Outside of London, the North is set to sizzle, with Manchester the focus of the heat.
The United Kingdom’s Spring Budget announced in March included a number of measures to drive home buyer demand, but introduced little to ease the country’s housing shortage. With the UK remaining a firm favourite for property investors in Singapore, Manchester is emerging as a strong investment hub outside the London hotspots.
While there were no real surprises in UK Chancellor George Osborne’s 2015 Budget, there remain some changes that will affect property investors from overseas.
As we all know, the UK faces a major housing shortfall – only 141,000 homes were built in 2013/14 – less than half the number required to meet existing demand. Osborne announced the creation of up to 28 housing zones outside of London – which could provide 45,000 homes. Yet neither this, nor increased funding for the London Land Commission, tasked with mapping brownfield land to accelerate building, are expected to make a substantial difference. This means we will continue to see a supply-demand imbalance for many years to come, leading to significant price growth in cities across the UK.
Another major announcement in this year’s Budget was the government’s commitment to its “Northern Powerhouse” vision. This scheme, first announced in 2014, will invest over GBP7 million to increase economic connectivity across a collection of the UK’s northern cities – Manchester, Liverpool, Leeds, Newcastle and Sheffield. And while London has always been seen as a safe haven for foreign investors, Manchester is now leading the charge for the North.
Property prices are predicted to rise by 22% in the next three years, with rental growth among the highest in the UK. Following the Budget, Manchester has been handed the right to retain increases in business rates revenue. This move is expected to drive the delivery of city-specific infrastructure and regeneration plans – creating more opportunities for private and overseas investment. What is Manchester's appeal compared to other cities in the UK?
Manchester has attracted a wealth of commercial investment in recent years, particularly in the digital and creative industries. It is the birthplace of many of the world’s most successful and diverse bands – from pop groups such as the Bee Gees through to The Smiths, Joy Division and Oasis – and this creative heritage very much lives on today.
MediaCityUK – a 200-acre development site in Manchester – represents the first purpose-built media community in the UK. Chosen as the new headquarters of both the BBC and ITV Granada, this has become a nexus for national and international media operations. It has created some 15,500 new jobs since its opening and will add GBP255 million to the city’s economy each year.
The transport links, both domestic and international, in any city will always be a major consideration for foreign investors. Manchester Airport is already Britain’s third-busiest airport, with direct flights to global hubs such as Singapore, Hong Kong, Dubai, Abu Dhabi, Washington and Beijing.
Construction Engineering Group has pledged to invest GBP800 million to expand Manchester Airport even further, following a model that has seen success in Barcelona and Frankfurt.
Opening next year, new offices, manufacturing and hotel facilities will be added, and passenger numbers are anticipated to double to some 36 million annually by 2030. Drawing more visitors and residents into the city, this will be a prime factor in stimulating the local economy, creating jobs and, of course, driving up property demand.
Proposed future transport infrastructure such as the High Speed 2 (HS2) rail line, the new tunnelled trans-Pennine route, and improved motorways will contribute to unlocking dormant value in these areas as they improve connectivity with neighbouring northern cities and drive down travel time to and from London. Just as the opening of MRT stations along the Downtown Line has driven a property boom in Singapore for example, these future connections could also create new investment hotspots for investors.
Following the wealth of public and private investment into Manchester, 65 of the FTSE 100 companies now have an office in Manchester, with more likely to follow. For the savvy foreign property investor, it is surely a city to watch.