What Are the Best Cities to Invest in Real Estate in the UK & Europe?

Properties are known to be a solid long-term investment for landlords, but this is only true when you choose the right location to invest. Profits vary according to where you choose to invest. Should you buy an apartment in a large city in the UK or a cosy holiday home in a sea resort in Europe? This is what we wanted to find out for you at HomeToGo.

As we often compare letting prices across thousands of holiday homes in the UK & Europe, we decided to investigate which popular destinations prove to offer the highest return on investment when it comes to real estate. To establish this, we compared the average square metre price to buy accommodation in a specific city against the average price to rent (in other words, we created a ratio by comparing how much it costs on average and what you can expect to get back.

Let’s start, shall we?

Best and Worst UK Cities for Property Investment

For this year’s study, the three cities with the best return on real estate investment are Sheffield, Derby and Swansea. Real estate prices are on average more affordable in Sheffield, which propelled the city to first place. Derby comes second with a ratio of 18, closely followed by the Welsh city Swansea which comes third.

England appears to be the best country in the UK for real estate investments, with eleven out of the fifteen most profitable cities for real estate. In addition, medium and large cities appear to be the best choices for investment.

If you’re looking for a strong return on investment, then you had better avoid London. Although average rents are high, the extravagant real estate prices in London hinder potential profits considerably. As a matter of fact, with a ratio of 2.8, London is by far the least profitable city for real estate investments among the most popular cities in the UK. The second least profitable city for buy-to-lets is Oxford, followed closely by Bradford in third place.

Property Investment in Europe – the latest trends

Surprisingly, Sheffield turns out to be the city with the highest potential return on investment. Properties in Sheffield provide stronger returns than in Crete or Antalya, even without considering the political contexts.

Almost half (9 out of 20) of the most profitable cities for real estate investments are in the United Kingdom. If you want to buy a holiday home in a sunnier destination then head to Crete in Greece, where average buying prices are low but rental prices attractively high due to year-round tourism. Investing in a holiday letting in Crete provides not only a strong return on investment but also weekend getaways to the clear waters of the Mediterranean whenever your heart desires.

The UK may have some of the most attractive cities in terms of real estate investing but buyer beware: London places dead last in our ranking of the 177 best cities for real estate investing in the UK.

Switzerland dominates this ranking with three cities. The high cost of living and real estate prices makes it difficult to have a good return on investment when buying a property in an Helvetian cities. On the other hand, Berlin is a surprising presence in this ranking. While it is often referred as “poor but sexy”, many people move to the German capital city for its lifestyle and the solid economic growth. This has led to an increase in the real estate prices, which reflects in this ranking.

Methodology:

All rankings were established using data from Numbeo and HomeToGo. Average real estate prices were calculated using property prices available on Numbeo. Average renting prices were extracted using HomeToGo’s data. We used price data from the next 12 months for all types and sizes of lettings to give a reliable overview. The ROI Score comes from a comparison of these two metrics (real estate prices vs. renting prices).