Where are the best property investment locations in 2023?

Like every other business sector, property investment has had to deal with the fallout from Brexit and COVID19. Unlike some business sectors, however, it has come out the other side relatively unscathed.

As always, however, some locations seem to have better prospects than others. With that in mind, here Portfolio8, specialists in buy to let properties for sale, provides a brief guide to the best property investment locations in 2023. 

What makes a good property investment location? 

Here are the key considerations when looking for a good property investment location.

The local economy 

The transactional costs (and administration) of buying property mean that most people look to hold purchases for at least five years. You, therefore, need to be reasonably sure that there will be consistent rental demand for at least this time. You also need to be confident that you have a viable exit strategy. This needs to allow for the possibility that you may need to exit your investment earlier than you expected. 

Infrastructure 

In the context of property investment, infrastructure means transport and internet connectivity. People who are renting a property to live in generally want both to be at least decent. People renting a property for a holiday may be prepared to go off the beaten track and/or go without the internet. This is, however, still a fairly niche market. 

Facilities, amenities, and attractions 

The facilities, amenities and attractions renters will appreciate will generally depend largely on the demographic you are targeting. With that said, most people renting a property to live in tend to value areas with a strong sense of community. This isn’t something that can necessarily be checked on the internet. It is, however, usually quite easy to identify in real life. 

Low crime rate 

This speaks for itself. People need to feel safe, especially in their homes or homes from home. 

Cost of properties and renovation 

Properties are big-ticket transactions. For most investors, therefore, the headline purchase price and cost of any renovations will be a significant consideration. 

Potential for capital growth 

Although the main purpose of property investment is yield, many investors also like to have capital appreciation as an added bonus. 

Rental yield 

In principle, higher yields make for more compelling property investment locations. In practice, it can be worth sacrificing some yield for the reassurance of a mature market. This is likely to be particularly relevant for people who depend on their rental income. 

Market trends and demand 

It’s always worth thinking about what the future might bring, especially when making a long-term purchase. 

The UK’s best property investment locations in 2023 

Taking all of these factors into consideration, here are the UK’s five best property investment locations for 2023. 

London 

London may seem a surprising entry on a list of the best property investment locations for 2023. Over recent years, many property investors abandoned it for the lower prices and higher yields of the Midlands. After Brexit and during the pandemic, many renters abandoned it too. 

With all that said, London does have some unique advantages that help to sustain its economy and hence its property market. This means that downturns tend to be temporary and hence can be key buying opportunities. 

London’s main advantage is, quite simply, the fact that it’s the de facto capital of the UK. It’s also a global hub for many industries and home to world-famous educational institutions. London is also a transport hub and a significant tourist destination. 

The prices in central London might still be too high for the average investor’s comfort. By contrast, outer London and the commuter-belt areas could be well worth looking at. These locations are benefitting hugely from the move to hybrid work. 

Leicester 

Birmingham is probably the best-known property investment location in the West Midlands. Leicester, however, is now catching the eye of investors looking for up-and-coming alternatives. 

Leicester has long had a strong local economy of its own. It’s now benefiting from its proximity to many of the UK’s most important economic hubs. Somebody living in Leicester can be in London, Birmingham, or Manchester in about two hours. Oxford, Cambridge, Nottingham and Derby are even closer. 

These may not be the sort of distances people want to travel if they are commuting daily. People who are only commuting once or twice a week, on the other hand, are much more likely to see this as reasonable. 

Birmingham 

Birmingham’s main claim to fame is that it has the second-largest economy in the UK. As it’s not actually the capital, it doesn’t have a central government presence. Otherwise, pretty much everything that applies to London also applies to Birmingham. It just applies at much lower prices. 

As a result, Birmingham is able to attract and keep young adults. Many come for the universities and affordable student housing. Some come after graduating, looking for good jobs and affordable regular housing. A lot of both then choose to stay for the community, the amenities and the affordable housing. 

Manchester 

Manchester is arguably the UK’s biggest modern success story. In the 1980s, it was the UK’s gun-crime capital. Now, it’s one of the UK’s most desirable places to live. Unsurprisingly, its house prices have risen to reflect this.  

Even so, however, they’re still much lower than London. This means that investors can charge lower rents and still make good yields. What’s more, the city is still completing its regeneration. That means there are lots of opportunities for investors who want to buy off-plan. 

Liverpool 

The battle for fifth place was between Liverpool and Blackpool. Liverpool won because it has a more diverse economy. Like Blackpool, Liverpool is probably best known as a tourist hotspot. Its music scene in particular is arguably second to none in England.  

The key difference between Liverpool and Blackpool, however, is that Liverpool also has a strong banking, finance, and insurance sector. Its economy is also growing at a strong pace. 

Furthermore, assuming hybrid working remains popular, Liverpool’s geographical location could be a major draw. For example, commuting once or twice a week to Manchester or Birmingham would probably be acceptable to most people.