York: The North’s Emerging Investment Hotspot

York is widely renowned for its history and architecture, attracting 7 million visitors every year to its quaint streets and stunning Minster. The city is the UK’s most visited destination outside of London, providing £654m to the city’s economy per annum. In addition to exceptional levels of external visitors to its walls, York’s profile is on an upward trajectory with it expected to become the new base of a major Government department, part of this Conservative Governments drive to level up the country. The city provides fantastic opportunities for property investors in both the Long and Short term lettings markets. 

 

Serviced Accommodation investment has become extremely profitable for savvy investors in recent years. Investors can double and often triple their returns by letting their property to short term tenants, for both leisure and business use. 

 

With York having such a large visitor base you would expect a vast array of hotel rooms to be currently operating in the city, this, however, is not the case. Despite welcoming 7 Million visitors through its doors each year, there are only approximately 4000 hotel bedrooms to accommodate them. This creates massive undersupply, not only driving up per night prices but creating an unmissable opportunity for smart investors to take advantage of the supply-demand imbalance by letting their properties as a Serviced Apartment. Specialist Serviced Apartment lettings management company Ashtons report the average occupancy rate of York is 72%. On a quality new build development in York, this would provide a Gross Yield of 14% with investors expected to walk away with average NET returns of an outstanding 10% per annum when operated as a Serviced Accommodation Investment property.

 

Not only does York thrive due to historical landmarks and the associated tourism, but there is also a thriving domestic economy with major employers having large operations within the City of York. It is ranked within the top 10 for the number of firms with up to 250 employees whilst also placing in the top 15 for firms with 250+ employees. The city is home to the headquarters of major institutions and corporations including Aviva, National Rail, BT, and Nestle to name just a handful of major employers based in York. The city consistently posts impressive growth with its resilient economy year on year. The addition of a Government department in the near future is all but confirmed for the city, this would create further employment growth, not just directly but indirectly with PR and Media and other businesses following the department to York. The cities University welcomes 25,000 students at any one time, bringing highly skilled graduates to the city in addition to creating additional demand for high-quality accommodation from international students. 

 

The York Central regeneration framework is only set to improve the city in terms of its economic output. The York Central Partnership is a programme propelled via a partnership between Homes England, Network Rail, City of York Council, and National Railway Museum. This 45- hectare brownfield site adjacent to Yorks existing commercial core has confirmed £77.1m from Homes England and Network rail, it has been officially designated a Housing and Enterprise Zone, providing significant incentives to both housebuilders and commercial occupiers. This will create over 3705 new homes with 1.2 million square feet of commercial place in the heart of the city.

 

The bustling economy and university create strong tenant demand for good quality long term rental accommodation with many young professionals employed in the city. In just the past year the city experienced rental value growth of 5%, driven by the cities higher than average population growth. The average rental yield in the city is 4%-5% according to Zoopla which combined with expected capital growth of 21.6% over the coming 5 years predicted by Savills in their latest regional forecasts. These two factors provide exceptional returns for investors looking to let out their properties as a traditional Buy to Let Investment.

 

Both long and short term investment options will provide investors with above-average returns With having the flexibility to operate on both models investing in York will offer investors a brilliantly dynamic and versatile investment opportunity adaptable to various market conditions.

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