By Sophie Mitchell-Charman, Business Development Manager for Northern England, LendInvest
It’s been a couple of years since the then-Chancellor George Osborne coined the phrase ‘Northern Powerhouse’ and in that time an awful lot of focus has been on Manchester. That’s understandable; it’s one of the UK’s biggest and most connected cities, and a cultural touchstone.
If the North is to be turned into an economic powerhouse to compete with the glittering lights of London and the South-east, of course Manchester is going to play a central role. But it cannot do it alone. There is more to the North than Manchester, with a host of large, important cities that also need a boost in order for the region to become an actual powerhouse.
One city that is often overlooked in all this is Sheffield, yet there are already encouraging signs that Sheffield is on the up. And a big part of that is down to Chinese money.
Last year it was announced that Chinese company Sichuan Guodong Construction had tied up a 60-year partnership with Sheffield city council, with an initial commitment to spend £220m on up to five projects in the city centre over the next three years. It’s the largest Chinese investment deal in a city outside London.
Sheffield is an old industrial city, with a proud history, but it’s certainly an area that could do with some financial help. This Chinese investment can make an enormous difference in terms of regeneration, bringing businesses and employment to the area. Local councillors have talked about these projects bringing not just hundreds but thousands of jobs to the area. That all serves to boost the housing market in the area, and we are already seeing the first signs of that in the property developments springing up across the city. The brokers in the area that I speak to are excited; they can see the city changing and improving.
Sheffield is already an interesting market for landlords, with a strong rental market in place. In our most recent LendInvest Buy-To-Let Index, we found that landlords enjoyed a terrific 5.12 per cent yield in the city, with respectable capital gains of almost 3 per cent and rental growth of 2.5 per cent.
As is common with many of the big cities in the UK, the base of that rental market comes from students; Sheffield has two well-established universities, but is also a popular city for people to remain in after graduation. In fact, last year it was named the top city in the UK for graduates in a study by TheHouseShop.com.
Coupling that strong student and graduate base with an influx of young professionals following the regeneration of the city will only make it more attractive to investors.
Transport links play an enormous part in the attractiveness of any region to investors, and there are good signs on this front too. Just last week it was confirmed that HS2 will stop within the centre of the city, delivering high-speed rail access to London and other cities across the North. It’s no secret that up to now transport routes between Sheffield and other major northern hubs have not been good enough, so this news is a positive step in the right direction.
Of course, if the North is to be turned into a genuine powerhouse, there will need to be a significant increase in housebuilding, far beyond the improving levels we have already seen. There is still too much reliance on the big housebuilders, and not enough emphasis on what entrepreneurial small and medium-sized builders can do.
Even this is changing, though, with the Government recognising that the only way we will build the homes the nation needs is through a more diverse range of housebuilders. It’s a cause LendInvest has championed and will continue to do.
Much like Sheffield, small builders have been overlooked for too long, with the attention focused on the same old big names. But for Sheffield and small builders alike, things are on the up.