A new wave of UK ‘second cities’ is delivering the strongest growth in rental yields, research shows.
These emerging markets are offering investors the chance to achieve attractive returns, driven by rising rents and comparatively lower entry costs compared with the traditional major hubs.
West One Loans analysed both rental market data and house prices across the UK’s 63 largest cities and towns, combining these to calculate estimated yields for 2025 and comparing them with figures from 2023 to identify where growth has been strongest.
The research shows that Glasgow currently offers the highest average yields for investors, but it is Ipswich, Leicester, and Portsmouth that have seen the fastest growth in yields over the last two years.
Ipswich leads this growth with an estimated yield increase of 1.1 percentage points, rising from 4.1% in 2023 to 5.2% in 2025.
Leicester follows closely with a 1.0 percentage point rise to 5.3%, while Portsmouth has seen its yield climb by 0.9 percentage points to 6.3%.
Other notable second cities showing strong growth include Norwich, Exeter, Reading, and Southampton, all registering increases of around 0.9 percentage points over the same period, reflecting a combination of rising rents and manageable property price growth.
This highlights the rise of a new wave of second cities, where rental prices are increasing and property values remain comparatively affordable, giving investors the potential for strong returns without the higher entry costs of the major hubs.
As urban regeneration projects continue to reshape many of these cities, the opportunity for development finance in these emerging markets is significant. Whether for first-time investors or seasoned developers, West One Loans offers tailored finance solutions, including development exit finance and bridging loans, to support investors looking to capitalise on these high-growth opportunities.
A West One spokesperson says: “Birmingham and Manchester are no longer second cities and are now on a similar footing to London when it comes to investment, regeneration, and popularity, not just for residents, but also for property investors. However, high demand and rising property prices mean initial investment costs are significant.
“This has created an opportunity for a new wave of second cities, where investors can access more favourable deals and benefit from strong yield growth, particularly when using specialist finance solutions to support urban regeneration and property investment projects.”
