Property Investment in Leeds City Region

LEEDS Investment Location Guide

Property Investment in Leeds

TThis property investment guide examines property investment conditions in Leeds City Region – the largest regional economy outside London, and the biggest contributor to UK GDP within the Northern Powerhouse. Besides Leeds itself, it encompasses a number of other important property investment markets, including Barnsley, Bradford, Calderdale, Craven, Harrogate, Kirklees, Selby, Wakefield and York.

We have covered York in a previous area guide but the wider City Region is more than worthy of a guide of its own. It has an economy worth £69 billion, and is home to 109,000 businesses, 3 million people, and a skilled labour force of over 1.4 million workers. It also embraces nine universities and Britain’s densest concentration of professional services businesses outside of London.

In this guide, we’ll consider how these and other factors have been helping to create some of the country’s most attractive property investment conditions, and why it should be better placed than most to recover from any recession in 2023.

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Why Invest in Property in Leeds City Region?

Leeds City Region should not be considered as a single homogenous market. Each of its constituent districts has its own attractions and unique characteristics. We will therefore consider each of them in a little more detail later on.

More broadly, however, the City Region constitutes a very large and successful economy that, despite forecasts of a coming recession, is still generating jobs and business growth, and still attracting large-scale inward investment.

At that broad regional level, we can identify some important reasons why investors are likely to continue to be so drawn to the area. In brief, they include:

• Af fordable property prices, many of them well below the UK average

• A record of strong capital growth

• Growing local populations in Leeds and several outlying towns

• Growth in the regional jobs market

• Steady increases in average rental values

• Exceptionally strong demand for housing

• Severely restricted supply in many districts

This combination of affordability, rising demand and limited supply augurs very well in terms of growth in rental and capital values. By the same token, landlords should be able to count on reliable demand, minimal void periods and very competitive yields.

Other notable features:

• One of the fastest-regenerating economies in Britain

• A vital element of the Northern Powerhouse

• Set close to Shef field and Manchester city regions

• Very well-connected in terms of transport infrastructure

• Supporting the growth of higher-value, high-growth industries

• A record of unusually rapid capital growth*

• A record of similarly strong rental growth **

* The December 2022 House Price Index from Zoopla reports that average values rose by +8.0% year-on-year in Leeds, which makes the city the UK’s sixth best-performing market for capital growth.

** Leeds also achieve a top-10 place in Zoopla’s December 2022 Rental Market Report, recording an average annual increase of +11.0% in rental returns.

Strategic Position

Leeds sits at the heart of a city region that benefits from the collective economic input of ten different districts. Lying within that region are towns and cities such as Bradford, Huddersfield, Halifax, Wakefield and York – most of which can be regarded as potentially attractive investment markets in their own rights.

A little further out, but still within easy commuting range, are other important population centres and employment sites: everything from sprawling industrial parks and distribution hubs to major cities such as Manchester, Sheffield and Doncaster.

A dense concentration of motorways and railways ensures that all these conurbations are very well connected. Moreover, the advent of Northern Powerhouse Rail and other transport infrastructure projects should improve that connectivity even further.

This geographic position clearly offers important benefits to large employers that rely on efficient distribution and ready access to supply chain partners. However, it also makes many parts of the region attractive to tourists, so it’s a key contributor to the success of West Yorkshire’s thriving visitor economy.

York, of course, is well known as a tourist hotspot. However, outlying towns such as Halifax and Wakefield also make excellent bases for exploration. From here, tourists can visit the nearby Peak District or, just a little way to the north, the Yorkshire Dales National Park. Similarly, many other satellite communities surrounding Leeds afford ready access to a host of country parks, National Trust properties, heritage trails and leisure facilities.

