THE SUSSEX COAST
INVESTMENT LOCATION GUIDE
Property Investment on the Sussex Coast This property investment guide covers the Sussex Coast and picks up where one of our previous guides – covering the central south coast of England – left off. It looks at some of the principal destinations along this 95km stretch of shore, which embraces some of England’s best known seaside towns. At the western extremity of our focus lies the resort of Bognor Regis and, at its eastern end, the historic town of Hastings – the site of one of the country’s most pivotal, culture-changing battles. In between lie Worthing, Brighton, Hove, Eastbourne and Bexhill, as well as numerous smaller villages, harbours and rural parishes. Although tourism is naturally a major industry here, this is a region that is also attracting considerable inward investment and nurturing the growth of several high-value industries. Local property markets are therefore influenced by a host of factors, some of which we’ll look at in this guide. They include: • Strategic position • Growth sectors o Manufacturing o Creative and digital o Tourism • Regeneration and inward investment • Key tourist locations o Brighton o Eastbourne o Bognor Regis o The East Sussex Coast • Population growth forecasts • The Sussex coast housing market o Housing supply o Average values o Affordability and yields • Local example: Hastings o Local tourism o Demand for tourist accommodation o Economic growth o The student market o Local yields • Property market predictions
Why Invest in Property on the Sussex Coast? A Summary This section of the South Coast embraces everything from farmland and small villages to the City of Brighton and Hove. Tourism is a key industry here, but the region is also seeing growth in its economy, employment and in its general population. It’s an area that also expects to see an increasing proportion of older residents – an important growth market – and rising demand for student accommodation. Consequently, it offers a broad variety of property investment opportunities. Brighton, Hove, Eastbourne and Bognor Regis are all well-known tourist destinations, and investors here could certainly take advantage of the rising popularity of the British staycation. Since the onset of the Covid pandemic, these markets have seen exceptional visitor demand – but so too have many smaller nearby resorts, where property investment costs are appreciably lower. In addition, Sussex more generally is benefiting from sustained investment on the part of local authorities, large corporates and other private interests. High value, knowledge-based sectors such as advanced manufacturing and the digital industries are growing fast, and new speculative industrial developments are arising across the county to accommodate new employers. With such a diversity of locations and strengths to consider, it’s hard to pick a clear favourite. Much will depend on individual investors’ priorities. Key points to consider: • • • • • • • • •
Some large, ever-popular resort towns Traditional strengths in tourism – a sector worth £1.4 billion in East Sussex alone A focus for high value industries, including manufacturing and creative / digital Hundreds of millions of economic investments A fast-rising population An ageing population, creating greater need for retirement properties Strong rental demand in many locations A generally higher-priced market with small pockets of relative affordability A record of solid capital growth and good yields in more affordable markets
Strategic Position The manifold appeal of Sussex as in investment location owes much to its geographical position. Its coastal districts enjoy far more sunshine, on average, than most other UK towns and cities, so they are a natural hotspot for tourism. This status is further accentuated by a wealth of good beaches and the proximity of attractive, open green spaces such as: • • • • • •
The South Downs National Park High Weald (Area of Outstanding Natural Beauty) Pevensey Levels National Nature Reserve Seaford Head Nature Reserve East Brighton Nature Reserve The National Trust’s Saddlescombe Farm and Cissbury Ring
However, the county is also very well connected in terms of education, commerce and transport. It’s close to some of the country’s most respected universities, and it’s set just 50km to the south of the M25, so London’s business and industrial heartlands are just a short drive away. Moreover, the area is flanked by major ports such as Portsmouth and Southampton to the west, and by Folkestone and Dover to the east. As a result, the wider regional economy is home to large manufacturing and logistics businesses that rely on a steady flow of international trade, and to all the many supply chain businesses that have grown up around them.
