Vesta Property | Investment Guide for Newcastle upon Tyne | Vesta Buy To Lets

Welcome to Newcastle

Innovation. Connection. Opportunity.

A city of opportunity

One of the UK’s core cities and an integral part of the Northern Powerhouse

Welcome to Newcastle, the vibrant capital of North East England, and a thriving hub of business and culture.

Home to exceptional talent, world renowned research, supportive business communities and underpinned by incredible culture, thrilling sport, superb shopping, exciting nightlife and top-notch cuisine - its no surprise that property investment has increased exponentially over the last decade.

Famous for its industrial heritage and brown ale, the city has undergone powerful transformations since it began life as a Roman fort on Hadrian’s Wall in 122AD.

Up against stiff competition, the Rough Guide 2018 crowned this UK city its number one must visit destination and was recently named the UK's happiest city and best for quality of life!

Dramatically changing skylines have been revolutionised through major regeneration leaving a demand for Newcastle buy to let. Driven by infrastructure improvements, inward investments, affordable housing and a growing demand for rental properties, prospective investors have recognised the city as a UK hotspot.

Newcastle is a core UK city and boasts an iconic and desirable location. It is one of the fastest growing cities in the UK, with 100,000 new jobs projected in the regional economy by 2024 and one of the fastest growing tech communities outside of London.

Catherine Walker, Inward Investment Director, Invest in Newcastle

Key Facts

OPPORTUNITY

a £350 million

Flaship project, Newcastle Helix is the UK's biggest 24-acre urban development bringing academics, industry leaders, businesses and top researchers

ECONOMY

£13 billion

Contributed towards the UK’s GVA each year whilst securing over £600 million to the local economy,

OUTSTANDING TALENT

1.1+ million people

Within a 30m drive and the highest percentage of STEM and Computer Science students in England

UNIVERSITY

Over 100,000

Students live in Newcastle and the surrounding region, boasting one the highest graduate retention rates at 55%

CONNECTIVITY

20 minutes

From the city centre, Newcastle International Airport connects to over 85 destinations worldwide carrying over 5 million passengers

INFRASTRUCTURE

£12.5 million

Investment in digital infrastructure and one of the fastest broadband speeds in the UK, as well as free city centre wi-fi

Population & Demographics

Newcastle has one of the highest graduate retention rates at 55%, its population has more than doubled since 2002, ranking in the Top 10 UK cities for growth in the 21st century

This city has a population of 300,00, the largest population in the north east region of England and it is the 8th most populous city in the whole of England. Newcastle also has access to over 1.7 million people within a 30 minute drive time.

Ranks in the Top 10 UK cities for growth in the 21st century

The number of households in Newcastle is projected to rise 12% from 122,424 in 2015 to 137,471 by 2030.

Renowned for their strong work ethic, businesses benefit from some of the highest staff retention and labour productivity rates in the UK. Labour costs are extremely competitive with the average salary 11% lower than the UK average.

Newcastle is “the hipster capital of the North East” and boasts a mix of culture, heritage and sophistication.

Within the region, over 100,000 students choose to live and study, with almost 20% arriving from over 110 countries worldwide. Newcastle city is home to two outstanding universities attracting over 50,000 students.

Newcastle University is ranked number one in computing science research impact and has an international reputation for cloud computing and big data, information systems, VR and digital media. Northumbria University is leading the way in computer forensics and security, gaming and visual effects.

Investors have access to a highly educated and multi-lingual workforce providing international businesses with the essential skills and knowledge to operate globally.

Newcastle is a magnet for young people, being named the UK’s ‘Best University City'

MSN Travel’s survey

Economy

Newcastle’s economic potential is being realised with many exciting investment programmes - the £92m Accelerated Development Zone, the £100m Giant’s Quay development and a £350m Science Central research facility

Providing a major contribution to the productivity and competitiveness of the UK economy, Newcastle is a significant driver of economic growth.