Nearby Motorways

• M1

• A1(M)

• M62

• M621

• M606 (Bradford)

Airports – distances from Leeds

• Leeds Bradford Airport (approx. 6.5 miles northwest)

• Manchester Airport (approx. 43 miles southwest)

Ports – distances from Leeds

• Hull (50 miles east)

• Liverpool (65 miles west)

Growth Sectors

Across the City Region, key growth sectors include:

• Advanced manufacturing

• Artificial intelligence

• Automotive

• Business and professional services

• Creative industries

• Cyber security

• Data analytics

• Diagnostics and personal medicine

• Digital health

• Digital technologies

• Financial and legal services

• Food, drink and agriculture

• Pharmaceuticals

• Tourism

Regional Economic Data

Economy £69+ billion

GDP growth target +20% by 2030 Population 3 million Population growth forecast +150,000 by 2033

Working population 1.4 million Employment growth target +6.5% by 2030 Businesses population 126,000 Graduates 39,000 per annum

The Regional Economy

Leeds City Region has a very successful economy, and has reportedly witnessed the fastest growth in foreign investment anywhere in the North of England.

The Local Enterprise Partnership notes that “With 126,000 businesses and a GVA of over £69 billion, Leeds City Region is the largest contributor to UK GDP in the Northern Powerhouse and the largest regional economy outside London. In fact, the Leeds City Region economy alone is larger than many European countries.”

Leeds City Region LEP notes that the region “is home to the UK’s leading professional services hub outside of London, and is a global leader in key sectors such as technology, healthcare and manufacturing.”

The trend towards higher-value sectors is important because it is helping to create jobs that are more secure and sustainable, and significantly better-paid than those in many traditional industries. For property investors, that is important because higher rates of employment and higher disposable incomes should ultimately help to provide greater capacity for growth in capital and rental values.

The LEP states that the City Region also hosts “the largest cluster of higher education institutions outside the capital, with nine universities producing world-leading research and 39,000 skilled graduates each year.”

Keen to retain that graduate talent, local planners have approved a number of major sites for commercial and industrial development, ten of which have Enterprise Zone status. This, together with the growth of new industries –such as digital and creative – have encouraged skilled young professionals to stay within the region. Indeed, recent years have seen a marked trend for British graduates to migrate towards more northerly cities to start their careers; to seek out communities where they can count on excellent job prospects but lower living costs.

Population and Demographics

While the population of the wider City Region is around 3 million, that figure alone offers little insight into how demand for residential property varies between districts, towns and cities. We noted previously that each constituent part has its own characteristics, and local populations vary considerably, as shown in the table below.

Location Population

Leeds (city only*) 516,298 Bradford 546,400 Halifax (Calderdale) 206,600

Huddersfield (Kirklees) 433,300 Wakefield 353,300 York 202,800

* Note that while Leeds itself is home to around 516,300 residents, ONS estimates that the City of Leeds District has a population of around 812,000.

The City Region as a whole is forecast to see its population grow by +150,000 by 2033, adding greatly to demand within an already under-supplied housing market.

Population: High Growth Areas

The Office for National Statistics (ONS) reports that “the largest population increases in Yorkshire and the Humber have been seen in Selby and Wakefield, where (over the last decade) the populations have grown by +10.2% and +8.4%, respectively.” Leeds came third overall, its population having grown by +8.1% between 2011 and 2021.

Demographic

Leeds City Region LEP reports that “Leeds has a fast-growing young population, with more under-24-year-olds than any other area outside the South East.” It also notes that over 30% of the working population is educated to degree level or above.

The predominance of younger residents is evident in the following breakdown.

Age range Percentage

0-14 18%

15-64 67%

65+ 15%

This has important implications for investors. First, the presence of so many younger people means that smaller apartments are likely to attract greater demand across the City Region. (That’s as opposed to larger detached and semi-detached homes, which tend to be sought by older people with established families.) Furthermore, a higher proportion of skilled, working-age residents should help to raise average disposable incomes, laying a good foundation for capital growth.

Regeneration and Inward Investment

Leeds City Region as a whole has secured billions of pounds’ worth of inward investment in recent years. Around £4 billion have been secured and allocated to major projects over the course of the last decade, and a further £7 billion are reportedly in the current pipeline.

