Landlords Investing in Travel

16 November 2016

Why for Landlords Investing in travel makes sense.

There is strong evidence that landlords investing in travel routes are seeing higher than average growth in both rental income and capital growth.

The Crossrail experience bears this out with property prices booming along the route and tenants already queuing to get on board even though services won’t start for another two years or more.

Crossrail 2 and HS2, both of which are still several years away from commencing, are already beginning to attract early investors keen to get in first and snap up the best bargains.

HS2 Impact on Sheffield

Sheffield and Chesterfield are potential beneficiaries of recently announced variations to the original HS2 route as it passes through South Yorkshire.

Plans to build a new station at Sheffield Meadowhall, the large shopping centre south of the city centre, have been scrapped and instead HS2 will make use of the existing Sheffield Midland route. This will bring Sheffield and potentially Chesterfield into the heart of the HS2 route and is bound to impact on property values and rents in the region.

Improved connectivity with London and the other Northern powerhouse centres, particularly Birmingham, Manchester and Leeds, will enhance the significant city centre development already going forward in Sheffield and will make the city a major player going forward.

The government has already announced big plans for Sheffield and is proposing to invest £328m by 2021.

In addition Sichuan Guodong (a major Chinese manufacturing firm) will invest more than £1bn in Sheffield over the next 60 years, including around £220m by 2019.  This money, which is the biggest Chinese investment deal in UK outside of London, will mostly be invested in building new hotels, leisure and residential properties.

Wang Chunming, Sichuan Guodong’s chairman, has personally visited Sheffield on numerous occasions and previously said it has “real growth potential”.

Night Tube impact on Zones 2 and 3

Much further south, London’s new Night Tube is likely to push property and rental prices up by as much as 10% in some areas, on top of general rates of growth.

Research undertaken by and Dataloft, calculated that homes within a half mile radius of stations in zones 2 and 3 will benefit most from the new service in terms of prices.

Landlords will inevitably see increased demand and rental prices, as young professionals, students and shift workers are drawn to areas with better night time transport links.

Although night buses already run across the capital many are significantly overcrowded.  The new underground service will provide faster routes and help ease congestion above ground.

Travellers will be able to use day travel cards from the previous day up until 4.30 am and once fully phased in next year the Night Tube will provide a comprehensive service across the capital (before being extended to the Docklands Light Railway by 2021).

According to the research the ten areas most likely to see the highest rent increases are

Stratford, Willesden Green, Mile End, Canada Water, North Acton, Turnpike Lane, Leytonstone, North Greenwich, Bermondsey and Acton Town.

The evidence seems clear that for landlords Investing in Travel is a smart move.

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