The rise of the regions – why property investors are snubbing London in favour of the UK’s second cities

Not too long ago, the idea of ‘inner city living’ was one that brought to mind run-down estates and high crime rates. Now, however, that’s all changed – and with the change has come a shift in investor sentiment so far as the UK’s urban areas are concerned. Jonathan Stephens, MD of Surrenden Invest, explains:

“The trend towards inner city living has brought about a notable shift in investor interest, particularly in the last few years. Five years ago, it was an uphill struggle to convince an investor even to consider residential property outside of the M25. Now, though, investors are snubbing London and looking to the UK’s regional cities – many already have a particular city in mind when they come to us.”

Liverpool is a great example. The city’s population fell steadily from the 1930s to the early 2000s, but a shift in contemporary living trends then reversed its fortunes. Between the 2001 Census and the 2011 Census, Liverpool’s population rose from 435,500 to 466,400. The number of those living in the city centre has shot up at an even faster pace, from 15,271 in 2006 to 29,060 in 2016 – almost doubling over the course of the decade. At the same time, the demographics of those seeking life in the inner city have changed, with three quarters of central Liverpool’s residents now aged 17-29.

“The shift in age of the city centre population – in Liverpool and other regional UK cities – is doing much to shape how our inner city areas are developing,” reveals Surrenden Invest’s Jonathan Stephens. “We’ve got young professionals who expect a high standard of accommodation and won’t settle for second best – they want high quality homes in excellent locations, with great views and even better amenities.”

 

The Tannery in Liverpool epitomises the kind of residential accommodation that young professionals are demanding – and that investors can’t get enough of right now. The striking building is in a prime city centre location, offering premium specification homes with luxury furniture packs. A 24/7 hotel-style reception and concierge service is provided, along with a spacious communal courtyard and superb roof garden for socialising and entertaining.

 

While the London market stagnates, with property prices in urgent need of a correction, the regional markets remain strong. Liverpool has just been shown to offer the best buy-to-let yields in the UK. In fact, three of the city’s postcode areas made it into the top ten buy-to-let locations recently compiled by TotallyMoney. Two Manchester postcode areas also made it into the top ten, along with one each in Middlesbrough, Edinburgh, Newcastle, Preston and Blackpool. London didn’t get so much as a mention – unless you count the fact that five London postcodes made it into the list of the ten worst areas of the UK for buy-to-let yields.

Nor are yields the whole story. In the three years to July 2017, Manchester house prices rose by 34%. For those looking to profit from property, figures like these represent excellent potential for capital growth, drawing investors away from London in increasing numbers. As Surrenden Invest’s Jonathan Stephen sums up,

“Liverpool, Manchester, Birmingham – these are the places where the residential property investment market is exciting now. London has had its day, at least for the foreseeable future, until the market corrects and prices become more realistic. There’s a palpable sense of excitement and purpose as you walk through our modern regional city centres. From gleaming residential developments to new commercial premises and innovative new leisure and social spaces, urban living has become increasingly sought-after by tenants and investors alike.”

 

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