Best UK city to start a business (Startups, 2022)
Young and growing workforce with 30% of workforce under 30 years old
3rd highest number of university graduates among core cities
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As a vibrant city in South Yorkshire, Sheffield has undergone a remarkable transformation since its post-industrial decline. The 1997 Labour government's large-scale regeneration efforts and economic initiatives have propelled Sheffield's growth, reinventing it as an emerging modern cosmopolitan centre with excellent property investment opportunities. Thanks to its robust engineering and manufacturing sectors, the city's economy has nearly doubled since 2000. Currently in its third stage of regeneration, focusing on private sector-led growth, Sheffield's property investment prospects are brighter than ever. The city is at the forefront of innovation and has attracted a diverse range of SME businesses, spurring population growth among graduates and young professionals. Now home to 586,730 residents, Sheffield ranks as the UK's fifth-largest city. This growth has placed considerable pressure on the existing housing stock, resulting in a significant undersupply of housing units. By 2035, a shortfall of 11,328 units is anticipated, driving up property prices and creating an ideal environment for investment.
As a vibrant city in South Yorkshire, Sheffield has undergone a remarkable transformation since its post-industrial decline. The 1997 Labour government's large-scale regeneration efforts and economic initiatives have propelled Sheffield's growth, reinventing it as an emerging modern cosmopolitan centre with excellent property investment opportunities. Thanks to its robust engineering and manufacturing sectors, the city's economy has nearly doubled since 2000.
Currently in its third stage of regeneration, focusing on private sector-led growth, Sheffield's property investment prospects are brighter than ever. The city is at the forefront of innovation and has attracted a diverse range of SME businesses, spurring population growth among graduates and young professionals.
Now home to 586,730 residents, Sheffield ranks as the UK's fifth-largest city. This growth has placed considerable pressure on the existing housing stock, resulting in a significant undersupply of housing units. By 2035, a shortfall of 11,328 units is anticipated, driving up property prices and creating an ideal environment for investment.
As of 2022, Sheffield is home to over 500,000 residents. The city's population has experienced an average annual growth of 3,657 inhabitants since 2000, and it is projected to increase by 3.8%, reaching more than 617,000 residents by 2035.
Sheffield's house prices have seen an impressive average annual increase of 13%. Over the next few years, property prices in the region are expected to rise by an additional 11.7% up to 2027.
Thanks to Sheffield's effective recovery plan, the economy has expanded by 98% since 2000, totalling over GBP16.4 billion in 2022. Furthermore, the economy is anticipated to grow by an additional 63%, reaching GBP26.8 billion by 2035.
Located within the South Yorkshire Mayoral Combined Authority (SYMCA), which includes the towns of Barnsley, Doncaster, and Rotherham, Sheffield stands out as the primary city and a major employment hub in the region, particularly for highly-skilled jobs.
Sheffield's economy has evolved, transitioning from a dependency on manufacturing and engineering to embracing diverse industries such as finance, healthcare, energy, technology, and digital sectors. Boasting one of the top 40 universities in Europe, Sheffield is rapidly emerging as an innovation centre. The University of Sheffield generates a steady stream of highly educated young professionals who fuel business growth and infuse fresh ideas into established enterprises.
With its well-connected location, the SYMCA has become an appealing destination for numerous companies to invest in. The region is now home to an impressive array of large-scale industries and collaborations with top firms such as McLaren, Rolls-Royce, Boeing, and HSBC. Sheffield's sizable population of young professionals makes it an attractive location for both large companies and SMEs looking to tap into a pool of talented and highly educated graduates.
Due to Sheffield’s explosive economic growth, the household incomes of its residents have followed a similar upward trajectory. By 2035, the lowest income bracket is anticipated to decrease to 38,560, a 70% reduction from 2010. Meanwhile, the number of households in the middle and upper-income brackets is expected to grow significantly, with increases of 68% and 1,015%, respectively, over the same period.