Growth Sectors The regional economy is huge. The South East Local Enterprise Partnership (LEP) writes that the region as a whole is “the largest economic contributor outside London” and that it supports the majority of the country’s international trade infrastructure. Conceding the recent impact of the Covid pandemic, it also asserts that its £85 million Getting Building Fund will support a range of “commercial, town centre and infrastructure projects to stimulate jobs and growth.” Of this, over £11 million has been allocated to eight projects in East Sussex. More generally, the LEP notes that its “Growth Deal with government has brought nearly £600m of investment to East Sussex, Essex, Kent, Medway, Southend and Thurrock over the lifetime of the Deal (2015-2021).” It has sought to deliver 78,000 jobs.
The South East is such a large region and there are so many successful businesses operating here that it’s almost meaningless to talk in terms of specific growth sectors. However, at a more local level, it is helpful to consider some of the fastest-growing sectors in West and East Sussex. Collectively, their respective local authorities and LEPs report significant long-term growth in the following industries: • • • • • • • • • • • • • •
Aviation and travel (esp. Gatwick area) Construction Creative industries Digital, including gaming Education Financial and business services Health and life sciences Hospitality (pre-Covid) Information and communications technologies Logistics and distribution Manufacturing Professional, scientific and technical Tourism Wholesale and retail
Regeneration and Inward Investment In October 2021, local media reported that Sussex towns and communities would benefit from an estimated £70 million of new investment. Some of the principal beneficiaries will include Bognor Regis, Littlehampton, Eastbourne, Seaford, Newhaven and Hove. These were all announced in the Autumn Budget. Other notable investment projects include: • • • •
Winter Garden restoration, Eastbourne: £3.9 million New manufacturing premises, Hastings: £4.45 million The Observer Building, (new leisure, retail, offices) Hastings: £4.2 million UTC Maritime & Sustainable Technology Hub, Lewes: £1.8 million
University of Sussex / University of Brighton)
Economic Data Economy: • West Sussex: £22 billion (source: West Sussex County Council) • East Sussex: £8.9 billion (source: East Sussex Council, 2020) Population: • West Sussex: 868,000 (source: Plumplot) • East Sussex: 851,000 (source: Plumplot) Population growth forecast: • West Sussex: +68,000 by 2036 (source: W. Sussex County Council) • East Sussex: +43,743 by 2048 (source: East Sussex in Figures) Tourist visitors: • West Sussex: 24.4 million per year (source: Coast2Capital, 2018) • East Sussex: 23.7 million (source: East Sussex in Figures) Tourist economy: • West Sussex: £2.05 billion (source: Coast2Capital, 2018) • East Sussex: £1.7 billion (source: East Sussex in Figures) University student population: • c. 40,0000 (source: University of Sussex / University of Brighton)
Key Tourist Locations The Sussex Coast is home to some of the best-known southern resorts in Britain, some of which might easily justify an investment guide of their own. Brighton The City of Brighton and Hove is the largest resort in the county. The ‘Brighton & Hove Visitor Economy Strategy (2018-2023)’ report, published by Visit Brighton, estimates that “the city attracts over 11 million trips that deliver nearly £886 million of spend,” and that tourism “accounts for around 14% of all employment, equivalent to 21,000 direct jobs.” That tourism takes the form not only of family holidays but day-visits and a normally thriving conference visitor market. Like other British resorts, Brighton saw a sharp rise in staycation bookings when lockdown conditions permitted but, overall, hospitality revenues fell during the pandemic. Nevertheless, with vaccination levels improving and local authorities committed to fund numerous Covid-recovery projects, the prospects for 2022 and beyond look good.
Eastbourne LocateEastSussex notes that “Eastbourne is one of the fastest-growing seaside towns in Britain” and that it has been “quietly reinventing itself into an exciting creative hotspot with a reputation as a growing centre for digital technology.” Digital businesses are forming here at four times the UK average rate. Also important, however, is the role of tourism, which the organisation estimates to produce £336 million of revenues from roughly 5 million annual visitors.
Bognor Regis Bognor is a perennial family favourite, known for bustling holiday centres, its iconic pier and for a host of seaside attractions. With parks and gardens, cinemas, a miniature railway, a boating lake and amusement arcades, it’s about as traditional as a seaside resort can get. However, it’s relatively well served for tourist accommodation and, delivering just 3.8% gross yields according to Liveyield, it’s perhaps not going to be top of every property investor’s list.
