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North vs South
London undoubtedly sees the highest number of tourists. In the South, alongside London, the likes of Brighton, Bath, and Cambridge are some of the best tourist cities in the UK. However, the South is home to more affordability constraints. In recent house price growth, the South has experienced dropping house prices. However, renting remains cheaper than buying, down to monthly rental payments and mortgage repayments. In the North-South divide, London offers rent as high as £2,053pcm and property prices averaging £522,000 versus the North East average rent at £649pcm and house prices at £109,000.
While tourist hotspots like London, Bath, and Oxford may seem like the best tourist cities in the UK to benefit from holiday lets, rental yields can be low. High and growing rental prices in the South may be appealing, but the cost to buy makes the window to profit much smaller than what is found in the North. The North offers some of the most rewarding rental yields in the country. In the North, average rental yields are above 6%. The North East even sees highs of 7.2%!
With some of the highest rental yields found in the best tourist cities in the UK, investors can greatly benefit from short-term holiday rentals. York, Newcastle, and the Lake District are among some of the most-visited locations in the North. However, investors should look at tourist figures and see which locations offer the more profitable returns.
Location, Location, Location!
When it comes to property investment, buyers should consider short-term lets over assured shorthold tenancies in these areas. Such areas, too, benefit from commutable locations. More affordable properties lie in city suburbs over city centres. Similarly, for more costly destinations like York and Chester, cities like Leeds or Liverpool are perfect, where commutes can be no more than 30 minutes.
Tourism can greatly benefit the property market. From property value and rental demand to the destination’s economy, tourist areas offer great capital growth potential for investors. It is not just overseas tourists who visit these locations. We as Brits have always loved a city break, but the pandemic brought a skyrocketing rise in staycations. Because of this, the popularity of short-term lets rose.
But, with growing tourism creating more employment opportunities, residents also benefit. It is not just short-term lets that see high demand. As a city grows in both its resident population and general popularity as a tourist destination, tenant demand also increases for long-term buy-to-lets. These are often high-quality, single-let accommodations.
London16.1m visitors (2022)
Manchester1.2m visitors (2022)
Birmingham0.80m visitors (2022)
Liverpool0.68m visitors (2022)
It is far from surprising that London takes the top spot. From the royalty of Buckingham Palace and the Changing of the Guard to the iconic attractions like the Tower of London and the unique delights of Camden Market – people from all over the globe and the country itself travel here. With footfall of 16.1 million last year, a full 15 million more than the second-highest city for visits, London is undoubtedly the best tourist city in the UK.
However, prices are the highest in the country. So much so that investors living in London are buying their investments in the North. While the capital may receive the highest footfall of tourists, rental yields are 4.2% and property prices average £533,000. Yields are 0.83% below and house prices are £270,000 more than the national averages. This difference in house price itself is even higher than the £263,000 average. With these figures in mind, property investment in London is not recommended.
Manchester is London’s main rival, in terms of migrating businesses and a thriving economy. Similarly, the city is at the capital’s heels in tourist numbers, too – albeit 15 million visits behind.
Once the heart of Britain’s Industrial Revolution, hence a common label of ‘the first modern city’. It has become a top city for businesses, relocating residents, and tourism. Manchester is famed for its football and is home to two football teams and the National Football Museum. Fans often travel for matches and need short-term accommodation. Also, being a gateway to the Lake District and Yorkshire Dales, Manchester is perfectly located for holiday-goers wanting its urban nightlife or nearby outdoor adventures.
Whether a tourist destination or a stop-off before or after flights from its airport, Manchester will always benefit from an influx of tourists. For visitors and residents, it is also one of the best tourist cities in the UK for its famed Christmas markets!
Birmingham may be the UK’s second-largest city, but it is known more as ‘Britain’s most exciting food destination’. The benefit of visiting the largest city in the UK outside London is the large array of attractions, eateries, and accommodation.
The city is a favourite family destination for the likes of Cadbury World, Legoland, and Sea Life. Most recently in 2022, Birmingham was the host city for the Commonwealth Games, which was the largest sporting event in the UK to follow the 2012 London Olympics. But Birmingham is also a top location for business trips. Be it conventions or conferences, Birmingham’s NEC events never cease demand for short-term rentals. Great opportunities arise alongside Birmingham’s projected house price growth.
Birmingham is certainly one of the best tourist cities in the UK for diversity, be it for family trips, a halfway point for long-distance drives, or Birmingham’s more unique attractions like The Coffin Works or fantastic food destinations. With Curzon Street Station enclosing towards completion, too, Birmingham will stretch out tourism potential through its new, high-speed rail routes.
Many buyers already invest in Liverpool for its extremely affordable properties, high student population, and ever-growing desirability and demand. But what about its tourist potential?
When you think of Liverpool, you think of the home of the Beatles. The city is a thriving cultural scene, with the cherished Cavern Club, classic Tate Gallery, urban Baltic Triangle, and the rich maritime history of the Albert Docks. Its shopping centre, Liverpool ONE, alongside its football stadiums, Anfield and Goodison Park, alone make Liverpool one of the best tourist cities in the UK. Liverpool also offers close connections to Chester, Manchester, and Leeds.
Before hosting the Eurovision Song Contest earlier this year, tourism made up 60% of Liverpool’s economy. Now, since the two-week event, its economy is predicted to increase by an incredible £250 million over the next 3 years. As an existing UNESCO City of Music, Eurovision has solidified Liverpool’s future for hosting similar events and accommodating tourists from across the world.
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