Built On Reputation
YORK
INVESTMENT LOCATION GUIDE
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Property investment guide YORK Often, it’s the UK’s biggest cities that attract the most interest from property investors. However, with its thriving economy, big development plans and exceptionally strong demand for rented property, the city of York is also deserving of serious attention. In this location investment guide, we’ll consider some of the most important reasons why.
YORK FAST FACTS REGION North Yorkshire
POPULATION 209,900
DISTANCE TO LEEDS 25 Miles, 40 minutes via car, 24 minutes via direct train link
DISTANCE TO MANCHESTER 71.6 Miles, 90 minute via car, 80 minutes via direct train link
DISTANCE TO SHEFFIELD 57.2 Miles, 72 minute via car, 45 minutes via direct train link
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Why Invest in York? York is certainly a well-known city – a tourist hotspot that draws upon centuries of history – but in recent years, it has also established itself as a high-performing property investment destination. On key measures such as capital growth, gross yield and rental returns, the city has consistently outperformed UK-wide averages, and rental demand here is amongst the strongest in the country. It’s also market that’s poised to
Thousands of new jobs being created
see a further improvement in performance, thanks to a range of large investment projects and developments close to the city centre.
Set to benefit from the HS2 rail network
Major inward investment and regeneration works Steady growth in high-value industries
The University of York is committing £130 million to an expansion of student facilities, and the local authority is spending tens of millions more on highway and digital
Key Points to Consider
Part of the fast-growing Leeds City Region
A university student population of around 40,000
infrastructure. And one of York’s most ambitious urban regeneration programmes, York Central, is now underway; a
SHARPLY RISING DEMAND FOR PROPERTY & RENTALS
GROWING POPULATIONS
mixed-use development that is projected to swell the city coffers by well over £1 billion. Importantly, York benefits from the support not just of its own local authority, but also the inward investment agency, Make It York; two Local Economic Partnerships; and the West Yorkshire Combined Authority – all of which are setting ambitious targets for job creation and economic growth.
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O N E O F B R I AT N ’ S M O S T PO ULAR TOURIST D E S T I N TA I O N S Residential Estates
AN OVERVIEW OF YORK
POPULATION OF
209,900
Set in the county of North Yorkshire, the city of York is
EXPECTED TO RISE TO
a historic walled city and one of Britain’s most popular
232,000 BY 2032
tourist destinations. It is home to two well-reputed universities and it’s an important station on the East Coast Mainline. The city economy is worth roughly £5 billion per annum and, locally, it supports 114,000 jobs. York’s population is rising steadily, which is one reason for the significant under-supply of good, affordable accommodation, and for the exceptionally high rates of rental demand. The city’s population is currently 6
£3.7BN &
36,000 JOBS ARE AIMED TO BE DELIVERED BY 2036
A CITY ECONOMY WORTH
£5bN SUPPORTING 114,000 JOBS
£220M
SPENT ON BUSINESS & INFRASTRUCTURE INVESTMENT BETWEEN
2014-2020
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estimated to be 209,900 but the city council expects
help to secure £2.4 billion of sub-regional investment
that by 2032, it could rise as high as 232,000. Student
over the next 30 years.
numbers are rising steadily but the largest growth demographic is older people; in the next five years alone,
Equally importantly, York is supported by West
the older adult population is predicted to rise by approx-
Yorkshire Combined Authority and Leeds City Region
imately 10%.
Enterprise Partnership. The two agencies have been working together to develop a far-reaching Strategic
Fortunately, the city’s economy is growing, too. York
Economic Plan, which aims “to deliver an extra 36,000
is located in an area supported by the York and North
jobs and £3.7 billion of economic output by 2036.”
Yorkshire Local Enterprise Partnership, which is currently bidding into the government’s £900 million
In short, the economy is driving forward at an
Getting Building Fund, which aims to boost economic
impressive pace, and all the ingredients are in place
recovery in the wake of the Covid-19 pandemic. Between
for reliable rental demand, rising capital values and
2014 and 2020, the LEP has spent over £220 million on
strong, dependable yields.
business and infrastructure investments, and it is now developing proposals for a devolution deal, which could 7
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INWARD INVESTMENT IN YORK
£ 2 b n in v e sted in tr a n s p o r t & ho u s in g
York is benefiting from inward investment and infrastructure development at both the local and regional levels. For example, West Yorkshire Combined Authority notes that “We are currently investing around £2 billion, working with our partner councils to deliver better transport and housing, regenerate our towns and cities and protect our environment.” WYCA also notes that a successful devolution deal could yield benefits including: • £38 million for 30 years via the West Yorkshire Investment Fund •
Access to a new five-year integrated transport
settlement • £317 million from the Transforming Cities Fund to 8
improve public and sustainable transport • Control of the £63 million annual Adult Education Budget for West Yorkshire Connectivity is an important local priority. York and North Yorkshire LEP’s annual report for 2020 notes that: “Transport investment is connecting our places, unlocking future housing and economic growth opportunities across the region. We have invested more than £70 million of Local Growth Fund (LGF) to enhance major junctions and build new roads to open up sites for development.”
