As the fourth largest city in England, Sheffield is making a name for itself amongst the investment giants such as London, Birmingham and Manchester, as a great option for savvy investors - whether they are looking for great rental yields or capital gains. But, what makes Sheffield such a good option for investors - both new and experienced? Let's start with some key facts about the city...
• House prices in Sheffield have risen almost 25%in the last five years to 2018 (Zoopla) to be at an average of £167,000, which is still lower than the national average of £291,000
• Sheffield's population is predicted to grow by 15% in the next 15 years (Sheffield City Council)
• The city has one of the highest retention rates of graduates, with 25% of University of Sheffield students choosing to stay on in the city (University of Sheffield)
• Sheffield's local economy is estimated to grow by £3bn by 2025 (The Sheffield City Region Strategic Economic Plan 2015 - 2025)
• In the next 10 years, it's predicted that over 70,000 new jobs will become available in the city
• Sheffield is a central player in the HS2 and Northern Powerhouse Schemes
Sheffield... the city
Located in South Yorkshire, Sheffield boasts a population over 560,000, which grown to 1.5 million within its metropolitan region. Known as the 'Steel City', Sheffield gets its nickname from its rich heritage of steel work. While you will no longer find smoke stacks around the city, this heritage of its industry days can still be seen in the cultural, art and architectural influences around the city.
In a contrast to this, Sheffield is now one of the greenest cities in the UK, with more trees than people! The city has a total of 2 million trees, 150 woodland areas and 83 parks to boast; and is also able to boast one of the lowest crime rates of any city in England, making it a great choice for families as well as young professionals and students.
Sheffield... and education
One of the stand-out reasons that Sheffield is such a good city for investment, particularly those looking for opportunities in the student and young professional market, is its large volume of students and sought-after university courses. Sheffield is home to two of the country's best universities in their fields - University of Sheffield (a Russell Group university) and Sheffield Hallam University - and is also home to one of the largest further education colleges in the country. With this large youthful population, Sheffield has a constant pipeline of eager renters looking for high quality accommodation, with over 50,000 students a year migrating to study in the city.
Sheffield... and its economy
Worth more than £7bn a year and Sheffield Hallam in the top ten richest towns in the country, the region has one of the fastest growing economies in the UK. Its GVA has increased by a staggering £3.4bn since 1997, to now be over £9bn. This steady growth is only predicted to increase more - an average of 5% per year to be exact - exponentially faster than any other location within Yorkshire and Humberside.
Sheffield... and demand for accommodation
The demand for high quality accommodation in the city is greatly outweighing its current supply, and not just in residential property - there is a distinct lack of commercial opportunities available to renters. The buy-to-let and student accommodation markets, however, are the sectors which are in most demand.
With the population of the city increasing rapidly every year, city centre accommodation supply is lacking. This has caused an increase in house prices in Sheffield over the last five years seeing property prices jump 25% (Zoopla), and the average rent has now inflated to £625 pcm (Home.co.uk). It's predicted that house prices, rental demand and rental costs will only increase over the coming years, especially in city centre locations and sought-after areas such as Kelham Island.
Where is best to invest in Sheffield?
So, we've shown you why Sheffield is such a good city to invest in - but which areas within the city should you consider? Each of Sheffield's areas has its own types of properties, demand and benefits to investors dependent on your chosen field.
Sheffield city centre has a population of just 30,000 and the average house prices are quite low considering its central location at just £114,200. The city centre is popular with Sheffield's ever growing young professional renters looking for high specification apartments either in top of the range modern developments, or converted period properties. There is currently a wealth of development in the area, giving off-plan investors a lot of choice. Total Money reports that yields in the area are on average 6.85% in S1.
With a population of 192,000 it is one of the most densely populated areas of the city (by number of residents), and has an average property price of between £190,000 and £330,000 - so it is also one of the most expensive areas. Mainly residential, this suburban area gives great scope for investors looking for family lets and larger properties. The side of this area closest to the city centre also houses the universities, Royal Hallamshire Hospital and Sheffield Children's Hospital, offering great opportunity for graduate, young professional and student accommodation investors too. Yields in this area are slightly smaller at an average of 3 - 4%, however in the HMO market this can be up to 8%.
South West Sheffield
The most expensive area in Sheffield with an average property price of between £240,000 and £390,000, and a population of just 63,000, this area is home to many of Sheffield's trendiest restaurants, bars and shops. As the city's most in demand area, it's a great option for investors looking for great yields as opposed to high capital gains.
South East Sheffield
Average house prices in this area are up to £200,000, and houses a population of 158,000. Known as Sheffield's main mid-priced family area, the south east of the city is great for investors looking for higher yields for long-term letting. The area has great access to the Advanced Manufacturing Park offering investors high demand for accommodation in the area from professionals. Yields in the south east of the city reach an average of 5%, according to Total Money.
One of the cheapest parts of the city in terms of property price, with average prices at just £100,000 to £120,000, this area offers great scope for HMO investors, and those looking into alternative accommodation for students. Yields in this area are some of the highest in the city, with some investors able to get over 8.16% (in S2) for their properties.
Thinking of investing in Sheffield? Get in touch with us today on 0161 3026732 to enquire about our current opportunities, or take a look at our portfolio here.