Why invest in Derby City Centre?

Our focus at Thrive is to identify, research and present opportunities that are appealing to all types of property investor.

We all are aware of the big four, London, Manchester, Birmingham and Liverpool but what about those hidden gems that offer investors great options at lower entry level purchase prices?

For investors on budgets that simply do not stretch to the asking prices of the aforementioned big four, we need to identify locations that will offer us an opportunity to provide potential for capital growth whilst also providing an environment that offers stimulus for strong rental yields and a minimisation of void periods.

In summary, we need to identify a location that offers the following:

✅ Home to large employers (creates rental demand and lowers potential void periods)

✅ Strategic location (good connectivity increasing demand for commuting if required)

✅ Clear plans to develop the city centre and surrounding areas (vital to promote future capital growth)

✅ Current affordable pricing (be ahead of the curve and position yourself to benefit from all of the above)

Derby – a strong alternative to the big four

So let us focus on Derby which has, in recent years, established itself as a highly rewarding property investment location which has seen its popularity only increase as time has gone by. It possesses clear stability in advanced manufacturing and numerous other high-value sectors which in turn are promoting one of the highest rates of average earnings in Britain.

Just as importantly, Derby is also part of a region that has wide-ranging plans for employment growth and urban regeneration – indicators that will inevitably enhance local rental demand and reduce the potential for rental voids. This is one of our most sought after criteria indicators (as referenced above) so this will allow investors to invest with confidence.

Let’s look at a summary of some further key factors indicating that Derby has some of the underlying fundamentals in place to remain as one of the country’s best buy-to-let destinations, for the short, mid and longer term. Some of those indicators include:

• Part of the East Midlands, one of the UK’s fastest-growing regional economies
• Continuing population growth
• Affordable property prices (lower entry levels than the UK big 4)
• Strong rental yields
• 4,500 jobs created over the last three years
• Thousands of new jobs forecast over the next 8-10 years
• A high concentration of high-value industries (Rolls-Royce, Bombardier etc)
• £billions worth of inward investment secured in the last decade
• Major regeneration projects in situ
• The second-highest average earnings in Britain
• Huge rental demand
• A multimillion-pound beneficiary of the Transforming Cities Fund
• A university student population of circa 34,000

✅ Home to large employers (creates rental demand and lowers potential void periods)

As the UK’s 6th most productive city, Derby has one of the fastest growing economies in the country.

While 4,500 jobs have been created over the past three years alone, the city’s expanding collection of global employers will continue to push this number in the years to come.

Derby has long been renowned for its manufacturing sector and is home to several international companies.

With Rolls Royce, Bombardier Transportation and Toyota all calling Derby home and housing nearly 45,000 professionals, it’s a sector that continues to support Derby’s impressive growth.

✅ Strategic location (good connectivity increasing demand for commuting if required)

Derby is a vibrant and diverse city within the heart of the East Midlands. The city is well connected by car, train or plane with over 6 million people living within one hour’s travel time.

Nottingham East Midlands Airport (previously known simply as "East Midlands Airport") is situated about fifteen miles from Derby city centre, making Derby the closest city to the airport.

The city is around 10 minutes away from the M1 junction 24 to 25 and you can also access Derby from the A6, A50, A38 and A52.

Direct rail services connect Derby with London St Pancras (from 93 minutes), Birmingham, Bournemouth, Bristol, Cardiff, Dundee, Edinburgh, Leeds, Leicester, Newcastle, Nottingham, Oxford, Sheffield, Southampton, Plymouth and many other destinations.

✅ Clear plans to develop the city centre and surrounding areas (vital to promote future capital growth)

The largest regeneration project in Derby is the Derby City Centre Masterplan. An exciting and innovative plan that will leverage £3.5 billion in investment, create 4,000 new jobs and 1,900 new homes. There will also be a focus creating new public spaces, transport infrastructure and business parks, as well as an introduction of new leisure facilities.

Attracting visitors to the city is also part of the wider big city plan with the Becketwell Performance Venue regeneration representing a key component of this strategy. Hundreds of new jobs will be created here alone seeking to generate £10 million for the local economy and attract an additional 250,000 visitors to the city per year.

Shrewd property investors will always look for their locations to possess these clear plans for the future. They provide opportunities for the local economy to thrive and in turn sustain rising standards of living, and furthermore allows potential tenants and buyers to find themselves in more affluent situations. As we know, property values have generally risen in correlation with average disposable incomes, so a strong economy bodes well in terms of both rental demand and longer-term capital appreciation.

✅ Current affordable pricing (be ahead of the curve and position yourself to benefit from all of the above)

The average values quoted by Rightmove and Zoopla (£193,915 and £206,633 respectively) are well below the UK mean.

So in basic terms, despite all the ongoing economic activity, average prices are very affordable indeed. Why is this? Well, it Is simply because the most important social and economic strategic impacts have not sunk in so in effect, we are ahead of the curve. Investment projects are generating new jobs and with more money flowing into local supply chains, the longer-term effects will be much more pronounced. Jobs and rental demand should grow steadily and continuously over the next 20 years, creating ideal conditions for buy-to-let investors.

So for those looking for value in the market and a viable alternative to the UK’s four largest cities, Derby represents as an excellent market for longer-term investments. This kind of location should deliver rewarding results, year after year. Local employment growth and an increasing population should drive dependable, steadily increasing rental demand, whilst the correlating rising disposable incomes should help to increase average property prices.

JLL suggests that Derby could see property values increase by 17.5% by 2026, demonstrating the need for investors to consider “getting in early”. As new transport links and amenities continue to facilitate the city’s growing rental sector, we can expect the disparity between supply and demand to grow. 

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