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ed in housing Investment is also extending to the development of skills. The LEP has spent nearly £50 million on skills and training since 2014, and the two universities are now funding local projects worth nearly £150 million. Similarly, in March 2020, the UK Government announced that York would benefit from a share of a £179 million fund designed to promote research into science and technology. The Gov.uk website notes that “the Doctoral Training Partnerships (DTPs) will be managed by the Engineering and Physical Sciences Research Council (EPSRC)” and that York
University of York, it will focus on developing sustainable and efficient chemical manufacturing . Many other significant investment projects are now taking place in and around York. However, perhaps the most significant of them all is the proposed York Central scheme.
will host one of four pilot schemes. Supported by the
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45 hec ta r e s
One of the UK’s largest and most exciting brownfield regeneration sites at 45 hectares.
2,500
Up to 2,500 new homes to be built on brownfield land.
HS2
YORK CENTRAL MASTERPLAN
YOR CENT PROJ
Future infrastructure growth with HS2 and Northern Powerhouse Rail enhancing connectivity.
112,000m 2
Up to 112,000m2 of commercial space, including high-quality office accommodation.
The City of York describes York Central as a major mixeduse development “planned for one of the largest brownfield sites in the United Kingdom.” Situated beside York Railway Station, the multi-million-pound scheme is expected to grow the economy by 20%. Given that the economy is already worth over £5 billion, this amounts to more than £1 billion of extra activity every year, so the implications for local supply chain businesses and job creation are immense. Planning consent was granted in March 2019, and the proposals entail the creation of up to 112,000m2 of office, leisure and retail space within a specially designated enterprise zone. Partners include the City Council, 10
Network Rail and the National Railway Museum, amongst others. •
Size: 45 ha
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Completion: March 2030
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Job creation target: 6,500
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Funding: £77 million secured to date
The draft York Central Masterplan includes a provision for “smaller, flexible workspaces for
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Excellent public transport connections at the heart of the UK rail network.
£1.16bn
RK TRAL JECT
£155m
6,500+
To the economy (GVA)
Public investment to deliver key infrastructure.
FTE high value jobs in industries such as professional services, insurance and high value rail.
Source: yorkcentral.info
smaller businesses and other uses including hotels,
Planners see important strategic potential in the development.
a number of shops, bars and cafés … with spaces for
First, the masterplan notes that it is expected to add to the
creative activities.” Plans also include the expansion
city’s tourism offer. “Proposals for the National Railway Museum
of the Railway Museum and “a new western entrance
will see a significant improvement in the cultural offer which
to the station and concourse to … support the future
could increase the length of time that people stay in the city.”
expansion of rail services through the station.” Other developments include a new park and square,
Second, it could help York to consolidate its position as a UK
educational facilities, and a western access road
centre of excellence in railway engineering. We’ll consider these
into the site supported by a series of improved
and other key growth sectors in the following section.
pedestrian and cycle connections.
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BUSINESS GROWTH IN YORK Despite its history, York has established itself as a centre
This is significant for property investors because if more
for several high-tech industries and growth sectors with
local people take up more professional, higher-paid jobs,
a dependable future. In a report dated September 2019,
so the average spending power of tenants improves.
York Council wrote that the city had distinct strengths in a
This helps to boost demand for higher quality rental
range of sectors including:
accommodation, while a general improvement in living standards can also help to fuel an upward movement in
•
Rail engineering
average house prices.
• Digital-tech • Bioscience •
Financial and professional services
Growth in these knowledge-based sectors is underpinned by a well-qualified populace. The council notes that “just under half of York’s residents are qualified to degree level our higher, meaning that the city has the highest skills levels of any city in the north of England.”
£4.8bn
5th Highest York has the 5th highest proportion of commuting to work by cycling in the UK.
worth of goods & services are produced in York.
21,000 York residents work outside of York
26,000
non-York residents work in York.
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A well connected city to the rest of the UK, with direct links to Manchester, Sheffield, Leeds, Edinburgh, Newcastle & Birmingham.
2.5%
economic growth projected on average each year for the next 15 years.
