Where next to invest? We profile property hotspots around the world, detailing everything an investor needs to know.
Up 4.4% y-o-y (Yorkshire and the Humber, May 2017 – ONS)
4.5% (Yorkshire and the Humber, Your Move)
1.4m tourists a year
Where is it?
Situated in North Yorkshire, between an hour and 90 minutes on the train from Hull, Leeds and York, Scarborough is one of England’s most well-known old coastal towns. With its limestome cliffs and harbour, it’s traditionally attracted domestic tourists to the area for seaside breaks. In fact, it’s the largest holiday resort on the Yorkshire coast.
Who lives there?
Around 50,000 people live in Scarborough, with the majority of them over the age of 45. It is largely a British population, with low levels of immigration, although the number of people living there has increased in recent years. Most people own a home, either outright or through a mortgage, but there is a sizeable market for holiday accommodation, whether in the form of a more old-fashioned bed-and-breakfast or rental apartment, or a hotel room on the beachfront. The result is far from multicultural, compared to some hotspots in the UK, but where there are visitors, there is potential for investors seeking UK opportunities.
Capital growth is the primary concern for most property investors, particularly in the UK, where the emphasis is on long-term asset stability. As in most of the country, Scarborough’s property prices continue to climb, fuelled by a shortage of supply: property values rose 4.4 per cent in the year to May 2017, according to official figures from the ONS, just below the 5 per cent average national price growth.
For investors seeking buy-to-let yields, apartments and terraced hosues are the best options, priced at £121,016 and £134,193 respectively, according to Zoopla, below the average £175,815 recorded across Scarborough.
There is certainly a case to be made for buy-to-let investments, as tourism in the area grows. The UK’s Brexit vote is already boosting the popularity of “staycations”; according to Columbus Direct, 41 per cent of British travellers said that since the pound had weakened following the EU referendum they had changed their holiday plans. 16 per cent said they had opted to stay at home.
While hotel occupancy rates across York have dipped 1.5 per cent in the last year, occupancy across the country is on the up, while Visit Britain data shows a rise of over 4 per cent in tourist figures in 2016 compared to 2015. Indeed, the weakness of sterling is also stimulating more international interest in UK holiday hotspots. In Yorkshire, inbound visits in Q3 2016 jumped 12 per cent year-on-year, with the number of overnight stays surging 21 per cent to a record high for the quarter.
Work is afoot to continue bringing in visitors, from a new tourism campaign to the revival of the local spa and Alpamare water park. The Beach Boys even played a gig in the open-air theatre in May.
While that might add up to a healthy but-to-let prospect, though, Scarborough’s strength actually lies in the hotel sector. According to CBRE, the UK is the top European target for hotel investment in 2017, and Scarborough is firmly on the map: in the three years from 2013 to 2015, it was the second most-visited English city or town for holidays, behind London and ahead of Blackpool and Manchester. In 2017, developments such as the Harland Hotel are offering 10 per cent returns to investors, outshining typical residential buy-to-let yields. The hotel market in general, meanwhile, has rarely been more attractive: with the UK private rented sector facing a growing number of government measures discouraging buy-to-let purchases, the lack of stamp duty for hotel investments saves investors thousands of pounds, immediately boosting their ROI.
British buyers are the most likely to hunt for investments in this domestic holiday haven, but with the weak pound, there is potential for rising international interest, particularly from countries such as the USA.
“At a time when staycations are becoming more fashionable, this established tourist destination with strong domestic appeal is well worth considering.”
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Photo: FreeImages.com / Vicky JohnsonGoogle+