The East Sussex Coast Although the bigger resorts are undoubtedly bestknown, almost the whole length of the Sussex Coast is dotted with popular visitor destinations, ranging from large towns to tiny fishing ports. Investment opportunities range from urban apartment complexes to isolated holiday cottages. Inevitably, of course, some promise better returns than others. By national standards, property prices along the Sussex Coast are comparatively high, as we’ll discuss later. However, there are attractive pockets of affordability that are worthy of particular attention. Here, investors may be able to find some exceptional opportunities that have escaped mainstream attention; where purchase costs may be lower and yields correspondingly higher. Plumplot, for example, identifies Newhaven, Bexhill, Hastings and parts of Eastbourne as some of the most affordable markets in the area.
Population Growth Projections According to ONS data and projections made by local authority planners, the population of the South East region (excluding London) is expected to rise by +566,968 between 2023 and 2048. Looking at more local data, West Sussex is bracing itself for an estimated 68,000 additional residents by 2036, while East Sussex is expecting a gain of nearly 44,000 by 2048. Those East Sussex forecasts break down further, as shown: Population gain between 2023 and 2048 (25 years.) • • • • •
Eastbourne: +6,489 Hastings: +2,833 Lewes: +8,940 Rother (inc. Bexhill): +11,082 Wealden: +14,399
These estimates matter for investors because they signal continuing high demand for property; often in neighbourhoods where housing supply is already very restricted. (We will consider local housing supply data later in this report.) Demographic Changes Steady growth in population is also expected to change the demographic character of the area. For example, East Sussex local authority planners expect that from 2017 (the last official baseline) to 2032, the number of residents aged over 65 will rise by 39%, which means an extra 54,800 older people. That would equate to over 31% of the local population, which compares against the 2017 figure of 25.4%. There are subregional differences, of course. One of the younger demographics is to be found in Hastings. In 2019, the East Sussex Joint Needs and Assets Assessment website noted that “Only 19% of Hastings population was aged 65+ in 2017, but even here, the proportion is forecast to rise to 26%.” Again, this is noteworthy for investors because longer lifespans tend to boost population numbers and, thus, to increase demand for homes. Moreover, an ageing demographic can also shift the balance of demand towards the smaller property types – towards more easily manageable flats, apartments and bungalows.
The Sussex Coast Housing Market As previously noted, much of the property on the Sussex coast is relatively expensive by national standards. Not excessively so in comparison to the rest of the South East, but certainly well above the national mean. However, rents also tend to be higher, especially in the lucrative holiday and short-stay business markets, so a well-chosen property can still produce a very good yield. When making that choice, some of the most important criteria to consider include local housing supply, investment costs and the kinds of market to which different property types appeal.
Housing Supply One of the main reasons why property in this area is relatively highly priced is a lack of supply. It’s fair to say that most of the rest of the UK is contending with the same issue, but there has been a twofold challenge within some of Sussex’s coastal communities. One has been a shortfall in construction rates, and the other has been a sharp fall in the number of properties coming to market, especially since the summer of 2021. A report by Planning Insight reports on the performance of various East Sussex districts against housing delivery targets. It finds significant shortfalls in several key districts, with the worst under-supply being in Eastbourne and Hastings. Here, new build supplies have reached only 29% and 55% of target respectively, and the nearby districts of Rother (65%) and Wealden (83%) have also fallen short. Since the summer of 2021 and a frenetic period of selling quickly to take advantage of the Stamp Duty & Land Tax holiday, the market has seen a pronounced fall in transactions. The property portal Home notes that between November 2020 and October 2021, transaction volumes fell across all property types. The number of flats sold in East Sussex dropped by 80%, and terraces, semis and detached homes saw similar reductions in availability. Further west, in Brighton, Home reports that the number of properties advertised for sale has fallen by 51% in the 12 months to January 2022. The combined effects of slow construction rates and few properties coming up for sale has produced a growing imbalance between supply and demand – an imbalance that will almost inevitably drive average values higher.
