Is Manchester really a viable investment case?
Here, we take a look at the factors that are strengthening inner Manchester’s property market conditions and convincing investors to broaden their portfolio by taking advantage of excellent deals in the very heart of this Northern gem.
Focused economic development in the city centre
Greater Manchester is continuing to grow at a sustainable rate and its Gross Domestic Product (GDP) is forecasted to increase by 3.5% year on year, demonstrating the strength of the local economy. Investment is also streaming in from overseas as thousands of foreign companies are choosing Manchester as their UK base. 65 of the FTSE 100 now have offices in the city.
Over 40% of Manchester’s jobs are located in the city centre, and this comparatively small region contributes over 22% of Manchester’s Gross Value Added (GVA). 40,000 roles have been created here in the last 20 years thanks to the rapid expansion of Manchester’s financial and professional services industry, which is now second only to London’s. A great deal of investment into the area’s digital and media-driven businesses has also aided growth and attracted more domestic and international talent from this sector into the city.
A marked population increase
A positive economy and an increase in employment opportunities has driven huge population growth here. As of 2013, there were 2.71 million people living in Greater Manchester, and by 2025 it’s expected to house a further 128,000 residents. Central Manchester currently contains circa 500,000 people and this figure is set to rise by 50,000 in the next decade; additionally, the city centre itself, once purely a hub for commercial and retail enterprise, is housing over 25,000 people, cementing the need for further development in the inner urban area.
Manchester is currently undergoing huge regeneration, with the city centre experiencing a particularly stark transformation. First Street, located in the south west, is billed as the place where artistic excellence will meet enterprise – over £500 million of investment will create a vibrant new neighbourhood that is set to combine leisure facilities with retail and office space.
The majority of investment resources in Manchester will be used to improve commercial amenities and, directly or indirectly, drive job growth. In fact, only 10% of Manchester’s regeneration scheme is reserved for residential construction, including student housing, which means that the increasing demand for properties will have to be met by outer boroughs.
Homes in the centre fall short of demand
On the subject of shortfall, only 978 new housing units are expected to be released in the next 18 months in the city centre. The government has also identified that there will be a shortage of around 6,000 residential properties in Greater Manchester. The scarcity of homes in the Manchester region as a whole has helped push prices up by 5.4% in the last year alone, while the cost of city centre apartments has increased by 6.4% in the same period. As we previously reported in our Q2 market overview, price growth is set to reach 26.4% in the next four years, signalling future favourable market conditions and further convincing private investors that Manchester is a major player in the global property sector.