarter – is needed in Manchester local authority, but there were just 1,792 new homes built between 2016-17.

This disproportionate supply-demand factor resulted in an increase in the house price index. Manchester registered a 15.3% increase in house prices over the past year, making it the top UK rental hotspot. House prices in Manchester are predicted to grow 22.8% by 2022.

If you are looking for a viable investment in the UK, it’s time to start looking to Manchester. With Manchester becoming an even greater target for property developers, bearing in mind its huge student population and growing workforce, plonking your pounds and pennies in this city could find you ample opportunities to capitalise on not just the fastest growing city but also soon to be one of the most populated regions in the UK.

More on Manchester:

Manchester: Modern from the Very Beginning

Just a day or two ago, we talked about the Manchester housing market stealing the limelight from London. Here’s a peek at what makes Manchester the amazing city that it is. 

Image from: https://www.visitmanchester.com/
Image from: https://www.visitmanchester.com/

Manchester, UK, might best be known for being the world’s first industrialised city — besides being home to just a couple of popular football clubs, of course. Once a manorial township with peasants working the field for the Lord of the Manor, the city of Manchester is now renowned for being one of the most modern cities on Earth following a multitude of revolutionary discoveries.

Manchester’s History

Manchester began expanding “at an astonishing rate” around the turn of the 19th century as people flocked to the city for work from Scotland, Wales, Ireland and other areas of England following a boom in textile manufacturing during the Industrial Revolution. It developed a wide range of industries, so that by 1835 “Manchester was without challenge the first and greatest industrial city in the world.” — Cotton spinning was Manchester’s specialty; it made them the largest marketplace for cotton goods!

Fun fact: In Australia, New Zealand and South Africa, the term “manchester” is still used for household linen: sheets, pillowcases, towels, etc.

Manchester went on to accumulate a fair share of world firsts: the world’s first IVF baby was conceived in Oldham, Greater Manchester in 1978, the atom was first split and graphene first isolated at the University of Manchester in 1917 and 2004 respectively, the first stored program computer was also built in the University of Manchester in 1949  — these groundbreaking milestones were reached in just one city, three of which occurred in one building!

Fun fact: The University of Manchester has 25 Nobel Prize winners. This has landed them in the top 25 schools with the most Nobel-winning affiliates!

Manchester Today

Manchester is known as the UK’s 2nd largest city and is also the third-most visited city in the UK, after London and Edinburgh. Additionally, in 2014, the Globalization and World Cities Research Network ranked Manchester as a beta world city, the highest-ranked British city apart from London. Manchester was also touted UK’s Most Liveable City in 2013 according to the Global Liveability Survey.

A colossal amount of money has been put into Manchester’s development as part of the British government’s Northern Powerhouse push. Starting from 2017, £1 billion will be spent to transform the Manchester airport, further establishing Manchester as one of the most connected cities in the world. The city already boasts direct connections to many of the world’s major capitals, like New York, Hong Kong, Singapore and Beijing. The project is set to be completed by 2023. Another development in Manchester’s transport system is the new High Speed Rail (HS2), still under construction, which will cut travel time between Manchester and London from the current 2 hours to just over an hour when it is ready, and, in its second phase, also reduce the time required to travel to Birmingham and Leeds. The first phase of the £56bn railway is due to open in December 2026. The onward legs to Manchester and Leeds is set to open by 2032-33.

In addition to Manchester’s connectedness is its technological growth — Manchester is Europe’s second largest creative tech hub! With a GVA of £4.1 billion, 82,300 people working in creative and digital companies and over 7500 creative and tech companies, Manchester is a place where creativity and technology are jointly driving the next wave of innovation.

Supporting Manchester’s digital expansion are the four leading universities in the area. These establishments have a proven track record for collaborating with production on ground-breaking research and development in areas from health to data analytics, cyber security, text mining and cloud computing. The universities also produce a constant stream of highly-skilled computer science graduates which further bolsters the industry.

With all these ranks and progress, it is no surprise that Manchester’s property market flourishes just as much. Manchester registered a 7.3% increase in house prices over the entirety of the year 2017 following an undersupply, topping the list of all cities in the UK. Manchester has also topped the list of the best UK property hotspots in 2018 according to The Property Hub — in a recent Property Hub podcast, they discussed how Manchester is becoming the “London of the North”.

Here’s a video that captures Manchester’s essence: 

Found below is a short recap denoting Manchester’s success:

  • Birthplace of the Industrial Revolution
  • Where the world’s first IVF baby was conceived
  • 25 Nobel prize winners
  • Where they split the atom and isolated graphene
  • Where the world’s first stored program computer was built
  • Population of 2.7 million people
  • Over 200 languages
  • With 50% growth in the last 10 years, Manchester is the UK’s fastest-growing city and Europe’s second largest creative tech hub
  • Around 70,000 people now work in the city’s creative, digital and tech industries
  • A rich talent pool of over 110,000 thinkers from four leading universities
  • Between 2015 and 2017, over £1 billion was spent on the city’s infrastructure
  • Direct flights to many of the world’s cities, e.g. New York, Hong Kong, Singapore, Beijing etc.
  • Called the UK’s second city
  • Global exporters of world-class culture as well as technology; a city united by a passion for sport and music
  • One of the world’s best places to visit in 2015 — the only British city to be given this accolade by the New York Times
  • Home to some of the world’s biggest brands which contribute to Manchester’s £50 billion economy

To add to Manchester’s already exceptional list of prosperity are several interesting facts:

  • Chetham Library, Long Millgate which opened in 1653 and is still open to public today, is the oldest free public reference library in the United Kingdom
  • A car fuelled only by coffee grounds, nicknamed the ‘car-puccino’, constructed in Manchester made a trip from London to Manchester in 2010
  • Manchester is the only place in the world where you can obtain a degree in ‘Mummy Studies’ – the University of Manchester has facilities to enable the study of ancient Egyptian mummies
  • Emmeline Pankhurst, the leader of the Suffragette movement in the UK, was born and raised in Moss Side, Manchester

With Manchester’s rich history, participation in the digital age, expanding transport system, flourishing property market and more, one would be regretful not to see how they can get involved with this blossoming city. Manchester’s property market in particular, following a housing shortage, would be most advantageous for investors looking for the next big thing.

 

Hello Manchester, Farewell London!

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 currency
  • 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

 

Property Investment: London Falls & Regional Cities Rise

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 show strong price growth towards the end of 2017, which has continued into 2018. Image credit: https://www.thesun.co.uk/uncategorized/5222878/whats-next-for-house-prices-and-what-will-happen-to-the-property-market-in-2018/
Manchester and Liverpool show strong price growth towards the end of 2017, which has continued into 2018. Image credit: https://www.thesun.co.uk/uncategorized/5222878/whats-next-for-house-prices-and-what-will-happen-to-the-property-market-in-2018/

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.

Conclusion

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.

Liverpool, Manchester Named UK’s Top Buy-to-Let Market Again

 Image by Totally Money indicates rental yields across the maritime city of Liverpool.
Image by Totally Money indicates rental yields across the maritime city of Liverpool.

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

Figure shows two postcodes in Liverpool dominated the top buy-to-let in Britain.
Figures show Liverpool dominating the top ranks of the buy-to-let market in Britain. Info source: Totally Money

Liverpool & Manchester to benefit from Northern Powerhouse development,job vacancy and infrastructural growth

Liverpool is a core city of the UK's Northern Powerhouse. Image from Urbanrealm
Liverpool is a core city of the UK’s Northern Powerhouse. Image from Urbanrealm

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.