07/10/2024
Birmingham: Economic Powerhouse with an Acute Housing Need
In the face of fluctuating house prices and shifting market dynamics, it's never been more crucial to choose your properties carefully and conduct thorough market due diligence.
Luckily, we have already done this research for you.
How did we do it? We utilized insights from leading industry reports by CBRE, Knight Frank, PWC, and the latest research from Oxford Economics to identify resilient markets with the potential for sustained growth.
Over the last two decades, we have brought to market developments in over 45 cities across 18 countries. In 2024, our focus is on three countries, but predominantly, the UK. It has one of the largest GDPs in the world, strong population growth and house prices have risen 183% over the last 20 years due to a critical undersupply of homes. The UK is home to some of the best real estate investment cities in the world.
We choose our cities for their strong economic fundamentals, reputable developers, and low-risk profiles. And we’re happy to say the research has paid off -according to the latest House Price Index from Zoopla, we are active in 8 of the top 10 UK markets currently experiencing price growth, despite the general market volatility and declines elsewhere.
In 2024, the UK real estate market faces multiple challenges. Higher than typical interest rates, issues with affordability, and geopolitical tensions are the most notable factors across the country. However, individual cities pose their own additional challenges –but also, present opportunities.
We often receive inquiries about the best real estate investment cities where we are not currently investing. Given our research-driven approach, we think it's important to share our findings on the holistic UK market landscape to keep our investors well-informed to be able to make their own decisions, too.
This blog post details the 12 key markets in the UK and the popular real estate investment cities that investors are most curious about in 2024.
Sheffield Image
1. Sheffield: A City in Regeneration with a Housing Crunch
Sheffield's transformation from a post-industrial city to a vibrant, cosmopolitan hub offers a compelling investment case, particularly in the property sector. Since 1997 The labour government's economic initiatives, Sheffield has seen substantial regeneration, doubling its economy in size and attracting a diverse array of SMEs and new industries.
Sheffield has seen significant growth in sectors like finance, healthcare, and technology, ensuring a continuous influx of skilled workers. The city also has a reputation for strong educational prospects, particularly at the University of Sheffield, which ranks 13th in the UK (Times Higher Education World Rankings 2024). This demographic trend supports a strong rental market, especially as many graduates choose to remain in Sheffield. Investment in Sheffield’s property market therefore offers stable rental yields, making it a smart choice for property investors and one of the best real estate investment cities.
The ongoing demand for housing in Sheffield has been fuelled by a steady increase in population, currently estimated at over 568,960 residents. The existing housing supply is unable to meet the growing demand, evidenced by projections of an 11,328-unit shortfall by 2035. This imbalance is driving up property prices, making Sheffield particularly lucrative for investment in residential properties. The city's strategic phase of regeneration emphasizes private sector-led growth, further enhancing its appeal as a forward-thinking and economically expanding city.
Take a look at our properties in Sheffield.
Edinburgh Castle, Scotland, from Princes Street Gardens, with the Ross Fountain in the foreground
2. Edinburgh: Scottish Capital with Resilient Rental Growth
Edinburgh, Scotland's capital, is celebrated for its rich cultural and historical significance, marked by its distinctive sandstone buildings and green spaces, earning it UNESCO World Heritage status. The city plays a strong role in the UK's business and tourism sectors, bolstering a strong real estate market, driven by consistent population growth and robust economic performance.
The presence of global corporations (such as Amazon, Microsoft, and IBM) in Edinburgh have contributed to its attractiveness as a business centre and has supported a strong job market. Edinburgh’s working population has increased by 21% in the last 20 years - 3 times more than Scotland’s average, and is currently the second most populous city in Scotland. The population is expected to continue growing rapidly, and reach about 570,000 residents by 2035, a 27% increase since 2000.
Economically, Edinburgh has seen a significant increase, with its GDP expanding by 182% since 2000, reaching GBP33.1 billion in 2023. In the real estate sector, house prices have grown 49.3% since 2015, with a further increase of 17.6% projected between 2023 and 2027. Additionally, according to Zoopla, Edinburgh currently ranks in the top three UK markets experiencing price growth in 2024.
In early 2023 a rental cap was introduced in Edinburgh by the Scottish government due to spiralling rental price growth. But the policy has backfired and led to Edinburgh seeing some of the highest rental price growth across the UK. Given that rental increases were limited by the cap during tenancies, landlords responded by hiking rents as much as possible at the start of new tenancies. This resulted in the policy quickly being scrapped as of March 2024 and the market still remains one of the strongest in terms of rental opportunities.
The combination of a growing economy, a strong job market, and increasing property values establish Edinburgh as one of the best real estate investment cities for property investors in the UK.
Browse through our properties in Edinburgh.
Aerial footage of Salford Quays, Great Manchester during a sunset time.
3. Manchester: Population Boom Meets Housing Deficit
Greater Manchester (encompassing ten metropolitan boroughs, including Manchester City, Salford and Trafford) has a total population of approximately 2.79 million (2023), which is forecast to rise to 2.96 million by 2030. This places it as the second most populous urban area in the UK after London.
Manchester’s position is solidified as a leading UK business hotspot and a top global city with a compelling case for property investment. It embodies a blend of strong, diverse career prospects, vibrant lifestyle, and leisure opportunities, as well as contemporary urban development. This is echoed in its accolades, recently ranked as the third-best city in the world by Time Out and listed as the UK’s Most Liveable City by The Economist in 2022.
The city’s regeneration since the mid-1990s has propelled its growth, transforming it into one of the most dynamic economic centres in the UK. Global employers such as Google and HSBC have been attracted to the city, as well as the BBC in a motion to relocate the entertainment industry from London to Manchester’s MediaCityUK.
Manchester is also regularly in the global spotlight due to sports and cultural activities such as football. It is home to two of the most famous football clubs in the world, Manchester United and Manchester City. Manchester United is the world’s 4th most valuable football club, regularly hosting sell-out crowds of 85,000+ at their Old Trafford stadium.
The educational institutions in Manchester contribute significantly to its economic growth due to a large student population (more than 100,000), many of whom remain in the city post-graduation to start their careers. The city makes a prestigious feature on the Top 50 Best Student Cities list (QS World University Rankings). This has created a thriving community of young professionals, continually refreshing the local talent pool and driving demand in the rental market.
Manchester’s GDP has grown by 240% since 2000. It generates the largest UK economic output outside of London and is predicted to reach a GDP of GBP58.4 billion by 2035. This economic growth coupled with strong population growth have led to a rise in housing demand.
According to Savills, house prices in Manchester are expected to grow by 21.5% in the next five years. The city is forecast to be one of the best real estate investment cities in the UK, ideal for buy-to-let investors.
Explore our properties in Manchester.
Aerial view over the city center on a sunny day
4. Birmingham: Economic Powerhouse with an Acute Housing Need
Birmingham, known as the UK's Second City, has demonstrated significant economic growth, with a 121% increase in its economy since 2000 and an anticipated further growth of 60% by 2035. Despite this economic vitality, Birmingham faces a notable challenge: its housing stock has not kept pace with rapid demographic expansion, resulting in a projected undersupply of at least 26,000 units by 2031. This severe imbalance between housing demand and supply creates a ripe opportunity for property investment.
The city's appeal as an investment destination is further enhanced by substantial regeneration projects and infrastructural improvements, including the introduction of the HS2 high-speed railway. This line will dramatically reduce the travel time to London to 45 minutes, enhancing Birmingham's appeal to commuters and potentially increasing demand for residential properties. As house prices are expected to rise by 19% over the next five years, Birmingham presents a compelling value proposition for investors looking for areas with significant growth potential and current affordability.
