The Ultimate Guide to Property Investment in Sheffield

Considering your first foray into property investment, or perhaps expanding your existing portfolio, and thinking of Sheffield as your city of choice? Our guide to property investment in Sheffield provides investors just like you with a comprehensive overview of investment opportunities in the Steel City including:

  • What makes Sheffield such a desirable investment location?
  • How do property values and ROI compare to other cities in the UK?
  • What up and coming areas should you be aware of in 2021 and beyond?
Table of Contents

    Important note: The advice provided on this website is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.

    An Introduction to the Steel City

    Sheffield is famous for its popular universities and rich industrial history, but extensive redevelopment and regeneration projects leading to a 60% increase in its GVA (gross value added) since 1997, and annual economic growth of 5% each year since means that it is fast emerging as one of the best property investment locations in the UK.

    The uncertainty that surrounded the economy, and therefore the UK property market following a tumultuous 2020 which saw the arrival of a new government, the COVID-19 pandemic, as well as Brexit had forecasters predicting a difficult period for investors, with many concerned about the profitability of their portfolios. Remarkably, the opposite occurred, with house prices steadily continuing to rise throughout the year and demand from property investors seemingly unaffected by the numerous lockdowns and restrictions.

    This means that now is a better time than ever for both first-time and experienced investors to consider their options for building or expanding their property investment portfolio before prices continue to increase. With average property prices significantly lower in the North, many investors are looking to move away from the expensive investment areas of London and the South, Sheffield is the perfect location for investors with a hunger for opportunities and growth.

    Why invest in Sheffield?

    There are several reasons why Sheffield is turning into one of the most desirable locations for property investors, the least of which is the impressive rate at which its population is growing.

    1. It’s a fast-growing, populous, city

    As one of the fastest-growing cities in the UK, the current population of 575,400 is set to see an increase of 80,000 by 2039. With such rapid growth, there is understandably a substantial increase in demand for housing.

    A key factor in Sheffield’s population growth is due to people living longer, with the number of people over 75 expected to increase by 20% by 2039, making Sheffield a prime location for care home investments. This is not to say that Sheffield is an ageing city, as the growth in population is equally driven by young working professionals in the 20-24 age bracket, creating an influx of renters and future buyers.

    2. Excellent job prospects for young professionals

    A big factor in young professionals moving to Sheffield is down to the job opportunities available in all areas of the city.

    Whilst steel and engineering are still important to the city’s economy, other key industries including logistics, health and education, financial, distribution, legal and professional services, as well as telecoms are thriving.

    The Advanced Manufacturing Park (AMP) is currently home to the University of Sheffield’s Advanced Manufacturing Research Centre (AMRC) as well as huge global companies like Rolls Royce, Boeing, and vehicle manufacturer McLaren.

    These corporations are providing highly paid jobs and attracting graduates and professionals from all across the UK. What’s even better for property investors in Sheffield is that the AMP has huge plans for expansion, creating even more job opportunities and demand for housing.

    3. Sheffield has had significant investment in regeneration

    As a result of the strong local economy and jobs created by these modern industries, Sheffield is preparing for a bright future with its second city centre regeneration scheme, Heart of the City II.

    The scheme is a £470 million investment in hotels, retail, leisure, office space and more city-centre living. Outside of the city centre, the Riverside Business District is seeing a £175 million development in the form of the West Bar Square scheme which will see even more offices, apartments, hotels, restaurants and shops.

    With its rich cultural heritage and booming business parks, Sheffield has seen a rise in demand for short-term accommodation from tourists and professionals visiting the city. The investment in building new hotels across the city is a reflection of this increased demand and highlights the opportunities for lucrative hotel room investment opportunities in Yorkshire.

    4. Well-connected transport links

    One of Sheffield’s biggest selling points is its excellent transport links.

    Being right on the M1 motorway, Sheffield is in prime position for those who need to travel in and out of the city regularly. For travelling within Sheffield itself, there is a tram network that has 4 lines reaching out into the suburbs, as well as to nearby Rotherham.

    TOP TIP: Property investor should take the tram network into account when investing in property in Sheffield. Having a tram stop nearby now, or in the future, can add significant value and desirability to potential tenants.

    Gary STreet, Sterling Woodrow

    In terms of the future, Sheffield is set to benefit from two major future transport projects, with the HS2 high-speed rail network enabling passengers to travel to and from London in just 87 minutes. As well as high-speed rail connecting the city with the capital, there are early plans for a new road and trans-Pennine tunnel that would connect Sheffield with the flourishing city of Manchester.

