“Location, location, location.”
Why is this phrase so often used?
When considering investing in a property, the location is paramount because it is the one aspect of a property that you can’t change. You can increase the size of a living room, you can install new features and fittings, but the location of a property is fixed. You need to ensure you make the right choice first time.
This is tough enough when buying a property for your home, and even harder when choosing one as an investment, with location having the potential to make or break your property portfolio.
As an investor, especially if you are new to property investment, you need to keep your finger on the pulse and be aware of where the next property boom might happen.
The high prices, headlines and glamour of investing in major cities like London still attracts a lot of attention, leaving some of the best locations untapped.
We’re here to tell you about one such area that is prime for property investment and one you seriously need to be considering… Preston.
1. Capital Growth
When researching an area to invest in, the first thing you research is always going to be the capital growth. Simply put: are house prices on the rise?
So, how does Preston measure up on this front? Well, according to Zoopla, the value of Preston property has increased on average by £21,601 over the last 10 years, an increase of 13.14%.
What this shows is that, not only are you likely to see regular returns on investment through strong rental yields, but we can see regular capital appreciation in the long-term for the area, all of which leads to a sound investment choice.
Now we know that Preston provides opportunities for investments with good capital growth, it’s worth taking some time to identify why Preston is on the rise. Do this, and you’ll have an even clearer idea of whether Preston will continue its upward trend.
By understanding the transport links to the area and how much attention the city is receiving in terms of investment, we have a good picture of how attractive it is to buy property in Preston. But, even with the knowledge of average rental yield, you wouldn’t commit to a long-term property investment without looking at capital growth.
2. Increased Investment
Anyone who has purchased a property before knows that local investment is a strong sign that a location is on the rise, and house prices are likely to follow suit. In recent times, Preston has seen a huge windfall of investment in the city centre that looks to benefit the area commercially and culturally.
A total £434m has been pledged towards the transformation of the area, creating thousands of new jobs and homes.
A forecast of 20,000 new jobs and 17,420 new homes are to be created. This investment will provide a huge boost to the local economy, which is expected to grow by £1 billion over the next ten years.
A £50m development of Markets Quarter is due to be completed by 2020. The plans for the area are comprised of a new 11-screen cinema with a large format experience screen, seven family restaurant units and a new multi-storey car park of 593 spaces.
Mark Whittle, manager of Preston Business Improvement District, said: “Preston has long had a good dining and bar scene, and the introduction of Level will provide yet another definitive reason for people to visit. I can see Level being a key player in bridging the gap between the daytime and night-time economies of the city centre; we wholeheartedly support that.
“In addition, we have the Harris Hotel (in the former Post Office) due for completion next year, which again shows the level of private sector interest and investment in our great city. We have a great deal going for us; not least a committed and talented business community, but fantastic connectivity to the regions and that real pride in Preston which is vitally important in encouraging others to realise our city’s potential.”
The increased interest in Preston is no wonder as, for the second year running, Preston has been named the best city to live and work in the North West in the Good Growth for Cities Index by Demos-PwC, which analyses categories including jobs, income, transport and work-life balance.
There’s no doubt then that Preston is an up and coming market and property investors are already starting to take notice. The completion of city centre developments such as Market Quarter is only going to intensify this interest, so investing in Preston property early is essential to getting a great deal.
3. Healthy Surrounding Areas
Of course, all this new investment in Preston is great and suggests a lot of potential for the future, but you still want to ensure the city is not a bubble that is going to burst. The best way to identify whether Preston is likely to grow in the future is to look at the surrounding areas and neighbouring towns and cities.
One of the factors behind the boom in Preston is the health of neighbouring cities, Liverpool and Manchester. As these cities grow, more and more renters are looking to smaller cities like Preston to provide a great quality of life and still benefit from being close to these major northern hubs.
This is especially important to young professionals, many of whom are priced out, but still want to enjoy the buzz, of a city centre.
For investors, Preston also offers a great opportunity to secure a property at a much lower investment total when compared with similar properties in Liverpool and Manchester.
