I am from the North, so forgive me if I am biased, but I cannot help but be excited that northern cities are finally being regenerated on a grand scale. Far from being grim, the North can boast of museums, art galleries, improved transport links, high spec apartments, waterside living, shopping centres, expanding airports, bridges, new job opportunities and business initiatives. Northern cities are changing, are changing fast and are changing for the better. Hence the investor, with chequebook in hand, has started showing an interest and the floodgates for residential and commercial investment opportunities have opened.

WHY INVEST IN THE NORTH?

Property prices are cheaper, rental yields are higher. Northern cities are being regenerated. Property prices are rising in the North, while remaining static in most of the South. The economy in the North continues to boom and unemployment figures are low. There is also a genuine commitment from developers and local governments to increase cultural interests, facilities and transport links, in order to lure investors and increase job opportunities.

Relocation

Young single professionals from London are relocating to the North, working as accountants, lawyers, brokers and so on with companies that have satellite offices in Newcastle, Leeds, Manchester or Liverpool. Couples with children also relocate to the North because the region offers them the possibility of cashing in their London housing chips and buying a bigger house with a larger garden than they can afford in the South. There are also good schools in the North and these help attract families to relocate. Some businesses are also relocating northwards because business costs, staffing and overheads are lower than in South.

LOCAL MARKET FORCES

It is important, just as with the South, to understand as much as possible about local market forces. Take into consideration before choosing to invest what job opportunities are in the area. Does the area have a university? What are the plans for the infrastructure of the nearest town or city? Are regeneration schemes definitely planned? What is the master plan for the city?

The Northern Way

This is a proposed plan to link all the major northern cities as an ‘extended metropolis’, which could rival London in its economic power. Each city would retain its own identity, whilst together being seen as a single economic unit. This would attract business from the South, generate thousands of new jobs and relieve the housing pressure in the South.

In order for this long-term plan to work, it would necessitate new transport links, homes and business facilities. The new ‘extended metropolis’ would include the cities of Manchester, Leeds and Hull with spurs linking it to Sheffield in the south and Newcastle in the north. This plan is very much in its early stages but is an indication that the North is seen as an area of considerable investment potential.

Owner-occupiers/tenants

You will need to assess whether the property you choose to buy will have a market for either owner-occupiers to purchase or tenants for rental. The best investment property will appeal to both markets and this would be important in a downturn. If you wanted to sell the property and were unable to achieve the right price, you could put the property up for rental. Because of these factors a property that can satisfy both markets will always be the safer bet. This ‘appealing to both markets’ applies as much in the North as it does in the South.

HOW CAN I ASSESS WHICH NORTHERN CITY WOULD MAKE THE BEST INVESTMENT?

I always recommend visiting the city personally to get a ‘feel’ for the place. You can see with your own eyes whether the city centre is being regenerated or not by walking through it! Look out for skips, cranes and obvious signs of a building programme.

How big is the city?

This will obviously affect your market. The bigger the city, the bigger your market. This does not mean to say that there aren’t good investments to be made in small towns and cities but obviously the market will not be as great. As more and more people choose to cut down on their commuting distance to work, living in the heart of a city affords that freedom. If a city has a large workforce and prospects of good future jobs growth, an investment property will have potential to increase in value in a rising market and a potential for rental should there be a downturn.

Theatre, cinema, museums and art galleries

If you want a good all round investment, it will be an advantage if the city is on the ‘up’ and appeals to a wide market. If the city has a cultural aspect to it, how well is it represented? Does the city have museums and galleries to visit? Does it have a theatre, preferably one with an impressive track record? If the area does not have a cultural aspect to it, consider this when choosing your investment city, as this will affect your market. A thriving city should be able to accommodate most tastes.

Sport

Sport is an important part of our lives, whether we are football fans or not. Does the city have a well-supported football team? Are there any sports stadiums? Does the city host any major sporting events? Has the city got a dry ski slope nearby? These are questions that you can easily find the answers to and, although not necessarily conventional ‘investor’ questions, they can help you assess the morale of a city. If the leisure and sports facilities are good, the local population will be more stable than in a city where the services are poor.

Events

If a city hosts big events, this will not only make money for the city and create job opportunities but it will also keep it in the public eye. This, in turn, will help it to remain fashionable because a city will have to offer good facilities and infrastructure if it is to attract competitive business and music events.