Examples of major investment projects include:

• South Bank regeneration scheme £500 million

• SOYO mixed-use development £300 million

• Legal & General – new offices £211 million

• Leeds Bradford Airport extension £150 million

• Public transport investment £114 million

• Rail and road improvements £100 million

These and other schemes are bound to generate thousands of new jobs, initially in their development stages and, subsequently, in their day-to-day operation.

In addition, however, the City Region’s various towns and cities have their own dedicated investment and regeneration programmes. It’s beyond the scope of this guide to detail all of them but the next section seeks to provide a brief introduction to regeneration in the key population centres.

Principal Towns and Cities

Leeds Leeds is the undisputed heart of the City Region. It’s the largest of its cities and home to the densest concentration of businesses. Unsurprisingly, it has attracted the majority of major investment projects, as noted previously.

However, The Local Economic Investment Partnership and other stakeholders, such as West Yorkshire Combined Authority, have been keen to ensure that all parts of the region achieve healthy and sustainable growth. This aspiration is being supported by the creation of enterprise zones, new transport infrastructure, flood alleviation works, improved digital connectivity and a local industrial strategy that aims to deliver:

• New, good quality jobs

• Accelerated economic growth across the City Region

• A healthy environment

• More skilled people, in good jobs

• Access to training to help residents build their careers

• Healthy, modern communities

The towns and cities outlying Leeds therefore play a crucial role in realising these ambitions. Collectively, their recent schemes and ongoing plans have been creating steadily improving conditions for job creation, inward migration and growth in their retail and tourism sectors. As a result, they are likely to generate rising demand for rented property: everything from new homes to short-stay visitor accommodation.

Bradford

Home to the National Science and Media Museum and a wealth of galleries and theatres, the city of Bradford was recently named the UK City of Culture for 2025. It’s also set close to the Yorkshire Dales and the Peak District, so it appeals not only to history and culture enthusiasts but to walkers, cyclists and many other fans of outdoor pursuits.

Bradford is also reinventing its urban centre, with a masterplan that seeks to create more jobs, better homes and improved public amenities. West Yorkshire Combined Authority reports that Phase 1 of Bradford City Village “will deliver a new, energy-efficient market hall and green space improvements… unlocking a mixed-use development opportunity.” Set to create an estimated 400 new jobs, the multi-million-pound scheme is expected “to reshape and reinvigorate Bradford city centre and assist in the recovery and development of the high street.” Another important central development is the £35 million One City office development, which seeks to create five-storeys of Grade A office space and to create 450 jobs.

More generally, these projects all contribute to a growth strategy, led by Bradford City Council, which seeks to:

• Improve the skills of 48,000 residents

• Grow the local economy by £4 billion

• Move 20,000 more people into work

Halifax

Set in the Calderdale district, the town of Halifax is home to Calderdale Council’s head office and the largest community in the borough. Calderdale, The Next Chapter is a hub created by the local council and supported by stakeholders including West Yorkshire Combined Authority. It notes that “millions of pounds of investment is coming to Halifax… We’re delivering economic regeneration through an unprecedented level of investment, creating a place where people want to invest, live, work, visit and study.”

Important local projects include:

• Improvements to transport infrastructure

• The regeneration of the town centre

• The construction of a new £17.7m bus station

• The creation of enterprise zones, such as at the proposed new Clifton Business Park.

Moreover, in 2021, the local council made a successful bid into the government’s Future High Streets Fund, which aims “to renew and reshape town centres in a way that drives growth.” This will support enhancements to local markets and theatres, open spaces and tourist amenities.

This all follows the construction of Halifax Northgate, a project that entailed converting the central library into a new sixth form academy, and turning old council buildings into high-quality office and retail space.

These and other schemes are generating new jobs and should, in time, help to boost demand for property while raising average incomes. In so doing, they should help to protect local residents against cost-of-living pressures and help to insulate the local property market against deflationary effects.