    5. Close to nature with the Peak District just a stone’s throw away

    As well as being one of the greenest cities in the UK, Sheffield is located right on the edge of the Peak District National Park, and the city itself is known for having an abundance of trees and parks.

    This close proximity to green open spaces is often a big hit with tenants and visitors alike. In fact, long-weekepers, day-trippers, and staycation-ers who want to combine the best of the great outdoors and a little city break often choose Sheffield as a base for their stays!

    Property values in Sheffield

    A big factor in Sheffield being popular with property investors is simply how affordable property is when compared to the rest of major cities in the UK. According to Hometrack, the current average property price in Sheffield is £202,732, with only Liverpool and Newcastle matching the area in terms of affordability.

    Low prices aren’t reflective of poor investment opportunities, however, as property prices are expected to continue to rise significantly in the future, having already seen an average increase of £33,000 since 2008.

    Given the current affordability of the market in Sheffield, now is an excellent time to discuss what investment opportunities could mean for your financial future. Why not book a complimentary, no-obligation, consultation with one of our investment advisors at a time that’s convenient for you to discuss your options!

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    Buy-to-let investments in Sheffield

    With low property prices and high rental demand, Sheffield is understandably a prime location for buy-to-let investments given the high yields that investors can expect to receive. The central S1 and S2 postcodes are the most lucrative in terms of yields and are widely considered to be some of the best buy-to-let areas in the UK, offering 6.85% and 8.16% respectively.

    For average yields across the city, investors can expect gross yields on two- and three-bedroom homes of around 5%, with four-bedroom homes delivering around a 4% return.

    Houses of multiple occupancy (HMOs) room rates range quite significantly and average at around £100 per week, with higher quality properties commanding significantly higher.

    Student property investment in Sheffield

    With two popular universities attracting over 60,000 students each year making up 10% of the local population, it is no surprise that Sheffield is one of the top student property investment locations in the UK. The University of Sheffield is based mainly around the city centre, whereas Sheffield Hallam University has a campus two miles away on Ecclesall Road in addition to its city-centre campus.

    The vast pool of students and international students in Sheffield creates large and consistent demand for high-yielding HMO properties, with many looking to move away from the more expensive university-run accommodation.

    Areas of Sheffield property investors should consider

    Location is one of the biggest considerations when investing in property. As part of our Sheffield investment guide, we explore the best areas for property investment, as well as the yields investors can expect to achieve.

    Sheffield City Centre

    Population: 30,000
    Average house price: £139,921

    As with many major cities, the city centre is one of the best areas for buy-to-let property investment. The best investments for those buying property in Sheffield city centre are residential and student properties.

    City centre living is desirable amongst young professionals who want to live close to their place of work and have access to transport links, whereas students want to be able to walk to and from their university campus.

    As a result, investors can achieve rental yields of 7.94% in the city centre, offering some of the best investment opportunities in Sheffield.

    South East Sheffield

    Population: 158,000
    Average house price: £115,290

    South East Sheffield is home to the pleasant suburbs of Arbourthorne and Norfolk Park and up and coming areas such as Heely, making it one of the best postcode areas for investment in Sheffield. The S2 postcode in particular can generate impressive yields of around 10.54%.


    East Sheffield

    Population: 133,500
    Average house price: £141,250

    Mainly made up of traditional terraced housing, and home to the popular Parsons Cross area, East Sheffield is one of the best and most affordable investment locations in Sheffield. Comprising the sought-after S2 and S5 postcodes, investors can generate yields of up to 10.54% in East Sheffield.


    Whirlow/Ecclesall

    Population: 19,211
    Average house price: £338,036

    As one of the most up and coming areas in Sheffield, Ecclesall is in S11 and sits to the South West of the city. Closely located to the affluent suburbs of Dore and Fullwood, the area benefits from many bars and restaurants, making it a popular postcode amongst students and young professionals.

    Whilst rental yields of around 4% are less than other areas in Sheffield, the trendy and cosmopolitan nature of the area bodes well for investors who are likely to see some impressive capital growth returns in the coming years.

    Summary

    There has never been a better time to invest in Sheffield, and with property prices set to rise significantly in the near future, getting in early is crucial for the best returns.

    At Sterling Woodrow, we pride ourselves on helping new property investors get a solid start in the market and are happy to speak to you about your long-term goals and ambitions in property investment in Sheffield.

    We also work with experienced investors to help them increase the value and profitability of their property portfolios.

    Whether you are a first-time investor, or an experienced investor looking to expand your portfolio, book a complimentary property investment consultation with one of our senior portfolio managers to discuss investments in Sheffield. Get in touch and we will call you back at the appropriate time.