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Environmental Technologies Sustainability is big business in York, which aims to be part
This, of course, is an aspiration that sits comfortably
of a carbon-neutral region by 2038. A February 2020 report
alongside large-scale infrastructure spending on new rail
by West Yorkshire Combined Authority suggested that
and cycle-way improvements. Of the £70 million spent by
adopting a circular, ‘green economy’ could help to create
the LEP on transport improvements, more than £9 million
100,000 jobs in West Yorkshire by 2030, and create £11
has been used to double the number of trains between
billion in GVA. It believes that the low carbon economy could
Harrogate and York, and a further £1.35 million has been
grow 11% per annum to 2030, “four times faster than the
spent on electric vehicle charging points and a new ‘York
projected growth of the economy as a whole.”
HyperHub’.
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The LEP also regards what it calls its “natural capital
A recent LEP-commissioned report sought to quantify the
economy” as a major driver of growth. It notes that “as
value of natural capital to the York and North Yorkshire
we leave the Common Agricultural Policy … we will grasp
economy. It estimated that value at £20 billion, which
the opportunity to make best use of our natural assets
amounts to nearly 11% of total GVA. Working from this
to generate new income streams from waste, renewable
baseline, the LEP is working “to grow our natural capital
raw materials, carbon capture, flood management and
economy by 31% by 2050,” which would be equivalent to an
biodiversity.”
economic gain of £946 million per annum.
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Railway Engineering & Digital Tech York Council has noted that “York’s enviable connectivity as
This is a realistic aspiration, considering that York
a major rail hub is matched digitally with the city having the
already employs 5,000 railway engineering workers
fastest digital connections in the UK.”
(around 10% of the national total) and two-thirds of all rail jobs in Yorkshire and the Humber.
Given these strengths, planners have seen real potential in York Central as a springboard for further growth. They
Moreover, the city’s academic research in computer
note: “York Central can be the new physical home for the
science is helping to make it a logical base for
city’s rail engineering sector. York is a key hub for the UK’s
technology businesses. The council observes that
rail industry. York Central can provide a physical hub for
“a strong synergy currently exists between rail
the industry to cluster itself around, creating a business
engineering and the digital tech sector, with growing
ecosystem that drives innovation and positions York at the
expertise around signalling innovation, all against
heart of the UK’s rail industry.”
a pressing national need to digitise the railway network.”
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York’s Tourism Market No examination of York’s economic strengths would be complete without mentioning tourism. The sector has been badly affected by the Covid-19 pandemic, as it has in most other popular tourist cities, but the underlying trend has been one of steady growth. In 2015, VisitYork.org reported that the city had welcomed 6.9 million visitors that year,
expansion of the city’s tourism sector is clearly good news
attracting £564 million of expenditure and
for property investors. It helps to drive up demand for rental
supporting 19,000 jobs. Four years later – in 2019
accommodation, particularly in the potentially lucrative short-
– it reported a pronounced improvement:
stay sector.
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Visitors:
8.4 million (+1.5 million)
Moreover, as a ‘city break’ destination, York sees steadier
•
Expenditure:
£765 million (+ £210
year-round tourism than many coastal towns and properties in national parks, so it tends to deliver higher rates of occupancy.
million) •
Jobs: 24,400 (+5,400)
In 2019, occupancy rates in York reached an all-time high of 80.3% across the whole year.
Like employment and population growth, the 17
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HS2 York will be one of the British cities directly benefiting from
the new line will speed connections.
HS2. The eastern spur of the line will connect with existing rail infrastructure, so HS2 trains will serve York station and
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East Midlands Hub, HS2 time 35 minutes
stops as far north as Newcastle. The new line will make
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Birmingham, HS2 time 57 minutes / current time 112
York more readily accessible to tourists and will enable
minutes
York’s Railway Museum to multiply the benefits of its own
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London, HS2 time 84 minutes / current time 111 minutes
£50 million masterplan. HS2 gives some examples of how
HS2 Line (Phase One)
Glasgow
Edinburgh
HS2 Line (Phase 2a) HS2 Line (Phase 2b) HS2 Services on existing network
Carstairs
New Station (Phase One)
Lockerbie Newcastle
New Station (Phase 2b)
Carlisle Durham Penrith
Destinations served by HS2 services on existing network
Darlington
Oxenholme
Lancaster Manchester Piccadilly
Preston
Leeds
York
Wigan Sheffield Midland
Liverpool
Manchester Airport
Runcorn Crewe
Stafford Birmingham Curzon Street
Chesterfield East Midlands Hub
Birmingham Interchange
Old Oak Common
London Euston
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COVID RECOVERY PLAN Across the UK, tourism, retail and many other sectors have been hard-hit by the Covid-19 pandemic. However, York was quick to introduce an economic recovery plan. The funding helped to secure jobs and productivity In May 2020, City of York Council formed 12 recovery
during a difficult period. Then, in September
group panels, consisting of representatives of (amongst
2020, York and North Yorkshire Local Enterprise
others) small business, educational establishments,
Partnership put together a funding application to
manufacturers and badly-hit sectors including hospitality,
central government, seeking a share of its £900
tourism, retail and the creative arts.