Huddersfield

Part of the Kirklees district, Huddersfield is planning one of the region’s most dramatic town centre regeneration projects. Valued at £210 million, ‘the Cultural Heart’ centres around a 10-year strategy that will create a new food hall, museum and art gallery, a 2,200-capacity entertainment and conference venue, and parking for 350 vehicles.

The scheme is part of the Huddersfield Blueprint, which as Kirklees Council reports, “focuses on regenerating six key areas: Station Gateway, St Peter’s, Kingsgate and King Street, New Street, the Civic Quarter and a new Cultural Heart in the Queensgate and Piazza area.” Over its duration, the scheme aims to create a vibrant culture, art, leisure and nightlife offer, to support business growth and to improve the local public realm.

However, there is an even grander, overarching plan. In October 2022, Huddersfield Hub reported that public and private stakeholders had met to set out a £1 billion vision for the town; a vision that features a portfolio of 11 major projects. Aside from the Cultural Heart mentioned above, these include, amongst others:

• A £250 million investment by the University of Huddersfield in a new National Health Innovation Campus

• A £43 million private sector re-development of the former Kirklees College and Huddersfield Infirmary site

• A £21 million plan by Kirklees Council to create a power plant to generate heat for the town centre

• A share of £9 billion of regional rail improvements.

York

The historic city of York is a well-known tourist destination and a popular property investment market in its own right. For further details, please see our dedicated Property Investment Guide to York.

Property investment

The other key community in Leeds City region is the cathedral city of Wakefield. As previously noted, it is one of the region’s more popular tourist destinations – particularly for lovers of heritage and outdoor pursuits – and it also seeing faster population growth than almost anywhere else in the region.

What’s more, it is now benefiting from a host of regeneration projects, so despite being rather less celebrated than Leeds or York, it stands as one of the region’s most attractive markets for property investment. As such, it perhaps merits a slightly more detailed exploration in this guide.

Wakefield’s Economy

The city’s record of inward investment is impressively strong. On the Wakefield First website, Wakefield Council writes that “With a £6.5 billion economy and its fantastic accessibility, the investment case for Wakefield is obvious… The business community in Wakefield includes large names such as Burberry, Haribo and Coca-Cola who have made Wakefield their business home, not to forget the mix of thriving corporate and SMEs situated in the district.”

Wakefield Council’s Economic Strategy document to 2023 notes that the city has seen strong growth in employment, together with:

• £1.1 billion of additional business output since 2011

• An award-winning cultural of fer

• Unique niche strengths in creative industries

• Upgraded digital infrastructure

• An improved integrated transport system

• New investment in clean energy

Development Sites in Wakefield

Although Wakefield is already performing well, it hosts a number of new and existing sites that should support further growth in business investment and employment over the coming years. Some examples are listed below.

• The Wakefield Local Plan, which will produce 1,554 acres of new commercial and industrial development space

• Broadcut Farm: a site that includes a new advanced manufacturing hub

• Mountpark Ferrybridge: a 400-acre site connected to the M62 with its own freight line and access to the adjoining River Aire

• Silkwood Park: situated on Junction 40 of the M1, this 98-acre greenfield development is attracting tenants from the advanced manufacturing sector and includes amenities such as a hotel, pub/restaurant and gym

• Wakefield Hub: a new prime industrial/distribution development at Junction 30 of the M62. Spanning around 200 acres it promises bespoke design and build opportunities

• South Kirkby Business Park (Enterprise Zone)

• Langthwaite Grange Extension (Enterprise Zone)

Development Sites in Wakefield

Although Wakefield is already performing well, it hosts a number of new and existing sites that should support further growth in business investment and employment over the coming years. Some examples are listed below.