Average Values In January 2022, Plumplot noted that between December 2020 and November 2021, average values in West Sussex stood at £424,000. That marked an 8% annual rise. In East Sussex, the company recorded an annual gain of 12%, taking mean property values to £415,000. For context, those figures compare against an ONS estimate (December 2021) of £268,349 for a typical UK property, and a 10% national rate of house price inflation. It’s often been the case in recent years that the fastest gains have been achieved in the UK’s more affordable markets. East Sussex properties can hardly be called cheap but it’s notable that they tend to cost less overall than comparable units in West Sussex. They have also enjoyed better than average rates of capital growth. This trend was evident in figures released by Zoopla in October 2021. The Hastings Observer was one of several local media that reported on its findings. It noted that: • • •
“11.9 million homes increased in value by a national average of +£49,257 or more over the past five years.” “83 per cent of the homes in the local authority area of Hastings have seen values go above a national average rise of £49,257 over the past five years.” (This was the second-fastest rate of growth in the whole of the country.) “Demand in many parts of Sussex has led to an increase in housing values. Rother has seen 74 per cent of homes rise above the national average, Wealden 68 per cent, Lewes 67 per cent, Brighton 59 per cent, Eastbourne 55 per cent and Mid Sussex 46 per cent.”
Gráinne Gilmore, Zoopla’s head of research, said at the time that: “demand in many parts of Sussex has led to an increase in the value of housing. This is due to its coastal location and proximity to London, while pockets like Hastings offer relative affordability compared to neighbouring areas.” Affordability and Yields This emphasis on relative affordability is important. As we noted earlier, Plumplot, identifies Newhaven, Bexhill, Hastings and parts of Eastbourne as some of the most affordable markets along this stretch of coast. While Zoopla puts the average sale price in Brighton at £462,035, prices are over £100,000 less in Hastings (£334,055), Bexhill (£339,573) and Eastbourne (£328,212.)
Data from LiveYield shows how these differences have impacted on gross yields. • • • • • • • •
Hastings: 5.4% Eastbourne 4.8% Lewes 4.8% Rother (inc. Bexhill) 4.6% Brighton & Hove 4.6% Wealden 4.1% Worthing 4.1% Bognor (PO22) 3.8%
Given that Hastings appears top of the local charts for both yields and capital appreciation, it seems appropriate to devote the next section of this guide to examining the town more closely.
Local Example: Hastings Hastings is, of course, synonymous with the famous battle of 1066. It’s so closely associated, in fact, that the local tourism website calls itself Visit1066Country.com. Given these historical associations, it’s unsurprising that it’s a town that makes the most of its heritage. The website notes that Hastings, the adjoining resort of St Leonards-on-Sea and its immediate surrounds are home to 15 museums, four galleries and six castles. Local Tourism Besides heritage, the town can also boast miles of attractive coastline, a network of walks and cycle-ways, and a wealth of family-friendly attractions. As one might expect of an established resort town, it’s a place where visitors can enjoy countless amusements, excellent cuisine, theatres, tours, trails and opportunities for all manner of pursuits, from golf to watersports. Hastings is also home to Britain’s steepest funicular railway, an aquarium, a famous pier and a number of very attractive parks and gardens.
The town also features a busy calendar of events, hosting 22 festivals, together with arts exhibitions, food markets, fun runs and even a Mardi Gras. LocateEastSussex writes: “Culture is playing an increasingly important role in the regeneration of Hastings and is positively impacting the lives of communities and the economy. The area’s reputation as a cultural centre continues to strengthen with flagship projects such as the RIBA award-winning Pier, Hastings Contemporary and iconic De La Warr Pavilion in Bexhill, stimulating new cultural economic activity. “The Coastal Currents Festival in Hastings and St Leonards is the annual month-long visual arts celebration featuring an incredible list of internationally acclaimed artists and curators… Hastings and Rother have earnt the title of UK’s newest ‘Music City’ with the highlight of the annual Music Month festival, Fat Tuesday, being voted the 12th Best Mardi Gras event in the world by The Telegraph.” For investors, it’s important to note that all these credentials give the resort an enduring appeal to tourist visitors. In August 2021, Sussex Live reported that Hastings had been named “the second-best holiday location in the UK.” (Nearby Eastbourne and Bognor Regis also made the survey’s top 10.)
