Property Investment in Nottingham, a guide

 Your free guide to Property Investment in Nottingham, dated May 2023

Based on its strong performance over the last five years and more, Nottingham certainly deserves to be considered as one of the UK’s most attractive destinations for buy-to-let property investment. There are several reasons for this and here we explore some of most important of them.

Why Invest in Nottingham? A Summary

In recent years, property investment in Nottingham has been a rewarding business. According to numerous sources, the city has delivered some of the country’s best yields, together with some of the highest rates of capital appreciation. On both these key measures of investment success, Nottingham has been performing extremely well.

Of course, an impressive track record is no guarantee of future performance, but there are many good reasons to believe that Nottingham will continue to deliver excellent returns in the years ahead. Key points to consider include:

• Being part of the UK’s fastest-growing regional economy

• A large and growing population

• A pronounced shortfall in housing supply

• Affordable property prices

• Large-scale urban regeneration and inward investment

• Expected to connect to the HS2 rail network

• Many well-established major employers

• Steady growth in high-value industries

• A university student population of around 60,000

• An ambitious economic development plan

• Thousands of new jobs being created

• 39,000 new jobs targeted by 2030

Inward Investment in Nottingham

Securing inward investment is the remit of D2N2 – the Local Enterprise Partnership for Derby, Derbyshire, Nottingham and Nottinghamshire.  It is responsible for supporting business growth in an area with a population of over two million people, and an economic output of over £42.9 billion per annum.

D2N2 certainly has a successful track record. Its previous economic plan, which launched in 2013, achieved its aim of creating 55,000 new jobs within three years. Its second strategic plan, entitled Vision 2030, seeks to generate up to £9 billion in added value in the local economy. D2N2 writes that is intends to push the region “into the top 25% in Europe for productivity, raising earnings, narrowing inequality and sharing prosperity across all parts of our two cities and two counties.”

Although the coronavirus pandemic inevitably slowed local economic growth, the D2N2 strategic plan is producing important new infrastructure and driving a number of major urban renewal projects that should support the creation of thousands of new jobs.

The published aims of the plan include increasing the value of the area’s economy to £70 billion per annum, and creating approximately 39,000 new jobs by 2030. Importantly for a city that, historically, has supported a relatively high proportion of low-paid jobs, the strategy aims to ensure that 90% of those new jobs are created within the service sector and in various knowledge-based industries.

To do this, D2N2 and Nottingham City Council are both committing substantial resources to business support programmes, training and vocational skills development, new business incubators and the creation of new workspace for future-focused businesses. In this, they are supported by important business outreach and commercial research programmes run by Nottingham’s two universities.

Meanwhile, Nottingham’s physical infrastructure is being enhanced through a number of major construction projects. Progress was delayed by the Covid-19 pandemic but there is no doubting the scale of the improvements, nor their likely impacts once they are finished. Already, Nottingham City Council has reported that local regeneration projects have generated around 1,000 new jobs, and more are certain to follow.

Some of the most important and transformative schemes in Nottingham include:

This is just a selection of the many urban regeneration projects that are now in progress in Nottingham. Some – like the HMRC office development – have generated jobs almost immediately, while transport improvements and business support schemes will tend to have more of a slow-burn effect. Collectively, however, they should all have a positive impact on the economy and on market conditions for property investors.

Business Growth in Nottingham

In February 2023, Ernst & Young published its Regional Economic Forecast, which records that Nottingham’s economy grew by +4.9% in 2022. However, it also reports challenges including relatively low skill levels in the workforce and a greater reliance on lower value economic activities.

Although the city has roots in manufacturing and textiles, Nottingham is now working hard to reposition itself. Today, some of its fastest-growing industries include:

• Advanced manufacturing

• Digital and creative industries

• Distribution and logistics

• Financial and business services

• Life sciences

• Tourism

This shift towards more forward-looking sectors is important. Nottingham is projecting steady growth in employment over the next decade, boosting job numbers by 39,000, but, unlike many cities, it is not making job creation a central objective of its economic plan. Rather, it is committed to changing the pattern of local employment; moving more people into higher-skilled, better-paid roles.

This is significant for property investors because if more local people take up more professional, higher-paid jobs, so the average spending power of tenants improves. This helps to boost demand for higher quality rental accommodation, while a general improvement in living standards can also help to fuel an upward movement in average house prices.

D2N2 explains its rationale as follows: “There will not be a lot of new labour entering the economy between now and 2030, so we must find ways of producing more output with the labour we have. We need to enable workers at all levels to move up into the more productive, better-paid jobs, and raise workforce skills levels to respond to the economy’s future needs.”