What to Know Before Investing in Property in Leicester
Current Property Market Condition in Leicester
If you’re considering investing in property in Leicester, there are a few things you should know. From the current property market condition and economic trends to regeneration and investment projects in the area, it’s important to understand the dynamics of the area before taking the plunge. In this guide, we’ll be taking an in-depth look at Leicester’s economy, population growth, job opportunities, expected rental yields, and more, to help you decide whether it’s the right location for your property investment. Read on to find out all you need to know before investing in property in Leicester.
Leicester is a city that exudes character and seamlessly blends the old with the new, making it a captivating destination for both locals and visitors. The city's rich history is reflected in its majestic architectural wonders such as the Leicester Cathedral and the King Richard III Visitor Centre, which serve as a testament to its past. However, Leicester's popularity is not solely derived from its remarkable buildings. The city comes alive with vibrant festivals and celebrations that ignite the streets, such as the exhilarating Caribbean Carnival and the mesmerising Diwali lights illuminating the city. This fusion of tradition and diversity creates an extraordinary tapestry of culture that seeps into everyday life, making Leicester an incredible place to live. The city offers an abundance of parks, museums, and an enviable culinary scene, providing endless entertainment options for its residents. With its welcoming spirit, pulsating with life and brimming with possibilities, Leicester is not only a popular destination but a truly great place to call home.
As of July 2023, the average property price in the Leicester postcode area is £296k, which is a 6% increase from the previous year. The median price for properties is £260k, with established properties having an average price of £295k and newly built properties averaging £326k within the city centre.
The rental market in Leicester has seen impressive growth, with an 11.6% increase between the years ending September 2021 and September 2022, and a 7.8% growth spike within the last 6 months. The average property prices for different types of properties in Leicester are: Detached £420,798, Semi-detached £274,491, Terraced £216,759, and Flats £159,224.
Despite the rising property prices, Leicester remains a good investment opportunity with expected rental yields ranging from 5% to 8%, depending on the type of property and location. Overall, Leicester's property market is competitive, and investing sooner rather than later is advisable to avoid missing out on great investment opportunities.
This growth is expected to continue in the coming years, driven by Leicester's strong economy, population growth, and increasing demand for quality rental properties. Many investors are already taking advantage of the city's investment potential, particularly in the buy-to-let market. As a result, it's essential to be aware of the latest property market conditions and stay up-to-date on any future developments in the area.
When it comes to property investment, location is key, and Leicester ticks all the right boxes. The city has a diverse and thriving economy, with key sectors including healthcare, education, engineering, and manufacturing. In recent years, the city has benefited from significant regeneration projects, including the £330m redevelopment of Leicester's Waterside area and the £100m expansion of Fosse Shopping Park.
Regeneration and Investment in the Area
One of the most notable regeneration projects in Leicester is the Leicester Waterside project. With a total investment of £300m, this project aims to transform a formerly neglected industrial space spanning 150 acres into a thriving and vibrant area. The City Mayor of Leicester, Sir Peter Soulsby, explained that this regeneration was much needed due to the poor state of the area after key industries closed in the 1980s, resulting in neglected and abandoned sites.
The impact of regeneration on property values cannot be overlooked. An analysis of the housing market in Leicester has shown that properties situated near regeneration projects tend to appreciate at a faster rate compared to those in other parts of the city. As the local environment becomes more attractive with new amenities and improved infrastructure, the demand for housing in the area also grows. This increased demand ultimately drives property values higher.
Investing in an area undergoing regeneration can be a promising opportunity for property investors. With the Leicester Waterside project in full swing, there is a strong potential for capital appreciation in properties located in this area. As the project progresses, it is likely that the surrounding amenities and infrastructure will improve, making it an even more desirable location for residents and tenants.
In the next section, we will explore the population and job growth in Leicester to gain a better understanding of the investment potential in this area.
Population and Job Growth
Leicester has been experiencing consistent population growth in recent years, with an estimated population of 380,000 expected by 2023. A large contributor to this growth is the city's student population, which is currently around 35,000 and is expected to continue increasing.
Overall, Leicester's population has grown by 12.1% in the last decade, outperforming other cities in the East Midlands region. In fact, Leicester placed 16th in the Good Growth for Cities Index due to its strong economic growth and above-average performance in terms of work-life balance, number of new businesses, transportation, skillset among all age groups, equitable income distribution, and safety.
Additionally, the city's employment rate in the labour market has been on the rise, surpassing the average rate for England at 95.2% as of 2022. This growth is a result of a diverse range of job opportunities across various sectors, from healthcare to logistics and manufacturing.
All in all, Leicester's population and job growth trends suggest that the city is a promising investment opportunity for property investors. As the city continues to grow and develop, demand for rental properties is likely to remain high, providing investors with potentially lucrative rental yields.
Rental Yields For Students, Traditional Letting and Serviced Accommodation
When it comes to property investment, rental yields are an important factor to consider. In Leicester, the top 50 rental yields are for properties in the LE5 postcode area, which includes Hamilton, Thurnby Lodge, and Evington. But what about the expected rental yields for different types of accommodation?
For student accommodation, Leicester has a strong market thanks to its two universities, the University of Leicester and De Montfort University. According to research by Knight Frank, purpose-built student accommodation (PBSA) in Leicester is expected to achieve gross yields of 5-7% in the 2021/22 academic year. The demand for PBSA is expected to increase, with the number of students in Leicester set to rise over the coming years.
For traditional letting, the average rental yield in Leicester is around 4-5%. However, this can vary depending on the area and the condition of the property. It’s worth noting that rental yields tend to be higher for properties in areas with higher demand for example within the city itself.
As for serviced accommodation, the expected rental yield can be as high as 8-10%. Serviced accommodation is becoming increasingly popular, especially in city centres, and can provide a lucrative investment opportunity for those willing to manage their properties as short-term rentals.
Leicester offers a range of investment opportunities for property investors, with strong potential rental yields across the board. However, it’s important to consider the specific location and type of accommodation before making any investment decisions.
Leicester’s biggest employers and likely your target tenant profile for both traditional long-term lets or short-term stay:
Overview - Is Leicester a Good Investment Opportunity?
After analysing the current property market condition, regeneration efforts, population and job growth, and rental yields in Leicester, it is clear that this city offers a promising investment opportunity.
Leicester has witnessed a significant surge in property prices over the years, with a steady increase in demand from both buyers and renters. This upward trend suggests a favourable market condition for potential investors. Moreover, the city has been actively investing in regeneration projects, aiming to revitalise certain areas and attract more businesses and residents. This investment in infrastructure and development further enhances the city's appeal to property investors.
In terms of population and job growth, Leicester has shown positive indicators. The city's population has been steadily increasing, fueled by both domestic and international migration. This growth translates into greater demand for housing, ensuring a steady stream of potential tenants. Additionally, Leicester's diverse economy has witnessed consistent job growth, creating more employment opportunities and making it an attractive destination for professionals and students alike.
Rental yields in Leicester vary depending on the type of property. For student accommodations, yields are typically high due to the presence of multiple universities and a large student population. Traditional letting also offers favourable yields, as the demand for rental properties remains strong. Lastly, serviced accommodation, with its growing popularity, presents another opportunity for investors to generate attractive rental returns.
Overall, considering the current property market condition, regeneration efforts, population and job growth, and rental yields in Leicester, it is evident that this city presents a favourable investment opportunity. With its positive growth indicators and increasing demand for housing, Leicester is worth considering for property investment.