With record levels of investment into residential, commercial and community projects in major city centres, it’s no surprise that living in the heart of the city is rising hugely in popularity once again after a downturn throughout the 20th century.

The last ten years have seen a breath-taking amount of investment into particularly the Midlands and the North of England, with Manchester, Birmingham and Liverpool experiencing significant investment in infrastructure, alongside great amounts of development in smaller UK cities. Much of this capital has been invested into rejuvenating city centres and associated projects.

As the skyline of these major cities transitions from construction cranes into high rise apartments and commercial office space, new sites are becoming commissioned for development at a constant rate. Residential units took the largest figure of new build construction in Manchester with a total of 11,135 units under construction, correct as of mid-January 2018 in a report carried out by Deloitte.

Once these developments are completed, cities are seeing large scale migration as recently noted by the BBC which reported that Birmingham has experienced a 163{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} growth in population while Manchester sits just below with a 149{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} growth between 2002 and 2015 with this only set to rise further. This sharp increase in demand is influencing the property market prices significantly, with the Guardian identifying Manchester and Birmingham as the prime cities for capital gain from an investors perspective, experiencing a rise of above 7{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} year on year retrospectively, while Leicester and Liverpool sit just below at around a 6{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} increase.

High Quality of Life

Living and working in the city centre alongside the amenities and facilities situated on the doorstep, has contributed hugely to avoiding long travelling times, in particular with daily commutes to work. The BBC states that around 32{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} of city centre residents are able to walk to work, with a large proportion of the rest taking a short journey on public transport. Naturally this creates a higher quality of life for residents, with the Guardian expressing that city centres beat suburban areas in terms of human well being, with more socialising and walking leading to a happier and healthier population. Many seek the ability to have the city as their back garden and everything they need within walking distance, eliminating the dependence on a car, a factor nearly always experienced in suburban areas.

Shift in Desires

While for some the change from suburban life to the city centre might be somewhat overwhelming, millennial’s are influencing this space significantly. Much of the population now demands amenities to be positioned on their doorstep or otherwise in very close proximity, prompting the move from the suburbs into the city centres. CityMetric states this rise is predominantly driven by young professionals who have an increased desire for convenience over previous generations and are willing to pay for that convenience, as well as students as university populations grow among major cities. As the demand has increased for a multitude of individual and chain restaurants, gym and leisure facilities and bars and coffee shops, street level space beneath the new apartment or office developments is both easily and quickly occupied. However, despite pinpointing the younger population as the influencer, InsiderMedia support the continuation of the move into city centres, with all generations living in city centres by 2030.

Many of the property developments we deal with at Gower & Mae integrate facilities for use by the residents free of charge, including a gymnasium, cinema and/or swimming pool, often at the ground level of the property. This offers great incentives for property investors to attract residents with the ability to achieve higher yields.

Students and Employment Opportunities

The most significant factor influencing the rise of young professionals in city centres are the high proximity and availability of jobs, in particular high-skilled and high-paying office roles across a number of industry sectors. Three quarters of city centre residents live in rented flats or apartments with more than 50{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} working a high-skilled job. The BBC states that Liverpool’s student population in the city centre rose by 208{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}, prompted by 4 universities based in the city, coupled with 99,000 students based across 4 of Greater Manchester’s universities.

Students who are graduating are therefore becoming enticed to remain in these cities, having spent their university lives living and breathing the centre and its amenities and attracted by the increase in employment opportunities than perhaps around their home towns. Take Manchester for example that has around a third of its student population graduating each year at around 33,000, with over 50{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} of this figure entering the young professional percentage of the city’s population, being the second highest graduate retention rate in the UK. This pattern has contributed to young, single professionals taking one of the top percentages of the population in UK city centres.

Top 3 Advantages of City Centre Living

  • Proximity to shops, restaurants, leisure and cultural facilities being a short walking distance away was the most important aspect by 66{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} in the ‘CentreForCities’ survey
  • Little or no reliance on owning a car, eliminating the running costs – cities are very well connected with vast availability of public transport
  • High quality of life with a healthier and happier lifestyle – city centre residents do substantially more exercise with some shopping areas being entirely pedestrianised, coupled with significantly more opportunity for social interaction

What does this mean for Property Investors?

Property investors need to be aware of on-going population shifts, ensuring they are investing in growing sectors. This trend of high-worth individuals moving back into the city centre will see rents and house prices continue to rise. Those investors who may be priced out of investing in large city centres can still find attractive investment property in smaller UK cities and towns and should aim to select investments offering excellent local amenities, strong public transport links and growing local employment opportunities.