Demand for Tourist Accommodation As previously noted, Hastings is witnessing a severe under-supply of accommodation. This will surely have played a role in driving up capital values in recent months, and it is also likely to be affecting short-stay rental values. Sussex Live has noted that average hotel prices are “on the high end” in Hastings, and the same is broadly true for short stay self-catering properties. Hastings Council has estimated that, pre-pandemic, visitors made over half a million overnight stays in Hastings, their total spending amounting to £142.3 million. In 2019, this constituted almost exactly half of all tourist spending the town: £288.3 million. The council’s wider assessment of “all tourism-related spending” in Hastings was £385.9 million. These numbers fell as a result of successive lockdowns but, like many British resorts, Hastings benefited from unprecedented demand (and higher revenues) when Covid restrictions were relaxed. In the coming years, as the NHS vaccination programme continues to reduce rates of infection and hospitalisation, it seems likely that visitor numbers will bounce back, not only in Hastings but in resorts along the whole of the South Coast.
Economic Growth Other sectors besides tourism are also helping to improve the town’s fortunes. LocateEastSussex writes that “a new generation of entrepreneurs, investors and cultural institutions are creating new opportunities for residents,” and that “new industries are replacing the old.” A number of these new industries fall into the ‘creative’ category. It’s estimated that the resort is home to over a thousand creative businesses and professionals, working in roles ranging from design and illustration to digital technologies, TV and media. The town is also contributing to the growth of the ‘Sussex games cluster’ which, according to a report by Wired Sussex, “generates more than £200m in economic value for the region annually, and is set to grow to a quarter of a billion.” LocateEastSussex adds that Hastings: “… has one of the most thriving manufacturing bases in the South East, with innovative industrial businesses in aerospace, defence, precision optics and hi-tech electronics… Hastings is home to a specialist and world-renowned ultra-high vacuum/photonics and optics cluster.” Not only is the growth of these industries helping to attract new workers to the town; the increasing focus on skilled, higher-value roles should also help to drive up average earnings. Both factors should ultimately have a positive effect on demand for property and, consequently, a sustained increase in both rental and capital values.
The Student Market Along the Sussex Coast, the bulk of demand for student accommodation arises in Brighton, where the University of Sussex and the University of Brighton are both based. At the former, there is an estimated student body of 18,500, and at the latter, 21,000. However, some of these student rolls will inevitably be local residents who commute in from around the county. As one of these satellite towns, Hastings will certainly enjoy some demand for university student property but a more salient factor is the presence of East Sussex College Hastings. The college as a whole has campuses in several local towns and supports around 15,000 full-time and part-time students. Serving young people and adults, it offers a wide range of academic and vocational courses: apprenticeships, A-levels, certificates and diplomas, HNDs and Honours Degrees validated by the University of Brighton. It is therefore an important generator of rental demand and, with a shortage of purpose-built student accommodation in Hastings, it’s a potential market that shouldn’t be overlooked.
Local Yields Hastings is characterised by relatively affordable property, good rental values and strong tenant demand from various sources. As Liveyield data shows, this results in some very respectable yields. • • • •
St Leonard’s (TN37) North Hastings (TN38) Hastings central (TN34) Hastings (TN35)
5.7% 5.5% 5.4% 4.9%
Summary The Sussex Coast encompasses many popular tourist destinations, and investment opportunities ranging from city apartments to isolated self-catering properties. As a result, it offers considerable choice. Tourism is certainly big business in the area, but Sussex is also part of a large and thriving regional economy and it’s witnessing growth in numerous other high-value sectors. The consequent growth in local employment is now helping to boost demand on the part of prospective home-buyers and tenants, the effect of which is generally to drive values higher. Average prices do tend to be on the higher side, but so too do rental values so, in numerous locations, rental yields can still be very positive. Rates of capital appreciation have been roughly in line with national averages, although some of the more affordable local towns and resorts have stood out, delivering both faster capital growth and excellent yields. Hastings is one clear example but, with appropriate research and support, investors should be able to identify numerous others.
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