Company investment

Are any ‘household name’ companies already in the area and are any planning to bring investment to the area, in the terms of new businesses and job creations? Your estate agent should be able to ‘talk up’ the area for you but if you want to verify any information for plans afoot, speak to the local authority planning department.

Industry and technology

Is the city famous for anything it produces, such as Sheffield, which is known for producing steel? Does it have active industries that manufacture goods? Does it have an expanding technology profile, which will create job opportunities and help bring long-term prosperity to the area? It is important to fully research what the employment situation is in any city and source where the areas for expansion are going to be. For instance, if you are aiming for a young professional to either rent or purchase your property, you will need to consider how central your property is to the business district of the city. If you are going to be renting to a student, you will need to consider the proximity of your property to a learning centre or university.

Change in working practices

A lot of cities are seeing a shift in their employment patterns. There are less manufacturing jobs and more in the service sector. The ‘jobs for life’ pattern has changed and the work force is more fluid, working on fixed term contracts or in a ‘temporary’ capacity. This does not mean that at the core, there isn’t a stable workforce, but it means that in the service industries, such as in hairdressing, retail and catering, the work force is more transient and, as such, is more likely to rent in the short term.

History/attractions

What is the history of the city? Is it famous for any historical buildings? Does it have an interesting cathedral? Not all cities abound with ancient monuments but most should hold some attraction for the visitor, even if it is only an excellent shopping centre!

Restaurants/cafes

Any city that has a plethora of coffee bars that spill out onto the pavement is moving with the times. The coffee industry is a big one and if a well-known coffee shop chain is going to open up in your area, this is a good sign. Most large chain concerns do their own extensive market research before they invest in an area. If they think that there is business to be had, then it shows a certain confidence in the area. Restaurants also play a large part in city living, as it is convenient for people to be able to walk to a good restaurant and not have to worry about the drink-driving issue. It is also important for visitors to the area to be able to enjoy a good standard of food during their visit and to be able to select from a wide variety of cuisines.

Famous people

Are any famous people from the city, such as the Beatles with Liverpool? Do any famous people live there? Do they promote the area? There is an obsession with fame and if a famous person chooses to come and nestle in the heart of a city, this can add to the appeal of city living. Living in the same block as a famous footballer can only add to the appeal, whether you like it or not!

What is the catchment area for the majority of the workforce?

This put quite simply is where people choose to live. If you buy a good property in an unfashionable area, this is unlikely to net you the same returns as if you choose a reasonable house in a fashionable area. How you determine what is fashionable and what isn’t will of course be down to the proximity to facilities, transport links and job opportunities in the area. Does the area have a visual edge? Is it close to a park, river or canal? If the property lies in a well-maintained part of the city, close to amenities and there are plans for improvements, this should represent a good investment in a rising market.

Road links

How far away is the city from a major road or motorway? What are the journey times from your chosen city to other major cities? How easy is it to get to London? Is the city easily accessible to Scotland, Ireland or Wales, as well as the capital?

Railways and airports

Are there efficient railway services to London and other major cities? Is there an airport close by? What cities are flown to and what are the journey times, destinations, costs? What are its European connections? Is the property you are considering conveniently placed for most transport links?

Crime rate

Does the city have a high crime rate and if so what areas are particularly affected?

New developments

How many new developments are planned? How many units are being sold to ‘investors’? If the majority of the development is being sold to investors then this could result in a glut of properties being released for rental, or for sale all at the same time. This would affect the market and you will need to consider whether you want to invest in such a block and whether you have the funds to ride out any new development hiccups, such as over-supply, low rental yields and failure to ‘sell on’ at the right price.

USEFUL INFORMATION ABOUT THE TOP NORTHERN CITIES

Below I have summarised some useful information about northern cities. There are many other factors to take into consideration when choosing to invest in the North but it would be impossible to list them all here. There are many websites which will aid your research and I have listed some of them here.

