Hull Property Investment Guide

HULL INVESTMENT LOCATION GUIDE

Property Investment in Hull

We often make the point that some of Britain’s less celebrated investment destinations deliver some of the best returns. Hull is a good example of this; a city that does not grab so many headlines as London, Birmingham or Manchester but which, nevertheless, promises all the key characteristics that serious investors value.

In this guide, we will take a close look at those characteristics.

Contents

• Why invest in Hull? A Summary

• Hull – an overview

• Hull’s economic structure and diversity

• Inward investment in Hull

o Examples

• Growth sectors

• Tourism and City of Culture status

• City centre regeneration plans

o Example projects

• Hull’s Covid recovery plan

• Hull’s housing market

• The student property market and Hull University

• Property market predictions

Why Invest in Hull? A Summary

Understanding Hull’s investment appeal is by no means rocket science. It’s a city where rental demand is exceptionally high and yet where average property prices are well below the UK mean. Rental supply is severely limited, rental values have been climbing, yields have been strong, and homes here have been appreciating at a steady pace.

Different sources produce different figures for that rate of appreciation. Land Registry data indicates that, across Hull, average house prices rose by +9.2% in the 12 months to January 2023. Over the same period, Home.co.uk estimates the growth rate at +10. There is considerable variation by property type and postcode, and growth rates have slowed since January, but most sources point to a modest and continuing upward trend.

So much for looking back. Looking forward, it’s a city in which employment rates are rising fast, where businesses are recovering swiftly from the pandemic, and where both public and private sector bodies have been making massive investments. All the signs are that the economy will grow quickly, together with job numbers and the size of the local population.

This, of course, all bodes extremely well in terms of rental demand, yields and longterm capital appreciation.

Key points to consider:

• A growing population

• Rising demand for property and rentals

• Major inward investment

• A major city centre regeneration plan

• Steady growth in high-value, future-proof sectors

• A large university student population

• Rising employment

• Very low property investment costs

Hull – an Overview

Hull is a traditional port city on the East Yorkshire coast. Originally founded on industry and shipping, it has evolved with the times to become a modern and multifaceted centre for businesses of all kinds.

•Location:

•Economy:

•Economic growth:

•Business population:

•Employment:

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•Self-employed:

•Population:

•Population

•Student

Economic Structure and Diversity

The city is benefiting from substantial employment growth and inward investment –both factors that work in favour of local property investors. And significantly, much of this growth is centring upon high-value, knowledge-based sectors such as computing, telecoms and advanced engineering. In its Economic Strategy 20212026, Hull City Council notes that “Since 2015, Hull has seen the largest growth in employment within the medical, construction, and manufacturing sectors.”

However, Hull is relatively unusual in that it has strength across a broad range of industries. These include modern, forward-looking sectors such as digital technologies and renewable energy, but the city is also host to many companies specialising in manufacturing, logistics and port operations. These employ approximately 20% of Hull’s workforce, equivalent to 25,000 people.

Sectors that deliver tangible outputs have played an import role recently. They have helped to protect the city against the kind of Covid-related economic decline and job losses that have impacted so many other cities; those that have relied much more heavily on services such as retail, hospitality and tourism.

“Analysis has … shown that while cities based solely on service sectors have been severely affected by the pandemic, Hull’s economy based on the producer and foundational sectors of manufacturing, transportation and storage and health and social care, places it in a strong position for growth.”

Hull’s Economic Strategy 2021 – 2026

As a result of its economic diversity, Hull has emerged faster and more strongly from the pandemic than many of its competitor cities. The Good Growth for Cities Index 2020 listed Hull amongst its 10 city economies least affected by Covid, and job numbers rebounded quickly. Hull Council reported that by July 2021, the number of people on unemployment benefits “was the lowest since the pandemic began.”

Since then, the city has found many ways to capitalise on this leading position.

Inward Investment in Hull

Before the pandemic, huge inward investment was pushing employment to record levels, and setting the scene for a dramatic revival of the city centre. The pace slowed in 2020, as it did almost everywhere else, but it has recovered quickly. Now, it seems that every week brings news of important investment projects, business start-ups and multi-million-pound deals.

In August 2021, Hull City Council published its Economic Strategy for 2021 – 2026. In it, the authors report that the city has witnessed over £1.4 billion of economic growth since 2013.

