Manchester, home to two of the biggest football clubs in the world, is becoming the poster city for infrastructure development and real estate investment in the United Kingdom (UK).
The new-found interest in Manchester properties rides on the ‘Northern Powerhouse’ plan which will see the UK government pour hundreds of millions of pounds to rejuvenate the region, boosting its global appeal.
The Northern Powerhouse project is aimed at spurring economic growth in the North of England by investing in skills, innovation, transport, culture as well as in infrastructure to support businesses. Manchester is expected to be a key beneficiary of this mega investment drive, injecting greater vibrancy and attracting diverse communities to the metropolis.
All that – plus population growth and brightening economic prospects- have cast a warm glow on the housing segment in Manchester.
Market Snapshot: Manchester
Property prices in the metropolis have picked up since the fourth quarter of 2017, but they are still considered to be fairly affordable when compared against homes in London. Colliers International estimates that home prices in Manchester could potentially surge by 28.2% over 2017-2021, while rentals may climb 20.5% over the same period.
The property market will get a big lift from the massive infrastructure investment and influx of urban dwellers, including the continued stream of young professionals and students into the city. It is not uncommon for a Manchester property to fetch 5-6% gross yield, much higher than the 3-4.5% offered in some areas in London.
A vibrant education hub with four universities – University of Manchester, Manchester Metropolitan University, University of Salford and University of Bolton – Greater Manchester is fast becoming a talent magnet for the digital technology and media, financial services, healthcare and life sciences industries.
Notable companies that have established a presence in Manchester included Swedish firm Handelsbanken which has recently committed to lease 40,000 sq ft of space at a landmark commercial building for 300 staff. Media powerhouse BCC also calls Manchester home.
Regeneration driving growth
Key to Manchester’s appeal is the UK government’s plan to revamp the region. In particular, Salford and its city centre Greengate stand out as promising areas. Salford is a key plank in Greater Manchester’s ambitious growth and transformation plan, with a slew of new developments including ongoing revitalisation works in Chapel Street.
The regeneration efforts have already paid dividend. According to a 2015 report by audit and consultancy firm KPMG, the BBC’s move to Salford has boosted the UK economy by 277 million pound within a year. KMPG added that this suggests that the positive spillover effects arising from the cluster of firms in Salford, catalysed by the BBC’s presence, could be considerable.
Good connectivity and expanding economy
Transport infrastructure plays an important role in supporting real estate growth. Manchester, an international gateway city for the North of England, boasts UK’s largest regional airport with over 100 airlines connecting to more than 200 destinations. It is expected to double its passenger traffic to 50 million per year by 2030.
In addition, the government is also planning a new high-speed rail network – known as HS2 - from London to Birmingham and to Manchester and Leeds. A BBC report last year said this will help to cut travelling time from Manchester to London to 1 hour 8 minutes, down by a full hour.
Better connectivity will help to attract more talent and businesses to Manchester. A recent report by think tank Centre For Cities pointed out that the number of people living and working in Manchester, Leeds and Birmingham city centres has soared in comparison to other cities across the country.
“Manchester has seen the highest city centre growth in England and Wales in recent decades (as measured by combined jobs and residential growth in central areas)… Moreover, jobs growth in Manchester city centre outpaced all other cities in England and Wales, including that of London, despite the capital’s continued dominance in the national economy,” the think tank noted in a media release out in March 2018.
Topping the chart, Manchester saw a 149% increase in population growth in the city centre between 2002 and 2015, and 84% jump in jobs growth over 1998-2015, it added.
With careful urban planning by policy makers and support from developers, Manchester has the potential to become an exciting live-work-play destination in the future. Considering the emerging trends and data projections, Colliers sees strong investment potential in the region especially in the revitalised city of Salford.
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