Sheffield has emerged as a magnet for students attracted by its cultural diversity and reputation for outstanding university education. The city is home to the University of Sheffield, ranked among the top 15 in the UK and 48th globally. Additionally, Sheffield Hallam University was recently named The Times' and the Sunday Times' University of the Year for Teaching Quality.
Ranked 60th in the QS World University Rankings' Best Student Cities, Sheffield boasts a sizable international student population. Of the 55,368 full-time students, 22% come from outside the United Kingdom, further enriching the city's vibrant and diverse atmosphere.
Sheffield's burgeoning population, driven by its large share of young residents, is fuelling a surging demand for housing, particularly in the rental sector. As 42% of graduates opt to remain in the city, Sheffield's student population ensures a steady demand. This younger demographic, possessing higher education qualifications, attracts businesses seeking a skilled workforce.
Compared to neighbouring cities in the North, Sheffield offers an affordable lifestyle for young professionals, making it an increasingly attractive destination. The influx of residents seeking the city's thriving lifestyle and job opportunities further fuels rental demand. Sheffield's projected population growth will place added strain on the housing market as supply struggles to keep pace. Investors can expect strong demand and rising rental prices as a result.
Sheffield's construction activity has struggled to keep up with the soaring demand driven by rapid population growth since the early 2000s. Between 2011 and 2020, only 7,600 housing units were added, bringing the total stock to 38,877 units by 2021. With an average of just 760 dwellings constructed per year over the past decade, the council's projected supply of 2,222 units per annum through 2039 is unlikely to be met. This has resulted in a significant undersupply of new-build, investment-grade properties in the city. A shortfall of 14,114 homes is projected by 2032, highlighting the persistent imbalance between housing supply and demand in Sheffield.
Sheffield's robust economic growth in recent years has fueled investment in numerous regeneration projects, positioning the city as an eco-friendly and modern urban centre. Consequently, Sheffield was ranked among the top 5 eco-friendly cities in the UK. Its most ambitious regeneration endeavour, the £470 million Heart of the City project, is currently underway and expected to generate 7,000 job opportunities by 2024.
The city is also a leader in energy research. The University of Sheffield's Translational Energy Research Centre, inaugurated in 2021, stands as one of Europe's largest and most advanced research and development facilities. This cutting-edge centre serves as a hub for academic and industry collaboration in the fields of bioenergy, zero-carbon production, carbon capture and storage, and combustion technology.
Although house prices in Sheffield are currently more affordable than in Manchester, Birmingham, and Leeds, the market downturn is expected to reverse. In fact, house prices in Sheffield are projected to increase by 11.7% by 2027.
Sheffield presents an excellent investment opportunity. With explosive economic growth and a rising demand for properties, the city has attracted numerous businesses and firms seeking to leverage its growing population and highly educated workforce. Although regeneration projects aim to address the housing demand, the supply is not expected to fully meet the need.
However, it continues to be one of the most budget-friendly locations in the UK for purchasing real estate. Investing in Sheffield's property market is an ideal choice for investors seeking a secure and profitable buy-to-let investment at a reasonable cost.
Rental yields in Sheffield vary significantly by postcode, making it difficult to provide an accurate average. In some areas, rental yields are as low as 3%, while others can reach over 6%. It is also dependant on whether the property will be let on a short-term or long-term model.
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The city offers affordable housing and living costs compared to other major cities in the UK, which makes it attractive for both professionals and families. Additionally, Sheffield is home to two reputable universities, The University of Sheffield and Sheffield Hallam University, which provide excellent educational opportunities. The city also boasts a vibrant cultural scene with various festivals, events, and a thriving music scene. With access to beautiful green spaces and the nearby Peak District, Sheffield combines city living with the advantages of a more rural environment, making it an appealing place to live in 2023.
The best places to invest in residential property in Sheffield typically include areas with strong rental demand, good transport links, and potential for capital growth. Some of the most promising areas for investment in Sheffield are:
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