The council notes that since 2013, it has created a ‘turnaround’ scenario which has seen:

•Over 20,000 new jobs created

•Over £3bn private investment in the city’s producer economy

•£250m invested into the consumer and visitor destination

•£50m invested into climate change resilience investment

•£89 million of investment related to the city’s UK City of Culture status (2017 to 2021)

Inward Investment – Examples

Over £1 billion of regeneration schemes are now in progress. Some of the most notable developments include:

Green Port Hull

Green Port Hull has its administrative headquarters in Hull city centre, and its operational base at the Alexandra Dock. Employing around 2,000 workers in the city, it has declared its intention “to establish Hull and the East Riding of Yorkshire as a world class centre for renewable energy, creating wealth and employment for the region.”

It goes on to assert that “the renewable energy sector will be the single biggest influence on the local economy for generations, creating thousands of new jobs along with a wealth of opportunity for local people and business.”

In all, the development is set to boost Hull’s economy (GVA) by an estimated £300 million every year and to attract a further £280 million of inward investment. Moreover, as a tier one employer, the organisation is supporting a supply chain that is sustaining literally thousands of additional jobs – and many more can be expected in future. Upon its completion, it will feature new office buildings and modern facilities for freight and warehousing.

Siemens wind turbine blade factory

Siemens is another important local employer and a long-standing investor in Hull. Its turbine blade manufacturing centre was initially valued at £310 million but Green Port Hull notes that the company is now set “to double the size of its factory with a £186m investment, creating a further 200 jobs at the Hull factory.” Now worth an estimated £500m, this new facility is a driver of innovation in the renewable energy sector and, as such, it is helping to cement Hull’s reputation as a centre of excellence in sustainability and low-carbon technologies.

It is also spawning other new projects and investments. In September 2021, for example, various national trade media reported that Siemens had returned to one of its regular suppliers –VolkerFitzpatrick – to create two new wind turbine blade manufacturing facilities, and to repurpose an existing factory at its site in Hull. Worth an estimated £82 million, the scheme is due to be completed in 2023 and should see the creation of 200 new jobs. These will be in addition to the estimated 1,000 employees already working on site.

Centre for Scientific Excellence (Reckitt Benckiser)

At the end of 2019, just a few months before the onset of the pandemic, RB announced the opening of its £186 million health research centre in Hull. Featured nationally, as well as by regional media such as the Yorkshire Post, it is part of a £200 million city-wide investment by the company and has reportedly helped to create or secure 1,200 jobs in the city, while also creating additional high-level roles in research and development.

These and other developments have already created hundreds of new jobs and will, in time, support thousands more.

Growth Sectors

Hull exhibits a robust mix of modern and traditional industries. It has been an important international sea port for centuries, and marine businesses continue to make a valuable contribution to the local economy.

However, Hull’s coastal position has also enabled the city to become a global leader in offshore wind energy and, as a consequence, a major hub for related R&D and engineering. In all, renewable energy technologies are now underpinning an estimated 10,000 jobs in the city.

Besides renewables, other important growth sectors include:

• Construction

• Digital industries and telecoms

• Education

• Finance and business services

• Food manufacturing

• Health, medical and social care

• Manufacturing / advanced manufacturing

• Renewable energy

• Transport and logistics

In recent years, notable private-sector investments and projects have included:

• Shirethorn House – a £30m mixed-use Development in the city centre (2023)

• Siemens Gamesa factory expansion - £186 million at Green Port Hull (2023)

• KCOM - £100 million, full-fibre broadband in East Yorkshire (2022)

• Hull Maritime Museum refurbishment – a £12 million upgrade (2022)

• Wykeland Beal – an £80 million regeneration project at the Fruit Market (2021)

• KCOM - £85 million, full-fibre broadband, Hull (2019)

• Arco – a £25 million distribution centre supporting 200 new jobs (2018)

• Connexin – a £5 million investment in a new telecoms data centre (2018)

• Croda Europe – a £27 million chemical manufacturing facility (2017)

• Smith & Nephew – a new £50 million wound-care research centre (2017)

• Energy Works – a £200 million energy-from-waste plant (2015 – 2019)

Tourism and City of Culture Status

To the above list, we must also add culture and tourism. Hull held the title of UK City of Culture 2017 to 2021. Initially, this prompted a surge in investment and visitor spending –boosting the city economy by an estimated £89 million per annum by 2019.

Hull Council writes that “£250 million (including £150m from the City Council) were invested into the consumer and visitor destination economy, improving our living environment and supporting the City of Culture.” It also records that its status “brought in over 5 million visitors and created over 800 jobs.”

Unfortunately, however, when Covid struck in March 2020, the associated lockdowns prevented the city from making more of the opportunity. Many of the newly revitalised tourist and cultural venues had to close for long periods and thousands lost jobs or were temporarily furloughed.

