Property for sale in Cardiff offers great potential

Buy-to-let investors looking for growth potential should turn their attention to property for sale in Cardiff…

One of the most important decisions property investors entering the UK market have to make is where to buy. The recent shift in the traditional north-south power divide has made it clear there are many appealing destinations in which to pursue an investment outside London.

Among these increasingly attractive regional locations is Cardiff, a city with great potential that is “on the verge of a sustained period of growth”, according to recent research.

Keeping up with regional hotspots

Cardiff’s property market has made great strides in recent years and demonstrated what it has to offer investors, despite being significantly smaller than other major cities across the UK.

A recent study published by real estate services firm Savills noted that Cardiff “punches well above its weight”. The Welsh capital is half the size of Liverpool, the next largest of the nine UK ‘core cities’, but has established itself as a vital economic engine for the wider region.

As the sixth biggest retail centre in the UK, Cardiff attracts more than 20 million visitors a year and makes an annual economic contribution of £1 billion.

Looking to the future, the city is on course to see further growth in the coming years. Its projected population growth of 25 per cent by 2034 is likely to outpace all the other core cities, including London.

Oxford Economics has predicted that employment in Cardiff will increase by 12 per cent by 2030, generating 27,600 new jobs.

Nearly 77,900 people who currently work in the city – a third of the total labour force – are commuters, and there are now 1.6 million people who live within a 45-minute journey of Cardiff. Access will improve with the electrification of the Great Western main line and the removal of tolls on bridges crossing the Severn, bringing an anticipated £1 billion boost for the Welsh economy.

Balancing growth and affordability

As far as property is concerned, there have been several trends for investors to feel positive about in recent years.

According to Savills, house prices in Cardiff increased by 6.1 per cent in 2018, which was way ahead of the 1.9 per cent average recorded across England and Wales. Property for sale in Cardiff is now 21 per cent above the peak witnessed before the 2008 financial crisis – a more considerable rate of growth than in other major urban centres, such as Manchester and Leeds.

For investors seeking capital growth, these are encouraging developments. Furthermore, the recent positive trends in property values haven’t come at the expense of affordability, with the research showing an average house-price-to-earnings ratio of 6.58 in Cardiff. Bristol, by contrast, has a ratio of 8.99, despite the city’s similar average annual earnings of £27,000.

Savills is not the only organisation to have highlighted the potential of Cardiff’s property market. In a report exploring the development pipeline of purpose-built student accommodation (PBSA) ahead of the 2018-19 academic year, Knight Frank identified Cardiff as an emerging market, with good-quality universities but low PBSA stock availability.

The resulting imbalance between supply and demand has helped the city outperform the rest of the UK in student accommodation rental growth.

Commercial and residential opportunities

Investment property for sale in Cardiff looks set to become an attractive option for property investors seeking opportunities in both the commercial and residential markets.

With predicted population growth of 25 per cent over the next 15 years and more jobs becoming available, there will be rising demand for living space in and around the city. As a result, buy-to-let property owners are set to benefit from regular rental income and steady growth in the value of their investment.

In the commercial property sector, Cardiff recorded total investment volumes of £408 million in 2018 – 34 per cent above the five-year annual average – and the vast majority (84 per cent) of this investment was in office space. Nearly a third (32 per cent) came from overseas, underlining the ongoing appeal of UK property to international investors, regardless of Brexit and other external factors.

Savills acknowledged there are “key challenges which need to be addressed if Cardiff is to reach its full potential”, most notably the undersupply of housing and commercial space. However, the report also stressed there is “significant potential in the city centre and bay area for commercial-led regeneration”.

For investors, it’s clear that Cardiff is a destination worth keeping an eye on in the months and years to come. This growing city could be the source of some of the UK’s most exciting property investment opportunities in the very near future.