December 8th, 2010
A reduced supply of apartments available for rent in Bradford city centre has created higher demand from would-be tenants, leading to a steady rise in rental yields on some investment properties.
One city centre property specialist said the average rent for high-quality apartments had risen by as much as two per cent in the third quarter of 2010.
The picture has changed considerably since 2008, when a plentiful supply of apartments, combined with a downturn in the property market, meant rental yields were struggling.
Two years ago, a number of new apartment complexes had just come on stream in Bradford, and banks, desperate for a return on their initial investment, were pressurising developers to make apartments available for rent due to the stale buying market.
Many new residential developments were mothballed as the credit crunch bit hard, meaning the supply of new apartments dried up.
Now there is fresh hope that planned developments at Midland Mills, near Forster Square, and CityGate, at the bottom of Manchester Road, can help meet the growing demand for rented accommodation in the city centre.
Sheikh Mani Waheed, managing director of Bradford property agents Squarefoot Apartments, said: “From a rental point of view, rental yields on investment properties are continuing to rise.
“One of the reasons is because you have not got much supply at the moment.”
In 2007 and 2008, a number of new apartment developments were completed in Bradford, including several warehouse conversions in Little Germany.
But Mr Waheed said: “Unlike a couple of years ago, there’s no new stock coming to the market now. Because of that, the yields are increasing.
“Average rental prices have increased by 1.5 per cent to two per cent in quarter three of 2010. Rental prices are now at a historic high since November 2008.
“Stock levels have fallen by 15 per cent over the last three months. Fewer rental properties are available.”
Squarefoot Apartments acts as the agent for several hundred apartments in Bradford city centre.
Mr Waheed said: “In terms of our stock levels, we have 98 or 99 per cent occupancy on the apartments.
“The apartments that are becoming empty are being snapped up straight away, with a new tenant ready to move in as soon as the old one moves out.
“There was a lot of stock on the market 12 or 18 months ago, down to the fact that developers had to go down the rental route when the banks put pressure on developers to get them let.
“Now they are all occupied and developers are not building anything else. There’s now a shortage of apartments from a rental point of view.”
Meanwhile, home owners who cannot sell their properties are renting them out while themselves renting larger properties.
The “let to let” trend is becoming increasingly common, according to Keighley estate agent Dacre, Son & Hartley.
The company said the practice was particularly popular with people struggling to sell in the current market.
Julie Craven, Dacre’s head of residential lettings, said many people were stuck in homes that no longer suited their needs.
She said: “We have clients who could sell but who would make a loss in the current market, or they may be targeting first-time buyers who are still fairly rare because of a shortage of mortgage products in that market sector.
“For those who can’t achieve the sales price they want, but who really need to move, becoming both a landlord and a tenant is a great solution that’s also very viable.”
Commenting on the Bradford residential market, Paul Ellis, managing director of York-based developer Skelwith Group, which is behind the resurrection of the CityGate scheme, said: “We see great potential in the Bradford market, even in the current financial climate, especially for safe, secure and well-designed buildings.
“We’ve been working hard with our designers and architects who are doing an excellent job of transforming Aspire CityGate into well-appointed city-centre apartments.
“By working with some very talented people, we have been able to quickly and easily fulfil a key goal, namely develop low-cost apartments while delivering high-quality architecture that can stand the test of time. I think it’s clear to see that we have more than succeeded in both regards.
“By having a starting price of £50,000 we are ensuring the apartments are attainable. We feel the development adds to what is already a vibrant and exciting city and is paving the way for further developments in and around the centre of Bradford. Most importantly, we feel this can be delivered at the right price to be successful.
“With construction of phase one, which will deliver a mixture of studios, one, two and three-bed apartments, due to start in early 2011 with completion of all 500 expected by the end of 2013, I think we have struck the perfect balance in Bradford between price, design, size and demand.”
Source: Telegraph & Argus