• UK cities local authorities: www.ukonline.gov.uk
• 2001 Census is a count of all people and households in the UK. It provides statistical information for schools, health services, roads and libraries: www.statistics.gov.uk/census2001
• Acorn Profiles (consumer preferences and behaviour). House price data can be accessed on www.upmystreet.com
• Regeneration profiles: www.englishpartnerships.co.uk
• Neighbourhood renewal office of the Deputy Prime Minister: www.neighbourhood.odpm.gov.uk
• Regeneration UK: www.regeneration-uk.com

Manchester

• The UK’s second city, measured by population and business status.
• City centre population: 20,000.
• The city centre was bombed by the IRA in 1996 and has since been regenerated.
• Manchester hosted the Commonwealth Games in 2002 and this encouraged inner city investment.
• £83 million from public funding has been invested in the city centre.
• Piccadilly Station has undergone a £55m refurbishment.
• Public money has gone into museums and art galleries. Salford Quays has benefited from the modern Imperial War Museum North and the Lowry Arts Centre.
• Manchester Art Gallery was extended and a steel-strung bridge was erected over the Manchester Ship Canal.
• The sports facilities built for the Commonwealth Games have been put to good commercial use. The weight lifting venue is now the Manchester International Conference Centre, the four pool aquatic centre is now a public facility and the Commonwealth Stadium is now host to Manchester City FC.
• New retailers have moved in including Selfridges, Harvey Nichols and Heals.
• Blue chip companies are moving in and the rental market is maturing.

• The Beetham Tower is being built, which will be the highest residential building in the UK.
• Manchester is home to the famous Manchester United FC and Manchester City FC.
• It is also home to the excellent theatre, the Royal Exchange.
• Manchester has three universities (counting Salford).
• Manchester is famous for many things but particularly Coronation Street, which is recorded there (and I should know!).
• Manchester has trams and a good transport infrastructure.

Leeds

• Leeds is the UK’s third largest city.
• Leeds is the largest financial centre outside London.
• Leeds has one of the fastest growing economies in the UK.
• A third of the city’s £9 billion GDP is generated by the financial and business service sectors.
• It has offices for Price Waterhouse Cooper and KPMG business consultants.

• Most leading household names in retail banking and insurance services have offices there.
• Other financial companies there are First Direct, Alliance & Leicester, Halifax Direct and Direct Line as well as the long established GE Consumer Finance, which is the consumer lending and credit card division and has outlets in 35 different countries.
• It is the country’s second major centre for paper manufacture, printing and publishing.
• It is the regional headquarters for supermarket giants ASDA and Morrisons.
• It has good state schools.
• It has regeneration prospects, with hundreds of city centre apartments currently under construction. Plans to revamp the Grand Theatre and Millenium Square, plus a new £26m museum.
• It has good transport links and is close to the MI, M6, M62, M621 and the Al.
• It has good train links to London and Scotland.
• It has two universities, a football team and the West Yorkshire Playhouse.
• It has urban waterfront areas.
• Leeds City Council forecasts a city centre population of over 16,000 in the next five years.
• Work has already started on the Supertram.
• The pedestrian heartland of Leeds attracts retail and leisure businesses.
• It boasts a Harvey Nichols and has designer, quirky shops and stalls at the Corn Exchange and Granary Wharf.
• Surrounding areas of Bradford, Harrogate, York, Huddersfield and Skipton are all within commuting distance of Leeds.

Newcastle/Gateshead

• The Gateshead Millennium Bridge cost £22m and leads directly to the entrance of the Baltic, a £46m centre for contemporary art.
• In 2005 the Sage Gateshead will open, a £70m music centre with two new concert halls and a music school.
• A new £7m dance centre will be opening in Newcastle with studios, theatre, library and café bar.
• The re-opening of The Waygood Gallery after a £5m refurbishment.
• The re-opening of the Newcastle Playhouse after a £7m rebuild.
• Tourism in the North East is now worth £1.6bn. It employs 100,000 people.
• It was one of the six short-listed cities for European Capital of Culture 2008.
• There is a council-funded 20 years regeneration initiative.
• It has a football club, good rugby clubs and is home to Jonny Wilkinson!
• It has Newcastle University and the University of Northumbria.

• The city centre is attracting trendy bars and restaurants.
• Newcastle has a history and was once a religious centre.
• The Council’s Economy Development Strategy for the next ten years is to create a dynamic city offering opportunities for innovation, employment, business, education and leisure.
• The Quayside has been transformed and is now a vibrant cosmopolitan area.
• The transport system is the Tyne & Wear Metro.
• Newcastle has an airport.

Sheffield

• England’s fourth largest city.
• Population of 550,000.
• Voted the safest city in the UK, according to government statistics.
• Sheffield’s two universities teach 45,000 students annually.
• Sheffield College is the largest in Europe.
• One third of Sheffield is within the Peak District National Park.
• Sheffield is England’s greenest city, containing 150 woodlands and 50 public parks.
• Sheffield Crucible Theatre has hosted the World Professional Snooker Championships every year since 1977. The Crucible Theatre itself is well respected for its dramatic productions and won the prestigious title of Barclays Theatre of the Year 2001.
• Sheffield Football Club is the oldest football club in the world.

