Manchester is “the place to be”, say property experts, as the UK city continues to see its economy, employment and house prices grow.
The city was once part of the northern cities that suffered the “brain drain” of London, as people moved to pursue opportunities down in the south. Investors followed suit.
Now, though, the exact opposite is happening: individuals and companies are relocating to Manchester, making it the fastest growing economy outside of the capital.
“Manchester is the core of the Northern Powerhouse”
Reverse Brain Drain
Since 2010, the number of SMEs in the city has increased by 36 per cent, while larg-scale corporate relocations continue in the footsteps of the BBC’s landmark move to Salford’s MediaCity. RBS alone employs 7,000 in the city and there are 100,000 IT workers in the metropolitan region, as well as 265 call centres for companies such as Etihad, John Lewis and BskyB.
“Manchester is the core of the Northern Powerhouse,” says Philip Rines, Director of ROC Invest, which has just launched a new hotel-style development of several hundred apartments near the historic Castlefield Quarter, overlooking the River Irwell.
What was until recently a buzzword for politicians, though, is a reality on the ground: the city’s upwardly mobile workforce is driving the area’s housing market, with property prices up 9 per cent, according to Hometrack, and predicted by JLL to grow 26 per cent in the next five years.
Finding Fame on the World Stage
The result is a hotspot for both house-hunters and yield-seekers: the Economist Intelligence Unit ranked Manchester as the UK’s best city to live in this year, with the area’s population swelling by almost 50 people a day.
Jonathan Stephens, Managing Director of property consultancy Surrenden Invest, explains: “It’s a great city to live in, is well connected (and due to be more so once the western leg of the HS2 rail link comes into play) and has a wealth of economic opportunities for professional tenants.”
“Not only do investors see potential,” confirms Mr. Rines. “They see proven value.”
That value has been given an added boost for foreign investors this year, following the UK’s vote to leave the European Union, which has sent sterling sliding against other currencies, making property in Britain more affordable.
While the country braces for Brexit, agents are welcoming buyers from overseas: MIPIM UK, which takes place in London this month, is expected to see international attendance “higher than ever”, say organisers, and the Northern Powerhouse will be one of the star attractions. At MIPIM in France next year, a delegation of firms from Manchester and the surrounding regions will journey to Cannes to show foreign investors they are open for business.
The Brexit vote has also seen interest rates lowered to a record 0.25 per cent by the Bank of England, which has left savers struggling to make a return on their bank deposits. On the plus side, buy-to-let mortgages have reached historic levels of affordability, which Philip labels a “win-win” for would-be investors.
Where can investors find the best rental returns for their money? You guessed it: according to LendInvest, Manchester now boasts the second highest yield in the UK, with property in the city generating a 6.8 per cent return.
Mr. Rines highlights the “huge demand for quality rental accommodation” in the city.
“I’ve heard reports of new stock on the market being let within a matter of 24 hours,” he comments. “This coupled with the fundamentals in place for long-term capital appreciation are two things that are without doubt, dangling the carrot for investors.”
Downtown is an indication of the kind of ambitions the city now has for its housing, offering facilities such as cold storage for online grocery deliveries that are designed to appeal to the millenial generation.
“Everyone talks about a ‘flight to quality’ in a booming market and Downtown epitomises exactly that,” says Mr. Rines. “A riverside development, walking distance to the city centre, connected to the city’s tram network and attractively priced with the developer offering incentives for those who get in early.”
“Compare the equivalent product in say, London’s Nine Elms and it just doesn’t offer the same value, much less affordability,” he adds.
As a result, while the city’s foreign appeal is undoubtedly on the up, ROC says that it is seeing equal interest from international and domestic buyers. On the one hand, a weak pound and a legal system that protects the rights of property owners. On the other, a chance to escape the financial squeeze of living in the South East.
“Manchester offers more,” says Philip, simply. “It’s the place to be.”
For more information on investing in Downtown, click here.