Two of the Northern Powerhouse’s flagship cities, Manchester and Sheffield, were the most popular options among investors from overseas in 2023.

Research from IP Global has found that 21.2% of enquiries from international investors last year were looking for buy-to-let property in Manchester. This was closely followed by investors enquiring about property in Sheffield, which accounted for 20.6% of all property investment searches from overseas buyers.

Both cities have gone from strength to strength over recent months, and this is largely expected to continue across many house price forecasts. The property markets in both Manchester and Sheffield are currently performing more strongly than many parts of the south of England.

They offer investors a much lower price point, enabling buyers to diversify their portfolios or simply take on less risk with a lower value investment. The rental markets in both areas are also strong, with Manchester in particular seeing a significant rise in tenant demand and rental yields over the past year.

Manchester has “a wealth of opportunities”

As IP Global points out, the flagship city of the north west is recognised internationally for its strong economy, growing population, and its thriving rental sector that is driven by a large student population alongside high numbers of young professionals, particularly in the city centre.

It notes: “The UK’s second largest city offers a wealth of investment opportunities for overseas property buyers.”

Sheffield in South Yorkshire is attractive for those looking for more affordable opportunities, as the research points out that prices in the city average 9.4% lower than in Leeds, Birmingham and Manchester. However, those who invested in the early 2000s have seen exceptional capital growth.

The research puts London in third position when it comes to enquiries from overseas investors, with 12% of the market share. This is followed closely by Birmingham with 11.5%, then York with 9.1% and Edinburgh with 8.5%. All of these cities have ranked highly on other databases as strongly performing areas for the coming years.

Who is investing?

Last year, as has been the case in recent history, investors from China took the market share of UK property investment from abroad, making up 40% of the total. This is lower than the 55% of buyers from China from 2022, but holds the country in top position overall.

Investors from Hong Kong have increased in number since the British National (Overseas) visa was launched in 2021, providing a new route for immigration to the UK. This also coincided with a weakening pound, drawing more investors in thanks to the effective discount it created.

The data also found that almost a third (29.2%) of homes bought by overseas buyers in 2023 were by Saudi investors, which is a significant jump from 8.4% the previous year.

A more positive 2024

Now that the outlook for the UK property market has stabilised, with any significant price drops looking increasingly less likely thanks to a more positive economic outlook, IP Global anticipates that investor activity into UK property will “rebound” in the coming year, particularly after recent house price growth data.

Tim Murphy, CEO and founder of property investment company IP Global, said: “Despite a challenging and uncertain economic environment, the UK property market remains an attractive prospect for international investors. This is chiefly due to the persisting undersupply of housing, exerting continuous pressure on property and rental prices.

“While London has historically been seen as a safe haven and resilient market for overseas investors, the emergence of the Northern Powerhouse has drawn buyers away from the capital.

“Manchester and Sheffield have emerged as highly attractive property markets to foreign investors offering very healthy rental yields.

“And with demand expected to increase significantly over the next five years, especially now the Northern Powerhouse is recognised across the world as an established, globally competitive and thriving economic area, this is likely to continue to be the case into 2024 and beyond.”