Investing in smaller properties in Liverpool city centre has become a popular choice for local and international investors. With steady economic growth, affordable property prices, and a flourishing rental market, the city offers solid returns. Studios and one-bedroom flats are excellent options for investors seeking consistent rental income.
Why Liverpool City Centre?
Liverpool city centre is a top choice for property investment due to its amenities and strong transportation links. Regeneration projects, including the Liverpool Waters scheme, are driving the city’s modern transformation. These developments are attracting both residents and investors, with the Office for National Statistics (ONS) forecasting a population growth of over 60,000 by 2043. As the city progresses with its regeneration efforts, Liverpool’s long-term growth potential continues to strengthen, making it an increasingly attractive location for property investment.
Liverpool city centre includes more than just the L1 postcode. Areas like the L2 and L3 postcodes are also part of the central zone. These areas offer excellent investment opportunities in smaller properties with slightly lower prices. They provide the advantage of being near the city centre while offering potential for higher rental returns.
Key districts within the city centre
- L1: The heart of the city, home to Liverpool ONE shopping centre, the historic Ropewalks area, and the Baltic Triangle. The Baltic area is particularly popular with young professionals and students.
- L2: The business and commercial district features a range of office spaces and luxury apartments. It offers easy access to the Pier Head and nearby Albert Dock, making it ideal for professionals seeking high-end living.
- L3: This postcode includes the up-and-coming Vauxhall area and parts of Liverpool Waters. This area is undergoing significant regeneration, offering affordable properties with strong rental demand.
Investing in smaller properties in the L3 area offers an excellent entry point into Liverpool’s buy-to-let market, particularly as significant developments like Liverpool Waters and expanding university campuses continue to reshape the area. The L3 postcode benefits from its prime location, providing easy access to key transport links such as Lime Street Station, as well as cultural landmarks like St. George’s Hall and the Walker Art Gallery.
Together, these areas form a vibrant and dynamic city centre, attracting a wide range of tenants, from students and young professionals to families. With strong transport connections to Manchester and London via rail and motorway, Liverpool is an attractive hub of opportunity, offering excellent prospects for both residents and investors alike.
By considering the broader definition of Liverpool city centre, including areas such as the L2 and L3 postcodes, investors can access locations with strong growth potential while still being close to the heart of the city.
Advantages of Investing in Smaller Properties
Affordability
Smaller properties in Liverpool city centre are typically more affordable compared to larger homes. Flats in L1 sold for an average price of £126,869, making them an ideal entry point for first-time investors or those with limited capital. This lower cost also allows investors to diversify their portfolios across multiple properties.
Higher Demand
Compact living spaces have become increasingly popular among single professionals, students, and young couples. These properties typically offer lower costs and require less energy to maintain compared to larger homes. According to Belvoir, Gen Z tenants are placing a higher emphasis on affordability, driven by the rising cost of living and growing student debt. Consequently, the demand for smaller properties is at an all-time high, as they offer more manageable living expenses in a challenging economic environment.
Easier Maintenance
Smaller properties require less upkeep, reducing ongoing costs for repairs and maintenance. This is especially beneficial for buy-to-let investors managing multiple properties.
High Rental Yields
Smaller units, especially studios and one-bedroom flats, tend to generate higher rental yields than larger properties. Research reveals that one-bedroom flats, in particular, achieve higher rental yields of 7.86%, outperforming other property sizes. This is primarily due to their lower purchase prices, coupled with strong demand from tenants seeking affordable, compact living spaces.
Resale Potential
Smaller properties are more liquid in the resale market, appealing to a broad range of buyers, including first-time homebuyers and downsizers. This versatility makes them a highly attractive and adaptable asset.
Market Trends for Smaller Properties
Recent property market data highlights the growing popularity of smaller units in Liverpool city centre. Studios and one-bedroom flats are particularly favoured due to their affordability and high rental returns. Investors have observed consistent rental yields ranging from 5% to 10%, depending on the specific location and property type.
Additionally, the trend towards compact living, driven by affordability concerns and lifestyle preferences, has further increased demand for smaller homes. Areas such as Ropewalks and Baltic Triangle have become hotspots for these property types, thanks to their vibrant atmosphere and access to amenities.
Who Should Consider Smaller Properties?
Investing in smaller properties, such as studios or one-bedroom flats, in Liverpool city centre can be a smart choice for various types of investors. Here’s a breakdown of who benefits most from this investment:
First-Time Investors
For individuals stepping into the property investment market for the first time, smaller properties offer an accessible and lower-risk option.
- Lower Entry Costs: Smaller properties are typically more affordable than larger homes, requiring less initial capital, which is perfect for those testing the waters of property investment.
- Easier to Manage: With less space and simpler layouts, these properties often require less maintenance, reducing the burden on novice landlords.
- High Demand: The consistent rental demand in Liverpool city centre means first-time investors can generate income more reliably, building confidence and experience in the market.
For example, an affordable one-bedroom flat in L3 could provide steady rental income while staying within a new investor’s budget.
Yield-Focused Investors
Investors prioritising rental income over capital appreciation will find smaller properties particularly attractive.
- High Rental Yields: Liverpool city centre is known for its strong rental market. Smaller units often achieve higher yields as their purchase prices are relatively low compared to their rental income potential.
- Consistent Tenant Demand: Compact living spaces are favoured by professionals, students, and young couples, ensuring a steady flow of renters.
- Shorter Voids: The affordability of smaller properties means they’re often rented quickly, reducing the risk of prolonged vacancy periods.
For yield-focused investors, areas like Ropewalks, Baltic Triangle, and the Liverpool Waters which attract young professionals, are great spots for maximising returns.
Portfolio Diversifiers
Experienced investors looking to diversify their property portfolios will also find smaller properties a valuable addition.
- Risk Distribution: By investing in several smaller properties rather than one large asset, investors can spread their risk across different tenants and locations.
- Flexibility: Smaller properties are easier to sell or re-let, providing greater liquidity in the event of market changes or a need to release capital.
- Catering to Different Tenant Profiles: Adding smaller properties to a portfolio allows landlords to cater to a wider range of tenants, including students, young professionals, and those seeking affordable housing in the city centre.
For example, a seasoned investor might acquire two or three smaller units in areas like L2 or L3, capitalising on rental yields while maintaining flexibility to adjust their strategy as needed.
Maximising Investment Potential in Smaller Properties in Liverpool City Centre
Smaller properties in Liverpool city centre provide an excellent opportunity for investors looking for affordability, high rental yields, and strong demand. With its bustling rental market and significant urban development, Liverpool remains one of the UK’s most promising buy-to-let property investment destinations.
Ready to explore smaller property opportunities in Liverpool city centre? Contact us today to discover how we can help you achieve your investment goals.
To read more about the property investment opportunities available in Liverpool, click here to read our guide to property investment in Liverpool.