• Over 500,000 tonnes of stainless steel is manufactured in Sheffield every year.
• Liquorice Allsorts – produced by Sheffield’s sweet makers Cadbury Trebor Basset – celebrated 100 years of production in 1999.
• A large proportion of the world’s surgical blades are made in Sheffield.
• A workforce of over 1 million people live within an hour’s drive of the city.
• The Masterplan for Sheffield focuses on the city centre and includes, residential, retail, leisure and cultural facilities and improved transport links. The primary objective of the Masterplan is to create new jobs and to make sure that local communities have access to them. The fundamental principles of the Masterplan are:
  
  – To create excellent public places and facilities.
  – High quality commercial development including, hotel and offices to draw in private sector investment and create up to 1,500 new jobs.
  – City Hall is to be refurbished into a state-of-the-art, regionally important cultural venue and conference centre.
  – The new retail quarter will be pivotal to the Masterplan, the idea being, to lure high quality retailers and new shoppers back into the city centre and away from the shopping mall!
  – The railway station has an ongoing refurbishment plan.

York

• York lies within one of the fastest growing economic areas in the UK.
• York is situated is just 21 miles from the financial capital of the North, which is Leeds.
• The city has established itself as a centre for high tech business, following the launch of the Science City York initiative in 1998. Since then it has created 1,600 new jobs with a further 15,000 new science and technology jobs expected to be created by 2021.
• York is 100 minutes from Kings Cross and 30 minutes from the Leeds/Bradford airport.
• The city has a strong financial and service sector.
• York has two universities and a law college.
• York has two theatres.
• York has a large tourist industry, as befits its Roman and medieval heritage.
• York Minster is a well-known attraction.
• The city has a racecourse.
• It has boutique shopping, good restaurants and trendy coffee bars.
• There are luxury apartments and town houses.
• York is situated within its historic wall.
• The average house price in York increased by 22.9% last year.
• York is an attractive city.

Liverpool

• Liverpool has been voted European Capital of Culture 2008.
• This will bring in £2bn of investment.
• £1.7m extra visitors.
• 14,000 new jobs.
• Liverpool has Europe’s fastest growing airport, named after John Lennon.
• A new airline shuttle service ‘The Liverbird’, running daily trips to London, has been introduced and is already being hailed as a great success.
• Liverpool celebrates its 800th birthday in 2007.
• There is the connection with the Beatles.
• Liverpool is building a Fourth Grace, to compliment the Royal Liver Building, the Cunard Building and the Port of Liverpool Building.
• The city has theatres, museums and art galleries including the Tate.
• Liverpool has a two football clubs, Liverpool and Everton.
• Merseyside is among the UK’s safest metropolitan areas, according to statistics from the Home Office.
• Liverpool has a university.
• Kings Waterfront is to be regenerated and will include a new conference centre, with adjacent arena and exhibition facility, hotels, residential and commercial development.
• The city has the famous Aintree racecourse, where the Grand National is hosted.
• Liverpool shipping group Bibby has secured £26m of funding to boost its UK operations and international expansion programme.
• Liverpool has two cathedrals.

FACTORS AFFECTING THE PROPERTY MARKET

The danger is, of course, that city apartments can be owned in large numbers by ‘buy to let’ investors, hoping to either ‘flip’ their property prior to completion or keep it to rent out, with the aim of achieving long-term capital gains. These factors can affect the stability of the market. First-time buyers will be priced out of the market, which will have a knock-on effect throughout the property chain.

If the market becomes saturated and there is an over-supply of properties for sale and rental, yield and sales prices will be automatically lowered. When this happens, the market has to shift outwards to the surrounding areas, within easy commuting distance of the city centre. It can be there that the best property bargains are to be had, if you are aiming to purchase at the lower end of the market.

If you are wanting to buy in a hotspot but are priced out, look at the area next to it. This will still be affordable and will have some capital gains potential, as the hotspot inevitably expands into the surrounding areas. Remember that in order to maximise on ‘property profit potential’, you are investing for long-term prospects, rather than short-term capital gains.

SUMMARY

Property prices are rising faster in the North than in the South, but are still relatively low. Many northern cities are being regenerated and workers and families are relocating there. Visit any areas you are considering investing in, think about all the factors listed in this chapter, then the decision is yours.