Areas of Derby: Buy-to-Let Property Investment Hotspots
Derby is one of the UK’s smaller cities. But it is one of the country’s leading manufacturing centres with a healthy economy providing lots of skilled jobs. Surprising then, that it is also one of the cheaper UK cities for property investors. It also has an interesting similarity with New York! *
Why Invest in Derby?
Derby, a city with a rich history and strong industrial heritage, is an attractive prospect for investors due to its affordable property prices, thriving economy, and future growth potential. Here's why you should consider investing in Derby:
- Strong Economic Performance: Derby has one of the fastest-growing economies in the UK, supported by key industries such as manufacturing, retail, and textiles. The city has several major employers, including Rolls-Royce, Bombardier, and Toyota, contributing to a strong job market and attracting skilled workers.
- Affordable Property Prices: Property prices in Derby are well below the national average, making it an affordable option for investors and homebuyers. The average house price in Derby is £244,000 as of April 2024, and the city offers a range of properties to suit different budgets.
- High Rental Demand: Derby has a growing population, including a large student body of over 30,000, and a young demographic, with 48% of the city's population under 35. This dynamic population drives demand for rental properties, and the city's status as an educational and career hub further enhances its appeal to young professionals and graduates.
- Regeneration and Development: Derby is undergoing significant regeneration, with projects like the Derby City Centre Masterplan, Nightingale Quarter, and Infinity Park. These initiatives aim to revitalise the city, create new jobs, and provide much-needed housing. The Assembly Rooms, a key cultural hub, is also being redeveloped, and the University of Derby is investing £150 million in its campuses.
- Transport Links and Connectivity: Derby benefits from excellent transport links, including proximity to the M1, A50, and A38 roads. East Midlands Airport, one of the UK's busiest freight airports, enhances the city's connectivity. The future East Midlands HS2 Hub will further improve connections, positioning Derby as one of the most accessible locations in the UK.
- Cultural Attractions: Derby boasts a variety of cultural attractions, including Derby Cathedral, Derby Museum and Art Gallery, Pickford's House Museum, and the Royal Crown Derby Museum. The city also has vibrant social scenes, with Friar Gate and the Cathedral Quarter offering independent shops, cafes, restaurants, and bars.
- Population Growth: Derby's population is expected to increase by 5.3% over the next 20 years, rising to an estimated 312,000 by 2037. This population growth will drive demand for housing and rental properties, making Derby an attractive prospect for investors.
- Strong Rental Yields: Derby offers competitive rental yields, with an average of 4.6%. The city's affordable property prices and growing population contribute to its rental yield potential.
- Student Population: The University of Derby has a significant student population of over 30,000, providing a steady demand for student accommodation. The university's ongoing investments in its campuses and facilities further enhance Derby's appeal to students and contribute to the city's vibrant atmosphere.
Property Values
Derby, located in the East Midlands, offers property prices that are well below the national average. The average house price in England (as of January 2024) is around £299,000, while the average house price in Derby is around £245,000 (April 2024), making it the 34th cheapest postcode area, out of 105 in England and Wales.
The cheapest properties in Derby are currently priced at around £46,000, and the most expensive properties can reach £761,000.
Derby's property market has been resilient, with house prices increasing by 57% over the last decade. Between 2021 and 2022, property prices in Derby jumped by 15.8% to an average of £277,491. From 2022 to 2023, house prices grew by 4%, despite economic challenges.
The Derby property market is expected to continue its upward trajectory, with major investments and regeneration projects contributing to its growth. The city's economy is the sixth most productive in the UK, and Derby has come close to being the fastest-growing economy in the country.
With its affordable property prices, strong economic growth, and ongoing development, Derby presents an attractive opportunity for property investors.
Average Asking Price by Postcode Area
Last updated: July 2024
Data from HM Land Registry
| Postcode District | Average Property Price |
|---|---|
| DE1 | £170,168 |
| DE3 | £320,926 |
| DE4 | £347,339 |
| DE5 | £254,314 |
| DE6 | £445,965 |
| DE7 | £238,443 |
| DE21 | £247,174 |
| DE22 | £286,457 |
| DE23 | £250,752 |
| DE24 | £224,147 |
| DE65 | £330,759 |
| DE72 | £312,412 |
| DE73 | £338,466 |
| DE74 | £332,965 |
Rental Demand
Rental demand in Derby is driven by a combination of factors, including its thriving economy, the presence of major companies, and its strong student population. The city has a large student population, with over 34,000 students enrolled at the University of Derby. Additionally, Derby is home to global businesses such as Rolls-Royce, Toyota, and Bombardier, attracting business professionals and skilled workers.
