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Insight & Opinion

Here’s why Manchester is one of the UK’s property investment hotspots

Author: Gemma

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Manchester has plenty of attributes that could capture the interest of property investors, including a steady trend of price growth and strong appeal to people who want to live and work in a big city.

One of the defining trends in UK property in recent years has been the steady reversal of the north/south power divide, with regional cities and Northern Powerhouse hubs seeing strong growth and demonstrating that the country’s housing market is about much more than London.

In no city has this been more evident than Manchester – one of the north’s most exciting, culturally distinct cities. This thriving destination has plenty going for it, including a strong economy, a solid track record for price growth and big-city appeal, which helps to ensure steady demand for homes in the private rented sector.

Economic strength

A strong local economy and consistently high rates of employment are positive signs for buy-to-let property investors. Growing businesses and an expanding working population mean more demand for property on the private rental market, which fuels regular returns for investors and keeps the risk of void periods to a minimum.

Manchester has clearly demonstrated its strength where economic development and job generation are concerned in recent years. Data from the local council shows that, between 2016 and 2017, Manchester’s gross value added – a measure of the value of goods and services produced in the area – increased by 4.3%, compared to 3.6% for the UK as a whole. This was the third-highest growth recorded in the UK’s Core Cities group, which also includes regional hubs like Liverpool, Glasgow and Cardiff.

More recent figures, published by real estate advisory firm JLL in May 2019, highlighted how accelerating job generation was fuelling the Manchester property market. The data showed that new job creation in the city was outpacing other regional centres all over the UK.

Elaine Rossall, UK head of offices research at JLL, said: “When thinking of the UK’s strongest property markets, Manchester continues to be in a league of its own. Job creation is at record levels and is spread across a range of sectors.”

The firm released another report in November 2019 showing that employment growth in Manchester was among the highest in Europe. Factors including a steady supply of skilled graduates and an expanding ecommerce sector helped the city surpass London in labour market growth.

Prices on the rise

If long-term capital growth is one of your chief property investment goals, you’ll want to know more about recent house price trends in the destination you’re considering.

In Manchester, the past five years have been a time of fairly consistent growth, as this graph from the Land Registry shows. Average prices soared by more than 37% between January 2015 and March 2020, from £134,515 to £184,506.

Manchester consistently featured among the top five UK cities based on year-on-year price growth in Hometrack’s monthly price reports between February and April 2020, breaking into the top three in the last two months.

Looking to the future, there’s every reason for investors to feel positive about the ongoing expansion of Manchester’s property market. Indeed, JLL has predicted it will see the strongest price and rental growth of any UK city in the next five years.

It goes without saying that the coronavirus pandemic will have an impact on regional property markets all over the UK, but what these statistics show is that Manchester has the underlying strength and core attributes to get right back on track as soon as the housing market returns to normality. Encouragingly, we’re already seeing the first signs of the sector starting to get back on its feet.

‘Big city feel’

Aside from the positive economic factors and the fundamental strength of the local property market, investors can take reassurance from the fact that Manchester is one of the UK’s biggest and most attractive cities in which to live and work, particularly for young people and ambitious professionals.

This was highlighted by Louise Emmott, head of residential agency and development for the north at JLL, who said: “Manchester is unique in that it offers residents a truly ‘big city’ feel, but on a scale which is manageable and, currently, affordable.”

She commented on the exciting trends occurring in the local tech, creative and media industry, fuelled by major developments like MediaCityUK in Salford – home to the BBC, ITV, Ericsson and other high-profile organisations – and Enterprise City in the St John’s neighbourhood.

Ms Emmott also noted the “enduring appeal” of central Manchester, which has led to “an exciting pipeline of residential development”.

“There are a number of build-to-rent schemes scheduled for completion over the next two years, and we believe the rising rents reflect both heightened demand and a better quality of stock,” she said.

Development and delivery

On the subject of development, this is another area where there are plenty of positives for Manchester, which will provide further encouragement for investors.

Deloitte’s latest crane survey for 2019 – which monitored construction activity across various real estate sectors, including residential and student housing – highlighted the “huge resilience” regional cities have shown in the face of recent economic uncertainty. The study revealed that Manchester, Birmingham, Leeds and Belfast delivered record volumes of city centre homes, offices and education space last year.

Manchester in particular saw 27 schemes and a total of 3,619 homes delivered in the latest survey, the second-highest number since 2006.

Simon Bedford, partner and regional head at Deloitte Real Estate, said: “It’s been a record year for residential, with the three English cities delivering more homes than at any time since 2007 and our development pipeline suggests this trend will continue.”

While the coronavirus situation will clearly have an impact on construction activity and other aspects of Manchester’s real estate sector, what won’t change is the enormous appeal of the city itself and the essential strength of its housing market.

Buyers who commit to a property investment in Manchester can expect to benefit from its unique attributes and huge potential in the years to come.

If you would like to discuss some property investment opportunities in more detail, you can contact Experience Invest.

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