• The Wakefield Local Plan, which will produce 1,554 acres of new commercial and industrial development space

• Broadcut Farm: a site that includes a new advanced manufacturing hub

• Mountpark Ferrybridge: a 400-acre site connected to the M62 with its own freight line and access to the adjoining River Aire

• Silkwood Park: situated on Junction 40 of the M1, this 98-acre greenfield development is attracting tenants from the advanced manufacturing sector and includes amenities such as a hotel, pub/restaurant and gym

• Wakefield Hub: a new prime industrial/distribution development at Junction 30 of the M62. Spanning around 200 acres it promises bespoke design and build opportunities

• South Kirkby Business Park (Enterprise Zone)

• Langthwaite Grange Extension (Enterprise Zone)

Regeneration Projects in Wakefield

Like other towns and cities in Leeds City region, Wakefield has its own city centre masterplan. The 20-year strategy will give rise to new urban green spaces, footpaths and residential developments, together with improvements to road infrastructure. The masterplan, which was formally approved in February 2022, will encompass several other important projects.

• The conversion of the BHS building into a museum and café

• The Bread Street/Cathedral Square project, which will incorporate a larger public square, and refurbished properties for retail and business use

• Westgate and Cathedral Retail Park: the creation of a new “linear park” together with a new mixed-use neighbourhood.

• The Ridings/Kirkgate: a plan to improve social housing provision, with associated green spaces and the creation of new leisure facilities

• Northgate and Borough Road: new pedestrian and outdoor leisure facilities, with possible provision for extra parking, cycleways and a new commercial building

• George Street: plans to renovate neglected local sites to create new cycleways and an “accessible and green new residential neighbourhood.”

• Wakefield Waterfront: the local council writes that the scheme seeks “to transform the southern gateway approach to Wakefield City Centre by creating a heritage-rich urban destination with dedicated space for creative industries, leisure, housing and tourism.” It will build upon an already completed creative arts space at the award-winning Hepworth Gallery, and will feature new office space and the refurbishment of Rutland Mills.

Wakefield Council notes that its masterplan has been part-funded by a £24.1m Town Deal. It reports that it will begin with two key projects: the conversion of the BHS building and its Bread Street/Cathedral Square project, which should create “a key historic town centre route” and prompt new investment in culture.

Wakefield’s Visitor Economy

Wakefield has a thriving visitor economy valued at around £300 million per annum. It owes much of its popularity to the creative industries: to its theatres, music, art and, in particular, sculpture. It is home to the famous Hepworth Gallery and well-known sculpture trails, but visitors also come to enjoy its museums, historic buildings, country parks and an array of retail and leisure facilities. Examples include:

• Art Exchange (arts centre)

• Hepworth Gallery

• The Ridings Shopping Centre

• Theatre Royal

• Wakefield Cathedral

• Wakefield Museum

• Wakefield One Library

• Westgate Retail and Leisure Park

Another important group of visitors typically comprises walkers and outdoor enthusiasts who use the city as a base from which to explore both the Peak District and the Yorkshire Dales. Both are within easy driving distance, as are numerous other attractions, and the combination of outdoor and indoor options gives the city a useful ‘all weather’ appeal. Nearby attractions and walking spots include:

• Clarence Park & Garden

• Lowes Hill Castle

• Newmillerdam Country Park & Boathouse

• Pugneys Country Park

• Sandal Castle (ruin)

• Southern Washlands Nature Reserve

• Walton Colliery Nature Park

(More details and attractions can be found on the Experience Wakefield and Yorkshire.com websites.)

The majority of the city’s tourist trade stems from day visitors, but herein lies an opportunity for investors, since there is a pronounced shortage of good quality short-stay accommodation. Creative Wakefield notes that “Wakefield has a strong visitor economy base of day visitors, but… the volume and range of guest accommodation need to provide the capacity and quality needed to support the growth of both leisure and business visitors.”

Tourism Elsewhere in the Region

We have highlighted Wakefield as an example simply because it has the region’s fastest-growing population and an unusually successful economy. In the foreword to the city’s economic strategy, Peter Box, the Leader of Wakefield Council, writes that “With strong job growth and major regeneration, Wakefield is ranked as one of the country’s fastest growing economies.”

