Sheffield - for the Steely-Eyed Investor
Sheffield – for the Steely-eyed Investor
Another week, another new northern English town to look at as it seems these days, and this week proved no different. On from our recent forays to Leeds, staying within Yorkshire I made the short journey down by train to Sheffield, home of what was the English Steel Industry [hence the title] amongst other things. In fact, the steel industry here is producing more steel here than at any time in the city's future, still a thriving industry then.
As is becoming customary in these little missives, let's go through in short order the reasons why I parted with £4 for my train ticket from Leeds to visit Sheffield this week:
City Population: 552,000 [up from 513,000 in 2001]
City Population Forecast: 670,000 by 2033
Main Industries: specialised steel [£7 billion pa], technology, sports
Unemployment:10.1% [UK average 8.1%]
Economy: Gross Value Added – increased 60% since 2007
University Population and Rating:58,000 students, 2 universities / 28th out of 116
So, different in many ways from Leeds and different motivations to invest beyond yield returns which can be quite similar. Leeds being the much bigger city, and firm roots in the financial and legal service industry and Sheffield focused more on production and engineering. Interestingly, the UK has great ambitions to grow heavy industry once more, the “March of the Makers” PM Cameron has called it. And his partner in the coalition, Nick Clegg, is member of Parliament for Sheffield. The city is on the country's development map.
Lets at the city centre property where I focused this week's trip.
Example Property
There's nothing I like more than an “odd” property and here is one, positioned near to the University faculties, which is just that. But odd in a good way I think. The property is located within a very well-looked after building with conceirge service, so far so not odd. But going inside we saw that really 2 units had been converted into one, perhaps the old sales office of the development being merged with a residential unit. Actually the layout with perhaps 110 sqm was very generous with 3 bed / 2 bath and you would say laid out perfectly for the student rental market. Student would pay around £300 per month in this area, and this would be certainly achievable in this quality of unit, perhaps £350 for the larger bedroom which would give a monthly rent of £1000. The price of £135,000 is precariously near the stamp duty threshold of £125,000 and this would perhaps be the bid. Afairly solid and low maintenance way to collect a gross yield of near 10%. That was the first one I saw.
On from that, and nearer to the city centre itself, we saw then an array of 1 to 2 bedroom apartments with the usual layouts and balconies. The apartments differ little in terms of rental value, and I was surprised to find many came with allocated parking.
Here's an example, pretty much in the city centre. A 2 bed apartments, built 4 years ago with full furniture ready for letting and underground parking. Rent should be around £625 with parking an extra £75 per month. The selling bank have indicated here that £100,000 will be accepted, so interesting once more from a yield perspective.
In summary, I thought the trip worthwhile to the city and found some good value in places. I would need to do some more research as an investor as to the economic development prospects and generally forecast future tenant demand and therefore yield sustainability. But at today's prices / rent levels then the headline yield rate does look tempting enough above mortgage rate levels to participate in principle. I will update as the research continues and investments made in the city and got under management.
Next week is holiday time, and we are heading to the Forest of Dean. So expect a property report from there next week, unless I can keep away from the estate agent windows..