We buy more than £100m of property every year for ourselves and our clients, aiming for a mix of rental income and strong capital growth prospects. To achieve that, picking the right areas is essential – and these are the hotspots we’ve asked our team to target this year.
Nottingham: The Hidden Gem
We’ve been talking about Nottingham for years, and we’ve been investing there for a long time. Here’s why it continues to be a winner:
Chronic supply shortage
Thriving student scene
Major local employers
Excellent transport links
According to Hometrack, Nottingham has seen the highest property price growth in the country over the last 12 months. Yet investors continue to overlook it. While Nottingham prices are unlikely to suddenly explode like London did or Manchester has more recently, it’s a solid bet for long-term investment.
One standout feature of Nottingham is its extensive tram network. This opens up investment opportunities across various budgets, as properties along the tram line tend to be sound investments, whether in the city centre or the suburbs.
Birmingham: The Rising Star
Birmingham is ticking all our boxes right now:
Rents are increasing rapidly: Birmingham has the second-highest rental inflation in the country.
Ambitious future plans: The city has a 20-year, multi-billion pound development roadmap called the “Big City Plan”. This initiative aims to bring 50,000 new jobs to the area and continue the ambitious overhaul of the city centre.
These factors indicate that Birmingham could be an excellent investment for 2024 and beyond. It’s also worth considering investments in surrounding areas with strong transport links, such as Wolverhampton, as people may start looking for more affordable options outside the centre.
Leeds: Standing on the Shoulders of Giants
Leeds presents a unique investment opportunity, highlighted by significant institutional investment in the city. There are 34 separate developments either completed or underway for the institutional rental sector.
While individual investors can’t buy into these specific developments, the presence of such large-scale institutional investment is a strong positive indicator. These professional investors and pension funds have invested billions of pounds after thorough research, effectively doing the due diligence for individual investors.
Leeds’ appeal is clear:
It’s the biggest financial centre outside London
Every major bank has a presence in the city
It’s a significant fintech centre, chosen as the site for a government-backed National Hub
There’s a large population of young professionals, with over 120,000 financial services jobs
Both the Bank of England and the Department of Health have their only hubs outside London located in Leeds
Derby: The Dark Horse
Derby stands out for its favourable ratio of average salaries to house prices. The city boasts the highest disposable income of anywhere in the UK, coupled with a house price to income ratio of just over 6, well below the UK average of 8.1.
Beyond attractive pricing, Derby presents a significant market gap:
There’s a huge lack of premium rental accommodation in the city
There’s a total absence of the modern, amenity-rich apartment blocks common in cities like Manchester
This type of premium housing is in high demand among the high-earning professionals based in Derby
We’ve made a couple of major investments in Derby within the last 12 months. Investing in premium housing developments in Derby offers the opportunity to buy at a reasonable price, charge premium rent, attract the best tenants, and potentially see significant price appreciation over time.
Manchester: The Gift That Keeps on Giving
We’ve been talking about Manchester since 2015, and its investment case remains as strong as ever. While the city centre has seen significant price increases due to its growing popularity, investments still make sense due to rapidly growing rents.
Manchester tops the list for rental inflation, with rents growing faster than anywhere else over the last 12 months at 19.6% – nearly double the national average. This suggests that despite the thousands of new rental units built and more in the pipeline, there’s still a supply shortage.
While the city centre still works as an investment, those looking for different options or lower entry points might consider Greater Manchester as a whole. Areas that are desirable in their own right and have strong transport connections to Manchester city centre are likely to benefit from a ripple effect as the city continues to grow and people get priced out of the centre.
But remember: Focus on the reasoning, not the locations!
When we pick out areas, it’s always based on the underlying fundamentals – transport links, employment, inward investment, and so on. So you don’t need to restrict yourself to our list: take the principles, and use them to discover areas of your own.
Similarly, we frequently invest in places that aren’t on this list: we’re always scouring the country for opportunities, and often come across great deals in places with solid fundamentals that for whatever reason hadn’t previously been on our radar.
In other words: steal our approach and methodology, but don’t restrict yourself to our areas!