Whilst securing over £600 million to the local economy, Newcastle also contributes to £13 billion towards the UK’s GVA each year, reinforcing its thriving entrepreneurial spirit and exceptional credentials.

Despite uncertainty brought by the recession and Brexit, there is a strong evidence of market confidence and investment, particularly through Newcastle property.

Newcastle has a strong reputation in banking, corporate finance, insurance, contact centre and shared services. The sector is growing, employing over 130,000 people in 17,500 companies, and thought to generate around 25% of the region’s wealth.

The city boasts a tech sector is forecasted to grow to be worth £2.5 billion by 2025 and is growing faster than rest of the economy attracting young professionals and millennials

The city was named as one of the top cities for inward investment by design and consultancy firm Arcadis. The group ranked 24 UK cities based on their performance against six criteria deemed crucial for future inward investment and growth: business environment, workforce and skills, infrastructure performance, housing, place and “city brand”.

Business & Employment

Newcastle is the most vibrant and fast growing digital cluster outside of London and has the highest growth in England

Newcastle has an impressive track record in the attraction of overseas investment as well as establishing and supporting home-grown businesses. There are almost 65,000 registered businesses within the Newcastle city region, with knowledge intensive sectors and tech driving consistent economic growth.

Newcastle is the most vibrant and fast growing digital cluster outside of London driving employment and innovation in the city and has the highest growth in England (+30%, 2011-2015), accounts for more than 3,500 businesses, employing more than 28,000, with a value of £2 billion.

The North East has the highest percentage of STEM students in England with more than 50,000 students at our universities.

The city also has an internationally-renowned reputation for medical sciences and the North East is home to 250 companies operating in the sector employing over 6,500 people. The region is one of the strongest in the UK for exports of medical and pharmaceutical products and home to cutting-edge facilities including the, National Innovation Centre for Ageing, International Centre for Life and Newcastle University Institute for Ageing, the largest facility of its kind in Europe.

Also home to some of the biggest names in business and professional services, and has a strong reputation in banking, corporate finance, insurance, contact centre and shared services.

All of the ‘Big Four’ professional service companies have operations in Newcastle and home to the only FTSE 100 software company in the UK – The Sage Group plc

From software giants to high street banks and world leaders in research, global brands have chosen to make North East England their UK home - Virgin Money, British Airways, Proctor & Gamble, Nestle, Deloitte, Worldpay, Sage Group PLC, Siemens, Nissan, Sky, Accenture, Barclays to name just a few.

Newcastle is the best city to work in the UK. Newcastle was ranked top alongside 66 other UK cities, with rankings based on connectivity, co-working spaces and places to eat and drink.

Established supply chains ensure companies can work across many sectors, bringing with it resilience to economic dips and the economy continues to evolve, its not surprising that many companies have chosen Newcastle and the wider region as a strategic site to position multiple business activities such as R&D, manufacturing, sales and service

Location

Newcastle upon Tyne is a city in Tyne and Wear, North East England, 103 miles south of Edinburgh and 277 miles north of London. The most populous city in the North East, Newcastle is the eighth most populous urban area in the UK.

With its twin city, Gateshead, it was a major shipbuilding and manufacturing hub during the Industrial Revolution and is now a centre of business, arts and sciences. Spanning the Tyne, modern Gateshead Millennium Bridge, noted for its unique tilting aperture, is a symbol of the 2 cities.

Connectivity & Transport

Newcastle is the most vibrant and fast growing digital cluster outside of London and the sector continues to build on its tech history, driving employment and innovation

When it comes to digital connectivity, Newcastle is at the fore. Whether it is to work or play, they offer free Wi-Fi across the city centre and their creative and digital office spaces provide the UK’s fastest available speeds, allowing businesses to attract and service clients.

The region is home to Stellium, the UK’s largest purpose-built data centre, delivering a 40km metro area fibre network, linking Newcastle to national and international networks.

There is also the North Sea Connect project. A high capacity fibre cable to Denmark that, together with existing subsea networks to North America and Northern Europe, both bring vast digital infrastructure to the North East.