However, it is only one example; several other cities, towns and villages in the same city region also have considerable appeal when it comes to the potentially lucrative visitor economy. Investors who have a particular interest in this market should contact one of our advisors to discuss options in terms of location and lettings type (e.g. serviced accommodation or conventional short-stay lets.)

The Property Market in Leeds City Region

In recent years, Leeds City Region has encompassed some of the UK’s best-performing property markets.

The Zoopla / Hometrack House Price Index, published in December 2022, ranked Leeds sixth overall for capital growth. It found that average values rose, year-on-year, by +8.0%. In Zoopla’s rental index for the same month, Leeds ranked eighth, producing annual rental growth of +11.0%.

Looking ahead, steady price growth can be expected in Leeds and York, both of which have delivered strong gains in recent years. However, as the cost-of-living crisis bites, further eroding household incomes, the markets that fare best could well be the country’s more affordable destinations – particularly those where new jobs are being created at pace, and where the domestic population is growing. Ultimately, this is because price growth is determined by demand, supply and people’s ability to pay.

Housing supply is greatly restricted in many parts of Leeds City Region and once the present affordability pressures ease, the continuing imbalance between supply and demand should prompt local property prices to start rising steadily once again.

Property Market Data

Average home price (Leeds) £257,414 1

Average Home price (Wakefield) £223,930 1

Average home price (England) £350,472 1

Average capital growth (Leeds) +14.1% 2

Average capital growth, UK (Rightmove) +5.6% 3

Average capital growth, UK (Zoopla) +8.0% 4

Average rental growth (Leeds) +11.0% 5

Average rental growth (UK) +10.1% 5

Sources:

1: Zoopla, January 2023

2: Land Registry (Dec ’21 to Nov ’22)

3. Rightmove House Price Index, December 2022

4: Zoopla House Price Index, December 2022

5: Zoopla UK Rental market Report, December 2022 (UK figure excludes London)

Property Market Predictions

UK-wide capital growth forecasts for 2023 are broadly negative – a reaction to the cost-ofliving crisis, higher than usual mortgage rates, and global economic uncertainty. However, many sources expect prices to contract only for a short period, followed by a recovery in 2024.

UK-wide, Savills is predicting cumulative price growth of +6.2% by 2027 but it expects Yorkshire & Humber to recover most quickly. It expects the region (as well as the North West and the North East) to see average growth of +11.7% over the same period. Thus, while capital forecasts are hardly spectacular, no other British region is expected to outperform Yorkshire.

It is also worth noting that the Bank of England expects inflation to drop back sharply in 2024, perhaps even to turn negative. Consequently, the real-terms returns on investment should be considerably better than during the second half of 2022, when capital growth rates tended to fall below the rate of inflation.

Summary

Although 2023 is expected to be a year in which average capital values fall, some towns and cities should recover more quickly than others. Leeds City Region, with its rapid economic growth and huge inward investment, could well be amongst them.

Of course, there will inevitably be variations across its population centres. Leeds itself is likely remain attractive, as is York but. Among the rest, perhaps the leading contenders are Huddersfield – with its ambitious regeneration plans – and Wakefield, which combines widespread regeneration with a strong tourism offering.

Many forecasters expect the UK’s more affordable markets to recover most quickly after any recession. Many of those in the North (and parts of Scotland and Wales) could therefore see a rapid resurgence in demand. What’s more, there are good reasons to believe that, with demand returning to urban centres after the pandemic and its ‘race for space’, smaller units in town and city-centres could see the greatest upturn in both rental and capital values.

In the medium to longer-term, the markets that should deliver the best returns are likely to be those characterised by:

• Af fordable prices

• Population growth

• High levels of inward investment

• Continued economic expansion

• Steady growth in employment and average earnings

• Economic resilience: growth in multiple sectors

• Strong and reliable demand for housing

• Significantly constrained supply

For these reasons, many of the towns and cities in Leeds City Region can be expected to deliver steadily improving returns, once the cost-of-living crisis begins to abate. For property investors, they must rank among the UK’s most promising markets.