In terms of towns that surround Preston, Chorley is another area that we have identified as a property investment hotspot. With £17 million to be invested into the town centre, Chorley is another of Preston’s vibrant neighbouring towns who are going through a boom in regional growth.
As well as the man-made attractions, Preston also benefits from mother nature. The Lake District is a huge tourist attraction for the area which sees Preston benefit commercially and economically. Highlighting this point, Eleanor Harvey of BuyAssociation wrote in 2018:
“The area’s success comes from factors such as its proximity to larger cities like Manchester, as well as to beauty spots like the Lake District, its improving employment rates, and its impressive house price to earnings ratio, as property prices in Preston sit below the national average.”
4. Great Transport Links
Preston wants to benefit from its proximity to cities like Liverpool and Manchester, so it’s no surprise that the city has great transport links to make visiting these locations for work or pleasure easy.
With access to the M6, M61, M65 and the M55 motorways, Preston is the geographic centre of the UK. Less than an hour from Manchester, Liverpool and the Lake District by car, Preston offers easy access to the North’s major hubs as well as being just two hours from London by train.
Eleanor Harvey of BuyAssociation writes in January 2018:
“It is worth noting that Preston might be the only stop on the line between Scotland and London when the first phase of HS2 is completed. This means the city, as well as the surrounding area, is likely to be affected as footfall increases, leading to more investment in the area and more opportunities for businesses.
“Transport for Lancashire has also suggested the idea of creating a new business district near the railway station in Preston “to provide Preston with the high quality, premium business investment location currently missing from the city centre.”
5. Thriving Universities
University students may have a reputation for messy bedrooms and missing lectures, but their impact on the UK rental market cannot be ignored.
With more and more students settling where they study and looking for rented accommodation when they enter the job market, choosing a location with a thriving nearby university could make your property investment experience highly profitable.
Preston and the surrounding region plays host to three universities. UCLan, Lancaster University and Edge Hill. UCLan, based in the heart of the city, is one of the largest universities in the UK with a staff of 3,000 as well as 32,000 full and part-time students in 2018.
UCLan is the fifth largest employer in the North West of England. In 2015 the Centre for World University Rankings placed UCLan in the top 3.8 per cent of all worldwide universities.
According to Centre for Cities, 37% of Preston students choose to continue their university studies in the city and, with a graduate retention rate of 22%, we can see that students and young professionals are looking to live, work and study in Preston and its surrounding areas.
So, as well as offering young professionals from Manchester and Liverpool a more affordable living option, Preston also plays host to its own young professionals who are increasingly looking to stay in the city following the completion of their degrees.
This all means a high demand for rental properties in Preston and that’s good news for investors. High demand means high occupancy rates. High occupancy means a high rental yield. High yield means a higher return on your investment.
6. High Rental Yields
So, Preston provides a great investment opportunity so far as capital growth is concerned, but that’s not the only financial consideration. You also want to ensure you invest in an area with high rental yields to benefit from a healthy monthly income.
The rental yield of a property is what determines the returns that an investor will be able to see while they lease the property out and is one of the main figures that can determine a great property investment.
In a study by Totally Money, Preston’s PR1 postcode was listed as the 8th best location outside of London for buy to lets, with an average rental yield of 8.65%.
This is a strong showing from Preston when compared to some much larger areas like Manchester, Liverpool and Edinburgh. One highlight from this chart shows, of the postcodes in the top 10 rental areas in the UK, Preston has the highest number of properties for sale, though we don’t expect that number to stay that high for very long
So, everything seems to be pointing to Preston as the UK’s next property hotspot and we’re not the only ones who think so...
“The only way is up. We are focused on driving a Preston boom. It will boom in the future – it could be five years off, but Preston will definitely boom.” - Richard Simkin, Guild Group Head of Operations
That is why The Heaton Group is at the heart of some of the investment going into the city currently with our exciting developments. If you want to learn more about our activities in Preston, take a look at our current projects.
If you’re thinking about investing in property, make sure you read our eBook before you do. Download it for FREE here: How to Invest in Property the Easy Way: Strategies for Success and What to Avoid.