Newcastle also has all the transport infrastructure you’d expect of a major European city and is well connected by road, rail, sea and air.

A recent Legatum Institute report ranked Newcastle as the best place in the country on its logistics measure - the best connected area in the whole country.

With access to three major ports, the East Coast high-speed train line providing fast and regular travel to London in less than three hours and Newcastle International Airport just 20 mins from the city centre offering direct flights to over 85 world-wide destinations, Newcastle is the perfect gateway to Europe and beyond.

Property Spotlight

House prices in the North East are 40% less than the UK average

Newcastle property investment has increased exponentially over the last decade.

The cost of living in the North East is significantly lower than London and other UK cities. When it comes to residential properties, house prices in the North East are 40% less than the UK average.

Investment property comprises a large proportion of terraced housing, although many of these are large and impressive Georgian structures, particularly in the central areas of the city. Student lets are another big source for Newcastle investment property.

In line with the population rising by 12%, the number of households in Newcastle is projected to rise from 122,424 in 2015 to 137,471 by 2030. Figures from Gateshead & Newcastle upon Tyne House Market Assessment 2017 suggested that more than 1,000 new homes per year are needed in Newcastle over the forthcoming 15 years.

Across the North East, home ownership levels have declined over recent years and household income has been concluded as one of the fundamental determinants in the ability of households to access home ownership or the private rented sector.

There is a significant amount of private rented accommodation at 19.1% compared with the English average of 16.8%

Research from Totally Money states that university cities have some of the highest rental yields on offer, with Newcastle property taking the position as one of the top performers.

Due to a strong influx of students arriving each year, landlords have a plethora of students to choose from which ultimately reduces the likelihood of void periods.

NE6 ranks sixth for Newcastle buy to let with an average yield of 9.48%. Situated only a couple of miles away from Newcastle University it secures itself as a viable buy to let hotspot to invest in Newcastle for student accommodation.

According to the Royal Institute of Chartered Surveyors, rents will increase by more than 25% over the next couple of years, which makes owning rental property an appealing prospect in terms of the potential returns one can obtain.

Property Insight

GROSS YIELD

6.0% (+1.3%)

Median gross yields in NE1 and NE6 are amongst the highest performing areas achieving 6.1% and 7.8% respectively

PRICE PAID

£147,000

Median price paid has grown steadily over the last 5 years showing +14% growth and +1% in the last 12 months

ASKING RENT

£588 (+4%)

Median rent has grown over the last 12 months and 8% over the last 5 years

Property Insight

Landlord insight on house price growth, rental yield and demand

House Prices

The average price of property in Newcastle is around £161,000, much lower than the national average and significantly cheaper than London. In the last 12 months, property value in Newcastle has increased by 4.1%.

Rental Yield

The average rental yield in Newcastle is around 8%, with the NE6 postcode having an especially high yield of 9.48%. This makes Newcastle upon Tyne one of the best areas for rental yield in the UK.

Demand

Newcastle is a growing magnet for young professionals and students, with over 60,000 students attending two leading universities. Its population has more than doubled since 2002, meaning it currently ranks in the Top 10 UK cities for growth in the 21st century.

Price Paid

Median house prices have grown 14%

Median Price Paid v Median Sales Listings

Listings have been growing steadily month on month since December 2017

REalyse - Data accessed 31/01/2019

Asking Rent

Asking rent has performed steadily until September 2017 where it began growing quickly as rental stock is in high demand seeing rental listings decreasing at the same rate.

Population is set to grow 12%, student numbers are increasing and with retention rate one of the highest in the UK at 55% these is demand for private rental stock, particularly in NE1, NE4 and NE6

Asking Rent

Rental Listings

Rental listings started decreasing significantly in September 2017

REalyse - Data correct as of 31/01/2019

Property Overview

Overview by property type in the Newcastle NE area (12 month average)

REalyse - Data correct as of 31/01/2019

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