Researching the Best Property Investment Locations
All investors know that the location of a property investment is one of, if not the, most important thing to consider.
Having a high-quality location can help in a variety of ways. Firstly, it mitigates risk in terms of void periods. Having an investment in a popular rental area means you’re more likely to find consistent tenants, guaranteeing consistent returns.
Secondly, your location largely dictates the amount of growth and returns you can expect to receive. Aside from property type, location is one of the only factors that impacts both income streams, which means it’s important to get it right the first time.
This is why your property investment research is so important. Below, we explore what you should be looking for and how to go about choosing the best property investment locations.
Finding In-Demand Property Investment Locations
Whether you’re looking for an investment that delivers consistent rental returns or long-term capital growth, a key metric to consider is tenant demand.
Tenant demand is the primary driver of any Buy-to-Let investment and can be impacted by population growth, local amenities and businesses in the area, all of which can attract tenants that need somewhere to live.
At this point, you’ll also want to consider the tenant demographic that you’re targeting. Understanding the tenants you want to attract can help inform the property type that you’re looking for.
An example of this is a common demographic – young professionals. This market is usually the most open to renting and tend to look for 1 or 2-bedroom properties – a relatively simple and flexible investment.
Investing in Emerging Locations for Growth
Another major consideration for many investors is the potential for growth in up-and-coming locations.
While finding and investing in established areas can be a great way to start building immediate yields, an up-and-coming location can offer several benefits.
They’re typically more affordable to begin with, which makes the initial investment more accessible. They’re also usually in the midst of an area undergoing redevelopment or regeneration, which means accelerated growth is more effective overall.
The important thing to remember if you’re considering choosing an emerging property location is that remaining in the market for the long-term is vital – the longer you’re invested, the more you can maximise results.
Find the Top Investment Locations in the UK for 2021
Download our 2021 UK Investment Guide and discover the top locations for investment in the new year, alongside the potential rental yields and property price growth that make them so appealing for a Buy-to-Let investment.
Choosing Property Locations Based on Regeneration
Redevelopment and regeneration can be a great indicator of investment potential, as it shows the opportunities that will attract tenants are being created.
What are the key things to consider when researching redevelopment? You’ll want to look for popular amenities such as shopping centres, transport links, commercial spaces and leisure areas.
The redevelopment of transport links is particularly attractive for investors, as this is typically a top amenity renters are looking for. Take Birmingham and HS2 as an example. HS2 is a once-in-a-generation infrastructure development and will vastly improve links to London, which in turn will boost Birmingham property prices in the immediate vicinity.
That said, amenities such as bars and restaurants are also incredibly attractive, so don’t forget to look at the retail and leisure offerings available nearby.
Identifying Businesses In Property Investment Locations
Another common ‘metric’ to consider that often gets missed is the businesses and career opportunities available in top property investment locations.
Once again, this largely depends on your strategy but if you’re focusing on young professionals, for example, the quality of the businesses in the area can and will impact the type of tenants you find.
New business typically goes hand-in-hand with regeneration, especially the large-scale global brands that are looking for popular areas with the most ambitious and high-performing workforce available.
This is also a major consideration if you’re looking at investing a commuter location – such as Bracknell or Slough – where the businesses available are a huge driver of tenant demand.
Investing in a Quality Development
While not strictly down solely to location, investing in a quality development where there is a significant undersupply of similar property is an excellent strategy.
Quality is vital in the current market – especially as tenant demands have shifted thanks to the ongoing pandemic.
Although this can sometimes mean a larger upfront cost, it’s much more likely to maintain consistent tenant demand, providing the facilities and lifestyle that many tenants are looking for.
Supply and demand are key to the property market and with so many locations in the UK currently experiencing a chronic undersupply of available properties, it’s an ideal time to invest in an emerging market with long-term future growth.
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How Does a Developer Like SevenCapital Choose a Location?
When it comes to choosing a location for a development, one of the key metrics you’ll often see developers consider is the end user and thus, future potential.
Typically, developers will look at a location from the perspective of both an investor and a tenant – identifying the amenities available such as bars and restaurants – as well as the nearby facilities such as hospitals, schools and universities.
Similarly, spotting an emerging location before it starts to experience growth is key to long-term returns, which is why SevenCapital has chosen to invest in areas such as Slough and Bracknell.
These are both promising markets that offer a balance of affordability within the region and exceptional potential through the regeneration they’re going to experience.
At the same time, many developers will decide based on the atmosphere of the location, asking themselves the questions that an investor would consider.