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The key to successful property investment is knowing the areas that have the best property prices as well as the best rental yields. It’s also important to look out for those areas that are undergoing significant change and investment, which can be a key driver in attracting potential tenants.

We’ve put together a series of investment property locations to look out for in 2020, highlighting the areas that offer the most investment potential in the coming years.

The first area in our series is Preston, the third largest city in the North West. For investors looking for low property prices coupled with high rental yields, the North, and the North West in particular, is the area to look out for.

Preston obtained its city status in 2002 and was recently named as the most improved city in the UK (2018 Good Growth for Cities Index). For years, Preston showed disappointing economic performance, however, since 2013 it has seen an important transformation and now often sits in the top 10 buy-to-let hotspots.

Very low property prices combined with robust rental demand have helped propel Preston to the top of the charts for buy-to-let investment. The rising population and revival of the city centre mean it represents a rare and exciting opportunity for investors.

Preston has experienced a large reduction in its unemployment rate and has seen improvements above the national average for health, transport and work-life balance. The city also ranked 14th in the best cities list, ahead of London at 15th which was held back by high housing and transport costs and higher inequality.

But what else makes Preston such a desirable buy-to-let area?

We can’t talk about Preston without mentioning The University of Central Lancashire (UCLan), which has played an important role in transforming the city and, for buy-to-let investors, the university is an invaluable local asset. Preston is a university city and university cities boast some of the highest rental yields. Regular term times and a consistent annual flow of new students puts landlords in a strong position. Void periods are less likely and, with more students looking to rent, finding the right tenants is easier. UCLan is one of the largest British universities (ranked 19th in size) and one of the biggest employers in the North West. It is also a major centre for world-class research, working on numerous research projects with cutting-edge partners such as NASA and BAE Systems, and has close working links with over 1,000 employers.

Many of the features that make Preston attractive to investors owe their success to UCLan and its staff and students. The university currently has around 38,000 students and staff, including 18,115 undergraduates, 4,500 postgraduates, 98 professors, 600 researchers and tutors and 763 research students. It also hosts over 2,000 international students.

The number of people drawn to the university is an important driver of demand for rental accommodation. However, university owned accommodation accounts for only 2,200 places, which presents a huge opportunity for the private rental sector.

UCLan continues to invest in new facilities and growth and plans to do so for the next ten years. For example, it is currently benefiting from a £200 million modernisation and expansion programme. This includes a brand new £32 million Engineering Innovation Centre due to open this year, featuring a teaching and exhibition space as well as several specialist labs and four flight simulators. It also opened two new social spaces in 2018 and begun work on the £57 million Student Centre, which will incorporate a new campus reception building, student services, meeting rooms, office space, event venues and rooftop garden.

UCLan is a major employer in its own right and its business incubators have helped produce countless small and successful ventures.

It also produces thousands of new graduates every year. With some of its most popular courses in growing and high value sectors, such as engineering, health and law, and its extensive links with employers means that many of its graduates quickly find employment with local businesses rather than in cities such as Manchester and London. This retention keeps money and expertise in the city which helps to underpin Preston’s growing prosperity.

It also leads to a growing need for high quality rented accommodation. So the main driving force behind Preston’s potential as a top buy-to-let investment spot is the university. But what else contributes to its success?

Well, Preston is perfectly placed and has excellent transport links, connecting to four major motorways and rail networks and just one hour away from Manchester and just over two hours away from London.

And things can only get better when it comes to transport links in Preston, with the railway station undergoing a £1.5 million modernisation which includes a new concourse and entrance. The station is also expected to benefit from the proposed HS2 rail links. Preston is also number one in the UK for both advanced manufacturing and aerospace, home to 500 aerospace supply chain companies and the 4th largest aerospace cluster in the world. The city is also home to 50,000 businesses generating £28 billion per year.

Excellent transport links and a booming industry are a great start; combine that with significant investment and regeneration and you’ve got the whole package.

The City Deal Partnership Investment in Lancashire and Preston involves a £434 million investment which should see the economy grow by £1 billion in the next ten years, creating 20,000 new jobs and 17,420 new homes. There is also regeneration in key areas of the city, for example the £1.2 million improvement programme of Winckley Square, which took place in 2018 and was supported by the Heritage Lottery Fund. Winckley Square is situated right in the heart of the city, just 50 yards away from the main retail district, and is surrounded by legal practices, accountants and other professional agencies. Thanks to significant investment, Winckley Square is becoming the city’s most sought after address.

There is also a £50 million scheme which is well underway with the new Market Hall and Box Market opening earlier this year. A cinema led leisure scheme with an array of high class and major national restaurants is also due to be built next to the new market hall.

These places are both located in the PR1 postcode which has a rental yield of 4 per cent (TotallyMoney’s Buy To Let Yield Map 2019/2020) and average rental value of £511pcm. The average asking price is £115,000, below the national average of £218,700.

The university also sits within the PR1 postcode, as do many new student residence developments. There are also attractive properties situated around the marina. Desirable properties and city centre convenience combine to generate strong demand, but the postcode is also home to concentrations of low priced properties that are not necessarily high spec but produce solid and dependable rental incomes.

So there you have it. Preston truly is a city on the up and with its thriving student population and excellent transport links combined with planned investment and regeneration, things can only go up from here. Couple this with below average property prices and increasing rental yields, this really is a spot worth considering for property investors.