Manchester has become a popular destination with both UK and international property investors, and even the economic turmoil that has followed the Brexit vote has not robbed it of its shine. Enviable yields have been key in attracting investors to the city, with Manchester recently being recognised as the destination that offers property investors the best yields of anywhere in the UK.
Manchester has consistently been offering market-beating yields for landlords for several years and, in a recent report from LendInvest, has topped the rankings of profitable property investment postcodes. In the period from 2010-2016, the report says, privately-rented properties in Manchester brought in rental yields of 6.8% for their owners annually on average. The report looked at data from the Land Registry for purchase prices and from online property portal Zoopla for rental values in order to calculate the returns that investors were earning through rental income. This 6.8% figure refers only to rent and does not include the value of capital growth.
This is not the first report to highlight the value of Manchester as a place to buy investment property. Last year, a survey by HSBC reached the same conclusion that LendInvest’s report did; that yields in Manchester are higher than anywhere else in the country.
There are a number of reasons that Manchester’s yields are higher than those in other parts of the UK. Limited, constrained supply of rented accommodation simply cannot meet high demand, and with the city’s population growing rapidly many investors believe this will remain the status quo for a while. Some estimates hold that demand for rental properties is four times greater than supply. Demand is high not just because of Manchester’s sizeable population, but also because a very significant proportion of residents -26% – live in the private rented sector.
With the city offering the UK’s highest yields, demand strong, and both continued demand and significant capital growth predicted for the coming years, it is not hard to see why Manchester has become one of the UK’s most popular property investment destinations. Its appeal extends not just to investors within the UK, but also internationally. Recent research has shown that Manchester has the highest proportion of overseas property investors of any city in the North, and one of the highest anywhere in the UK.
Search Accumen, who carried out the research, report that the Manchester postcode area contains 2.253 properties owned by overseas-based companies. International investors have long been interested in the UK, and lately many have been taking advantage of the drop in the value of the pound to get an effective discount on property purchases. Traditionally, overseas buyers been reluctant to invest in UK markets outside London, but higher yields in other cities, with Manchester highest of all, have been changing that situation lately.
While London remains the UK’s leading market for foreign property investment, other locations are rapidly growing. With its high yields and the expectation that it will benefit from a number of economic and infrastructure projects lined up for the North of England in the coming years, Manchester has emerged as one of the definite leaders in attracting foreign investors who want to access the UK market but escape the high prices and comparatively low yields of London.