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SOYO increases the investment potential around Victoria Gate, Leeds

Leeds’ newest district SOYO, or SOuth of YOrk road, will be the city’s new cultural district. The attention of property investors has been drawn to this area of Leeds city centre, as the area has undergone vast redevelopment with the construction of Leeds’ newest luxury shopping centre Victoria Gate, the home of John Lewis. The district will be built adjacent to West Yorkshire Playhouse, Leeds College of Music, BBC studios, Northern Ballet Head Quarters and is set to become a key development in the regeneration of Leeds City Centre.

Leeds’ New Cultural Quarter

The SOYO proposal includes 106,000sq ft of offices, 35,000sq ft leisure, in excess of 700 residential units, a multi-storey car park, 7,500sq ft retail facilities, a medical centre and a series of vibrant public squares. This type of redevelopment is contributing to long-term economic growth in this area of the city centre and is essential for property investors to be aware of when considering capital growth potential of the property.

West Yorkshire Playhouse

The West Yorkshire Playhouse, which opened in 1990 is set to have a £14 million facelift. Redevelopment will include a brand-new entrance, studio and improvements to the buildings interiors for the thousands of visitors they host every year to enjoy. The Playhouse is a big pull for tourists for the city and was shortlisted for a top tourism award in the Arts & Culture category as part of the prestigious Welcome To Yorkshire White Rose Awards.

Transport

The city’s transport system is well positioned for access in and out of the SOYO district. Tenants will have a 6-minute walk to the bus station and 10-minute walk to the train station. Generally, Leeds is one of the most well-connected cities in the UK with exceptional rail, air and road links. London is just two hours away by train and one hour by air. Major roadways including the A1, M1 and M62 are in the vicinity, bringing drivers right into the city centre.

Infrastructure Investment

Within the immediate vicinity of the development is the completed Victoria Gate, a new £165 million luxury shopping centre which is also home to the largest John Lewis store outside of London. The true value of Victoria Gate has been revealed as it is expected to attract over £82.5m of inward investment to Yorkshire during its first 10 years. It’s no surprise then that the economy of Leeds ‘grew faster’ than London since Northern Powerhouse was launched back in 2014.

Investment into the Education Sector

A key growth area for development in Leeds is in the education sector. The city is already served by three universities and has the fourth biggest population of students in the UK. The crane survey recorded four new starts in 2017 adding over half a million sq. ft into the development pipeline. This included Leeds City College’s Quarry Hill campus and developments at both the University of Leeds and Leeds College of Building.

From Students to Young Professionals

Rental potential and longer-term capital growth is strong as more graduates are staying in the city to work in its growing financial, technology, professional services sectors. Three major universities support a thriving student population who are encouraged to stay in the region by more affordable house prices than in the South East ensuring high rental demand and healthy yields for landlords. House price growth in Leeds was at the highest in the UK, with average growth of 5.7% in 2017.

Financial Quarter

Leeds is the second largest financial city after London and has an economy worth £64.6 billion. There are over 30 national and international banks in the city, with First Direct and Yorkshire Bank basing their headquarters there. The city is seeking to establish itself as a strong Northern centre for financial services. A report from law firm Irwin Mitchell said Leeds has expanded its financial sector substantially in recent years, with the city’s total output from finance and insurance increasing by 40 per cent between 2012 and 2015.

Comparing the Northern Powerhouse heavyweights

The key to Northern Powerhouse success is ensuring the sometimes neglected city regions are able to realise their economic potential. The task isn’t a small one and the Northern Powerhouse government minister is committed to balancing the UK’s economic output. Some positive outcomes of this focused strategy are emerging, as the Northern Powerhouse regions have seen inward investment increase even faster than the UK average. According to EY’s latest UK Attractiveness Survey, the north-west region attracted 90 foreign direct investment (FDI) projects in 2016 – 60 per cent of which were first time investments in the region.

Centre for Cities has compiled data on 63 of the UK’s cities to understand and improve economic performance. So how do the cities of Leeds, Liverpool and Manchester compare when it comes to house prices, employment, GVA and graduate retention, all key factors for buy-to-let investors.

In the report, mean house prices in Manchester are £175,419, whilst in Liverpool they are lower at £131,046. In Leeds the mean house price is the highest at £186,206, although when you take population growth and demand for property into account, it is evident that Manchester is a good choice for investors as the population size in 2015, placed Manchester 3rd out of 63 cities in the UK.

The Centre for Cities research also took into account graduate retention rate, or graduate gain. Graduate retention gives an indication of a city’s ability to retain newly qualified graduates based on job prospects, wages and quality of life. Leeds graduate gain is the 3rd highest of all UK cities, whilst 50% of students who left Liverpool for university subsequently came back to work after graduation.

Please note:

* The cities are ranked in order out of 62 or 63, dependent on the criteria, with places closer to 1 at the top of the list.

* “The Centre for Cities uses data for Primary Urban Areas (PUA) in its analysis. This is a measure of the “built-up” area of a city, rather than individual local authority districts. PUAs are used in our analysis because they provide a consistent measure to compare concentrations of economic activity across the UK. This makes PUAs distinct from city region or combined authority geographies.”

Brexit concerns aren’t affecting the regional UK property market

The UK’s regional housing market is shrugging off concerns found in the wider economy following the Brexit vote. New information from Rightmove suggests that the housing market has been resilient to Brexit worries affecting the wider economy.

Although this is a problem for first-time buyers who are facing strong year-on-year price rises, the news is broadly good for buy-to-let investors, signalling confidence and strength in the market.

In London, the combined effect of higher rates of Stamp Duty and Brexit has pushed investors out of the capital and house price growth, which was at 14 per cent in 2016, is likely to fall to three per cent this year and the outlook shows little promise of returning to any similar level in the foreseeable future.

The results also show that there are more buyers and sellers overall than this time last year. The number of sales agreed were also up by 4.6% in June 2017 compared to the same time last year.

Miles Shipside, Rightmove director and housing market analyst, said: “A year on from the shock referendum result and subsequent dent in activity levels, the fundamentals remain strong.”

And they do. Low unemployment and low interest rates continue to ensure the UK is a good choice for investors.

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Source: The Guardian, UK housing market shrugs off concerns of Brexit slowdown; City AM, Six charts showing what the Brexit vote has done to UK house prices

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