The average rent in Derby as of 2024 is £956 per month, according to Home, an increase from £825 in 2022. Rental yields in Derby are impressive, reaching as high as 8.59% in 2023, according to various sources.
The demand for rental properties in Derby is expected to continue rising due to the city's growing population and the limited supply of housing. The population of Derby is projected to increase by 5.3% over the next 20 years, and there is already a significant waitlist for social housing in the area.
The average rental yield in Derby is 4.6%. This is calculated based on the average property price in Derby of £245,000, as of 2024.
The Derby City Centre 2030 Masterplan, a large-scale regeneration project, is expected to further boost rental yields. The project aims to create 4,000 jobs and 1,900 new homes by 2030, contributing to population growth and increasing demand for rental properties.
Average Rental Yield by Postcode Area
Rental yield is the rental return an investor can expect on their investment once costs have been taken into consideration.
Last updated: July 2024
| Postcode District | Average Rental Yield |
|---|---|
| DE1 | 6.2% |
| DE3 | 4.0% |
| DE4 | 3.0% |
| DE5 | 3.9% |
| DE6 | 2.4% |
| DE7 | 4.1% |
| DE21 | 4.2% |
| DE22 | 3.9% |
| DE23 | 4.4% |
| DE24 | 4.6% |
| DE65 | 3.2% |
| DE72 | 4.1% |
| DE73 | 3.3% |
| DE74 | 3.6% |
Property Investment in Derby
Here’s our guide to buy-to-let in and around the City of Derby.
City Centre
Derby city centre has a fairly small city living market currently. Derby City Council has plans to expand city living in Derby and attract the development of 2,200 new homes in the city centre by 2028. Investors looking to invest here now can choose from apartments in new-build blocks as well as apartment conversions.
Around the edges of the city centre, property types include traditional terraces and period houses, some of which have been converted in flats or shared accommodation.
Yields in this area, covered by the DE1 postcode, are a solid 6.1%.
North Derby Suburbs
North Derby suburbs have good access to the A38, A52 towards the M1 and to the countryside of the Derbyshire Dales. They include Allestree, Darley, Darley Abbey, Little Chester, Derwent, Breadsall Hilltop and Oakwood. Of all these Allestree is one of Derby’s favourite residential suburbs. It offers Allestree Park, Markeaton Park and a useful suburban shopping centre at Park Farm.
Just to the north of Derby villages like Little Eaton and Duffield are popular Derby commuter villages.
Some of these areas are amongst Derby’s most expensive residential areas. As a result yields in this area, based on the DE22 postcode, are tight at around 4.2%.
East Derby Suburbs
East Derby areas include Pride Park, Wilmorton, Chaddesden, Spondon, Borrowash, Alvaston, Alvaston Village and Alvaston Moor. These areas have good access to Derby, the M1 and also into Nottingham.
Chaddesden or Chad as it is known for short is Derby’s largest single residential suburb comprising several housing estates built from the 1930s onwards. Spondon is a one-time village with a railway station offering services to Derby and Nottingham and elsewhere. It is the location of the large British Celanese industrial site where redevelopment is planned. Borrowash is a village which is located in Erewash borough rather than Derby itself but is a popular Derby residential area.
The east Derby area is a mid-priced property area with good value property in some locations. Yields in this area, covered by the DE21, DE24 and part of DE72 postcodes, range from 4.5% to 4.8%.
South Derby Suburbs
Suburbs in the south of Derby include Rose Hill, Normanton, New Normanton, Pear Tree, Stenson Fields, Sinfin and Sinfin North, Osmaston, Allenton and Chellaston. The main industrial sites including Rolls Royce and Bombardier are here.
The inner-city areas of south Derby are amongst the city’s lowest price property areas and attract budget buy to let investors. Prices rise further out towards areas such as Chellaston which is a popular family suburb with easy access to the A50, A38 and M1.
Yields in this area, covered by the DE23 and DE24 postcodes plus part of the DE65 and DE73 postcodes, range from 4.2% to 4.9%.
West Derby Suburbs
West Derby suburbs include California, New Zealand, Markeaton, Mackworth, Littleover and Mickleover. Littleover and Mickleover are one-time rural villages which have expanded into large areas of suburban housing in recent decades. They have good access to the A38 and the Toyota plant at Burnaston. These areas are attractive residential areas and particularly popular with family buyers and tenants.
Yields in this area, covered by the DE3, DE22 and DE23 postcodes, are up to about 4%.
Property investors who are interested in investing in Derby property might also consider nearby Nottingham. Here’s our guide to the best areas of Nottingham to invest in buy-to-let.