Project Description

Deciding where in UK to invest

The UK has a population in 2020 of some 69 million people.

There are numerous cities and town where there may be residential investment opportunities, especially with the current growth in population likely to continue.

Of course, London with a population of over 9.1 million people has traditionally been the favoured destination for investment, certainly for overseas capital. Yet, over the last 10-15 years, awareness has grown that there are, indeed, opportunities in cities such as Birmingham, UK’s second city (some 1.2 million people) and other cities/towns such as Oxford within a 2-hour commute from the capital.

Previously, again certainly for overseas investors, there was the so-called north/south divide where few investors were prepared to invest north of Birmingham. Partly as they wanted to be in reasonable proximity to London and partly as they simply were not aware of investment opportunities in Manchester (1.2m people), Liverpool (1.0m), Newcastle or Glasgow.

However, the last 10 or so years has seen a major change in attitude from both domestic and international investors when it comes to investment north (or even west towards say Cardiff (500k)) of Birmingham.

Accordingly, there are now many more choices to be made if you plan to invest in residential property in the UK. Of course, it’s wise to get professional input about which locations in UK offer the best investment opportunities, but you can start by doing some of your own research.

Some key criteria to help in the decision making

Let’s take a look at some of the key criteria which can help you make a short-list of possible investment locations. You can look for towns or cities where:

  • there is a growing population: this may be the result of country wide migration where population shifts are in evidence—perhaps as more people move to new areas or, conversely, people move out of, say, London to smaller cities or towns for a better lifestyle or as a result of the recent pandemic and the desire for more space—as they can now effectively work from home.Population growth may also be stimulated by immigration with certain cities such as Leicester (417k) attracting a variety of immigrants originally from Asia and who prefer to be close to existing immigrant communities;
  • there is a fundamental supply-demand imbalance. Obviously partly connected to the above point but, in general in the UK, the supply pipeline is relatively slow and invariably can’t keep pace with demand. This is partly due to the lengthy planning and legislative process proposed new developments have to endure;
  • infrastructural improvements such as new roads, bridges or even airport extensions to areas always encourage population shifts and enhance demand for accommodation to buy or rent;Government linked incentive schemes such as grants or tax rebates for new businesses locating in certain location can also improve demand and make an area worthy of consideration for residential investment;
  • cities or towns where there are major universities. There is continued growth in the number of students attending university, both domestically and, with certain changes to the length of stay permitted in the UK post-graduation, from overseas students. Of course, the associated human capital infrastructure needed to support universities such as lecturers, administrators and so on will also enhance demand for accommodation;
  • where there is clearly increased domestic or foreign investment. For example, Asian investment money from Thailand, Singapore, Hong Kong and China has been active in mixed-use projects including residential properties and purpose-built student accommodation sectors in Sheffield, Edinburgh, Liverpool and Manchester.Domestic investment by nationally known house builder continues unabated in these northern cities.

Recent performance of certain key UK markets

The UK property market entered 2020 with a degree of optimism, having not been overly affected by Brexit issues. The global pandemic then proceeded to put a short-term damper on the market until a mini-boom started mid-year. This still continues across the country towards year end and investors are already looking ahead to the best places to invest in UK property 2021.

With the spotlight moving from the traditionally popular London and SE UK markets to regional hotspots and emerging cities and town, based on information from Hometrack here is a brief summary of the top 5 UK destinations worth considering for residential investment:

City Average price Peak-current Last 12 months Last 3 months
Liverpool £124,600 0.80% +4.60% +2.60%
Birmingham £168,300 23.40% +3.80% +2.10%
Cambridge £429,500 53.30% +0.30% +2.00%
Glasgow £126,900 2.90% +3.30% +2.00%
Leicester £182,800 28.90% +4.80% +1.80%

Data source: Hometrack

Time to buy?

The UK rental market continues to grow at an unprecedented rate, and is forecast to make up a quarter of the overall housing market over the next two years.

With an estimated value of over £1 trillion, the Buy-to-Let sector is one of the key investment markets for the UK and continues to attract demand to the point where residential undersupply is occurring up and down the country.

Back to Market News