Where is the next big property investment hotspot?
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Where is the next big property investment hotspot?

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Forget London, rumour has it that Leeds is the UK’s latest regional property investment hotspot. With overseas investors looking to make the most of the weaker pound, investors are searching further afield than the well-known capital city of London for opportunities. And, according to Hentons, a Leeds-based accountancy firm and property investment firm Palace Capital, Leeds is attracting fresh attention, particularly from middle east-based investors.

“London’s property prices and popularity among overseas investors, are rarely out of the headlines,” said Denhan Guaranteed Rent. “However, prices have climbed so high and Brexit-related concerns remain untended, making London a less attractive option than it was.”

Indeed, many potential investors consider those high prices alone, enough reason to hold off saying yes to a new London-based property investment. A little look at some data show it’s easy to understand those who feel that way.

High street mortgage lender Nationwide’s data underscores the wide divergence between home prices in London and Leeds. The average price of a residential home in Yorkshire and Humberside (where Leeds is situated in West Yorkshire), between July and September, 2016, was £150,823. In London, during the same quarterly period, the average home price was £474,736, more than three times that of Yorkshire and Humberside.

When you begin to consider commercial property prices, you’re talking about even larger sums of money – in both regions. Again, London is the most expensive. But, while the price difference is a pretty big reason behind the rise in investment interest in Leeds, there are other details at play too.

HS2,the Government’s next highspeed train line project – which will improve train links from London to Birmingham, then to Manchester and on to Leeds – is also a driver behind that increased investment interest.

“Even though the highspeed trains from London to Leeds won’t be in operation until the early 2030’s – some 15 years from now, investment in the West Yorkshire city is looking more attractive,” said Proskips. “Getting into the area early could mean buying in at a low price and being well positioned for bigger profits further down the line.”

Nadeem, Ahmed, managing partner of Hentons told the Yorkshire Evening Post that there are some “significant developments with major office and retail schemes launching this year.” He added that HS2 is also proving interesting to some overseas investors who are considering moving money into residential developments around Leeds aimed at both students and young, city workers.

The UK Government’s current drive to increase home building and improve infrastructure provides an additional encouragement to overseas investors. After all, if the Government is going to invest in an area, it stands to reason that region should benefit and thrive under that investment.

“Leeds is a vibrant city that’s popular with students,” said You Chose Windows. “Combine that with HS2 and major commercial building projects and those opting to invest in the city are likely to be making a shrewd decision.”

Palace Capital, a property investment firm, told City A.M. that discussions with Middle Easter property investors is less surprising than it used to be. “We’ve had an approach from a Middle Eastern group, and two or three years ago, that would have been extremely unusual,” Palace Capital’s chief executive, Neil Sinclair said. He added that the returns currently available on similar London-based projects are only around 3-4%, which is lower than what’s on offer in Leeds.

Guest post provided by Property Division.

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