million Getting Building Fund. The pot could be worth up to £15.4 million, spread across 10 regional
Council leader Councillor Keith Aspden noted that the
projects, and should help to safeguard businesses
council had “moved swiftly to deliver over £100 million in
and workers against the worst of the winter
support, developed our own £1 million grant scheme to
pandemic.
help those falling through the gaps … and successfully lobbied government to support our 12,000 self-employed.”
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£250,000 3% YORKS AVERAGE HOUSE PRICE
YEAR ON YEAR
2.5%19.4% 12% 18% AVERAGE GAIN (UK)
YORKS AVERAGE CAPITAL AVERAGE 5 YEAR GAIN GAIN YORK AVERAGE 5
YEAR GAINS IN UK
YEAR ON YEAR
CHANGE IN TENANT DEMAND (YORK)
AVERAGE RENT £830pc Zoopla’s report also found that annual rents rose by 4.5% in York between July 2019 and July 2020, which far surpassed the mean figure for the whole of the UK. Data from Home.co.uk broadly agrees. Its October 2020 data
YORKS HOUSING MARKET
puts the median rent for York at £895 pcm rather than £830
By any measure, York’s property market must look
LiveYield publishes a regularly updated table of rental yield data
attractive to investors, even before the effects of all
for York. At the time of writing (October 2020), it showed that
the ongoing regeneration and developments works
yields in the top 10 York postcodes ranged from 4.3% to 5.5%.
but the overall pattern is similar. The company also found that median asking prices had risen around 2%, but asking prices for smaller units had gained more: 3% for 1-bedroom properties, and 6% for those with 2 bedrooms.
start to be felt. Clearly, then, buy-to-let rental properties in York are tending to In September 2020, figures published by Zoopla
deliver rewarding returns and to outperform national norms. As
found that demand for accommodation in York had
major developments such as York Central start to take effect,
risen by a massive 28% over the previous 12 months.
rental demand should only increase and investors should see
Findings from the same report included:
even better returns in the years ahead. 21
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THE UNIVERSITY OF YORK, CENTRAL HALL
YORK ST JOHN UNIVERSITY
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THE UNIVERSITY OF YORK, KING’S MANOR
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THE STUDENT PROPERTY MARKET IN YORK York has two universities: the University of York and
Student rental demand is robust, predictable and rising,
York St John University. Collectively, they sustain a
year-on-year. For example, in 2015/16, the student roll
community of around 40,000 undergraduates, post-grads
at the University of York stood at 16,390, while in the
and researchers. They are also important employers
academic year 2019/20, it had risen to 18,930. There is
and investors in the city. Currently, for example, the
therefore a healthy student rental market within the city,
University of York is in the process of developing a new
though yields vary considerably by location and property
£130 million campus.
type.
PROPERTY MARKET PREDICTIONS Given the present uncertainties surrounding Covid-19
governing the property market. Fortunately, in all the
and the consequences of Brexit, many commentators
respects that matter, York is faring very well.
are understandably reluctant to offer any predictions for 2021 and beyond.
The city is already witnessing exceptionally strong rental demand, and this should only strengthen as employment
There are few, if any, credible predictions for York itself,
numbers and the local population grow. Similarly, York’s
but Savills expects to see prices in Yorkshire and Humber
resilient economy, coupled with large new investments
rise by 24.1% by the end of 2024. That compares to a UK
and a growing emphasis on higher skills, should all help to
average of 20.4% over the same 5-year period. Hamptons
underpin rising living standards and average disposable
International’s 4-year forecast expects Yorkshire and
incomes. In turn, these factors should help to support
Humber to see gains of 10.5% by the final quarter of 2023.
rising rental values and sustained capital growth for many years to come.
In the absence of more specific predictions, investors can only focus on the fundamental economic forces
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WE LOOK FORWARD TO HEARING FROM YOU For more in depth information in relation to property investment in York, or if you’re just looking for some professional advice, please contact our office, visit our website or drop us an email, you can also visit us at our brand new offices. Please use the details below. Are team of professionals are here to help in any way possible, please don’t hesitate to get in touch. We look forward to hearing from you.
Kinnerton House Bell Meadow Cuckoos Nest Pulford Chester CH4 9EP 01244 34 33 55 sales@residential-estates.co.uk www.residential-estates.co.uk
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