Identifying the next up and coming property hotspots is the holy grail of property investment. Despite volatility in the property market, UK real estate remains one of the most stable, secure and popular asset classes in the world. Due to rising house prices, demand for rental property has doubled since 2002 and it’s estimated to rise even further within the next five years.
So, what should savvy investors be looking for when choosing where to invest?
- Good student retention rates
A large student population who put down roots and find jobs in the city after they graduate creates strong demand in the young professional rental market, particularly in city centre locations with access to the main business districts.
Take the example of Birmingham, which boasts a student population of over 100,000 – 46% of whom stay in the city after graduating. Tens of thousands of new graduates looking for homes each year underpins Birmingham’s position as a real hotspot for growth, particularly in the Jewellery Quarter and neighbouring Gun Quarter which are popular locations for the city’s younger residents.
- Big businesses relocating
Major corporates and blue chip companies relocating out of London and moving north to cities such as Manchester and Birmingham, bring with them an influx of new residents and add a real sense of cachet and prestige. In Manchester the city’s economic growth and thriving housing market have gone hand in hand. 80 FTSE 100 companies already have offices in the city, with the likes of Barclays and Google attracting the brightest talent and driving up demand for housing.
- Regeneration and infrastructure spend
Another key factor that property hotspots have in common is significant public and private sector investment. Major infrastructure plans like HS2 or Crossrail are great indicators, as are the locations benefitting from the Government’s £4.8 billion Levelling Up Fund.
In Birmingham, the Big City Plan will create 50,000 new jobs and 1.5 million square metres of new floor space for businesses, whilst in Greater Manchester the Places for Everyone long-term plan identifies strategic development sites across nine districts (including Manchester city centre) in a bid to drive inward investment and create new jobs, homes and sustainable growth.
- A growing population
Smart investors will also be keeping an eye on population growth forecasts. Salford has seen the biggest population growth in Greater Manchester in the last ten years, with rents increasing quicker than anywhere outside of London according to Zoopla. It’s no surprise then that developers such as Domis are building there; with our Northill Apartments a prime example of a landmark development addressing this growing trend. The change has, in part, been driven by the relocation of the BBC to the £550m MediaCityUK destination, with the local economy expected to grow by over 46% over the next two decades.
- Housing shortfall
A final important indicator is housing shortfall. Last year in Manchester availability of rental properties fell to an all-time low, with this shortfall explaining why rents soared by 22% and an increase in quick sales and high yields. It’s predicted that over 80,000 new homes will be needed in Birmingham by 2040 with over 134,000 more people expected to be living in the city over the next 20 years.
API Global’s market leading research led approach identifies the up-and-coming locations where investors can capitalise on upward trends and achieve sustained capital and rental growth. We meticulously scour the market to identify the very best property investment locations in the UK, using the above five indicators (amongst others) to identify high-performing opportunities for our clients.