Nevertheless, its status did certainly raise Hull’s profile and set a foundation for future growth in its visitor economy. The authors of the local economic strategy write that the “City of Culture legacy has led to significant investments by both public and private sectors whilst promoting the city centre as a world class visitor destination.”

Examples include not only high-profile attractions such as the £110 million Hull Venue, which was launched in 2018, but also a host of public amenities and transport infrastructure improvements. Many of these focused on the city centre, as we’ll see later on, but others are undoubtedly benefiting the city at large.

Examples include:

• Hull neighbourhood renewal programme - £500 million

• A63 Castle Street improvements - £355 million

• Cultural infrastructure improvements - £200 million

• The transformation of key urban areas including Albion Square, Whitefriargate, Queens Gardens, and the Maritime Project (£ various)

• Stoneferry Corridor transport improvements (£8 million)

Looking ahead, these and other investments should underpin a stead recovery in the travel, hospitality, cultural and retail sectors, all of which will boost demand for short-stay tourist accommodation.

They should also help to create an even better connected, business-friendly environment that could well attract more investors and prospective employers. Thus, in time, they could underpin rising demand for residential property amongst both buyers and tenants, putting upward pressure on both rental returns and average values.

City Centre Regeneration Plans

Hull’s position, sitting on the coast beside a confluence of rivers, means that a host of industries tend to intermingle and overlap. Its centre is therefore populated not only by businesses and large public sector employers; it’s also host to the headquarters of industrial giants and to a myriad of tourist, retail and hospitality outlets.

To illustrate the point, the historic Museum Quarter sits immediately beside the civic centre and yet the marina and docks are just the other side of the A63, a few hundred metres away.

Consequently, plans to regenerate the city centre should yield benefits to many important sectors, and local planners have not been slow to recognise this. In their economic strategy document, they write:

“Accelerating the renewal of the city centre is a key and long-term ambition. The revival of the city centre core has been a priority for several years. City of Culture legacy has (changed) its focus to an ‘experience destination’, bringing together the unique and historic old town and waterfront and creating a thriving cultural and economic hub…

The ambition for the city to be a world class visitor destination includes promoting the city as a location for large-scale shopping, leisure, food and drink, financial and cultural activities.”

In January 2023, the UK government announced an important step towards meeting this objective, in the form of a £19 million award via the Levelling Up Fund. It confirms that it will support “the regeneration of Whitefriargate and surrounding areas (and) the development of a mixed-use space in Albion Square.”

The work will continue alongside a larger £96 million regeneration programme at Albion Square that is expected to create an additional 400 jobs. Invest Hull notes that the project is due to be completed in 2026.

City Centre Regeneration Examples

Important city centre regeneration schemes include:

Albion Square

The regeneration of Albion Square was postponed by the Covid pandemic but efforts resumed in August 2021. The wider project – worth around £310 million – is creating a mixed-use development, with space for retail, housing and leisure.

Public Realm Improvements

Arup, the company tasked with project managing these improvements writes: “At £25m, the regeneration of Hull’s city centre is one of the UK’s largest and most ambitious public realm schemes.” It notes that the new plans will see improved connectivity between several key zones, including Hull’s railway station, Queen Victoria Square, Trinity Square, the historic Old Town and the Fruit Market.

Fruit Market

Arup adds that “the reinvention of Humber Street, in Hull’s Fruit Market area, to become a new artistic hub, was one of the most successful elements of the project. This area has been totally transformed, producing a creative, mixed-use city quarter with galleries, street art and independent retailers.”

Queen’s Gardens

This area will be recreated with a new public amphitheatre and a reimagined Peace Garden. It will also see new planting, electric vehicle charging points, the restoration of the Rose Bowl fountain and improved public access.

Other regeneration sites include

• Anlaby Road

• Blackfriargate

• Colonial Street

• Dock Office Row

• East Bank

• Humber Quays

• Myton Street

• Portside

• Wincolmlee

Covid Recovery Plan

When considering the viability and likely impacts of the city’s regeneration plan, it’s worth noting that local economic planners have earned themselves a very impressive track record.

The city was named as one of the “10 most improved UK cities” as a place to live and work by Demos-PwC in its Good Growth for Cities Index 2019. Similarly, as the Hull CC News website reports, the previous 10-year plan “set out to create 7,000 jobs within the city; by 2020, more than 20,000 jobs had been delivered and in excess of £3.5 billion of investment secured.”

Prior to the pandemic, things had been going very well. The City Council writes:

“In March 2020 just as the Covid-19 pandemic struck, Hull’s employment rates were at their highest, local wages were growing faster than the national average and investment in the city was at an all-time high.”

Now, describing itself as “unashamedly ambitious,” the council seeks to exceed previous employment and economic growth rates by delivering improvements in “people, place and productivity.” It notes:

“The strategy’s initial focus is on continuing to recover from the social and economic impacts of Covid-19, moving towards a city that is cleaner, greener, fairer, and more inclusive – building on its core industrial strengths and heritage.”

The Covid-recovery plan plays an important role in its overarching economic strategy. It will include support for skills and business support, with additional targeted assistance for sectors most hard-hit by the pandemic. The document states that:

“… accelerating existing work and support for the creative, leisure, tourism and hospitality sectors will be a prime focus in the short term to make sure all parts of the economy recover at pace.”

Hull’s Housing Market

In March 2023, figures published by the Land Registry showed that average values in Hull had risen markedly; by +9.2% between January 2022 and January 2023. That compares against its figure of +6.25% across Britain as a whole.

Over the same period, Home.co.uk estimates that average residential values in Hull rose by +10%.

The Land Registry data also highlights the important fact that property values in the city are less than half the UK average: £138,393 in Hull as opposed to the national mean (for England) of £310,159 – or £293,089 for Great Britain as a whole.

Many sources suggest that prices are an upward trend, though there is no widespread agreement as to the strength of that rise. Indeed, Halifax suggests that average values fell by -1% over the course of 2022, while others indicate positive but more modest growth.

In any event, capital growth is not the only measure of success. For the rest of 2023 at least, the investment opportunities in Hull relate mainly to strengthening yields and prospects for future growth.

Across the various outcodes, HU1 to HU9, PropertyData points to gross yields of between 4.3% and 8.2%. These are good results in their own right and considerably better than the average for the wider Yorkshire & Humber region.

•Average house price (Hull): £138,393 1

•Average house price (GB):£293,089 1

•Average yields: 5.4% 2

•Capital growth forecast +11.7% by 2027 3

Sources:

1: Land Registry, Jan 2022-Jan2023

2: PropertyData, April 2023

3: Savills 5-year Mainstream Forecast

The Student Property Market and Hull University

The University of Hull is an important economic force within Hull. It supports a student body of around 16,000 and, in addition, it directly employs approximately 2,500 staff. This alone makes it an important consideration for investors, because it generates dependable demand for rental property every year, and yields can often be very good. However, its impacts go well beyond the supply of potential tenants. It is also a major investor in Hull, funding new construction projects and developments, and partnering on numerous knowledge-based projects that are helping to spawn new businesses and supply chains.

According to a report in 2020 by the University and College Union, its work adds an estimated £900 million to the economy every year. “As an anchor institution in the Humber region,” says BusinessLive magazine, “it plays a vital role in its economic growth and prosperity (and)… through its supply chain and business networks, supports an additional 4,100 jobs across the region.”

Recent investments have included:

• West Campus accommodation (£130 million)

• Computer Science Department (£82 million)

• The Courtyard, North Campus accommodation (£32 million)

• Health Campus (£28 million)

• Brynmor Jones Library redevelopment (£28 million)

• Plus various investments in business outreach and partnerships

The University states:

“A £200-million investment programme is well underway at the University of Hull, which is critical to offering an outstanding student experience.”

Property Market Predictions

When we consider the factors that matter most to property investors, they are all present, to varying degrees, in Hull.

Rental demand is already strong, owing to a mix of population growth, employment growth and an under-supply of residential property.

In its Hull Housing Strategy to 2020, Hull City Council wrote that “more homes, of the right type and in the right locations, are needed in the city. This requirement will feature in housing strategies for the foreseeable future.” Moreover, in May 2022, CIA Insurance noted that there was a -46,847 shortfall of homes in the city and that even if planners fully exploited the available brownfield sites, this would only create an additional 2,747 homes.

Across East Riding as a whole, construction rates have remained well below what is needed to satisfy current demand so, accordingly, prospective tenants have tended to ‘bid up’ the value of rental properties by sheer weight of competition.

Importantly, of course, that demand is poised to rise even further. The ongoing investments in the city – particularly in and around the city centre – are bound to create more jobs and to pull in growing numbers of workers from outside the area.

This influx of new employees, together with a rising population, should see even greater competition for modern, good quality accommodation.

Finally, given the remarkably low cost of property in the city, it’s unsurprising that Hull is delivering some of the highest yields anywhere in the Yorkshire and Humber region. Looking ahead, that cost advantage is unlikely to vanish any time soon and, as rental demand grows, gross yields could get better still.

KINGSTON UPON HULL