Property prices are on the up, with the northern city’s residential market outperforming most other parts of the UK including London, according to a new report by Cluttons.
Values rose by 6.4 percent in the 12 months to November 2017, compared to just 2 or 3 percent for prime central London in the same time period.
The city is becoming a much more appealing place to live and invest in, the report said, aided in part by the decision to grant Manchester devolved powers allowing it to govern itself in a similar way to London.
The city’s mayor, Andy Burnham, has spearheaded efforts to create a media and tech hub that aims to rival London. Jobs are being created and new residential “London-style” residential developments are popping up in the city center, the report said.
All these factors combined are drawing the attention of the Middle East buyer, said Faisal Durrani, partner, head of research at Cluttons.
“The status of Manchester has certainly grown in the minds of Middle East investors over the last three years, with commercial property investment originating from the Middle East rising by almost 61 percent to £45 million at the end of 2016,” he said.
“The UK government continues to endeavor to raise the profile of Manchester and Birmingham as a ‘Northern Powerhouses’, and possible investment opportunities, however the family offices from the Gulf, however, need more convincing if these locations are to become more than peripheral targets,” he added.
The appeal of residential property is also growing, due partly to it being far cheaper than London. Average residential values stand around £150,000 ($209,00) or six times annual incomes. In contrast, the figure for prime central London is just under £3 million, or 70 times annual incomes. Residential rental yields in Manchester are close to six percent, while average monthly rents stand at £1,044.
“For Middle East high net worth individuals however, Manchester offers a viable alternative to London, or indeed an opportunity to broaden their UK property investment portfolios,” Durrani said.
He added that the city also had “world class” universities, good transport links to London and 56 direct flights a week between Manchester and the Gulf.
The report noted Middle East buyers were particularly interested in the city’s new-build schemes, saying these developments offered amenities such as concierge services, parking and gyms, that they may be used to in their home markets.
New-build property in Manchester has seen a 40 percent rise in transacted values over the last 18 months, which are now close to £240,000. This increase compares to the smaller rise of 13 percent for secondary market property transacted values.
Chinese investors have also shown increased interest in the city in recent years, spurred by the 2015 visit of China’s President Xi Jinping.
The Chinese government has also partnered with the UK to deliver the £800 million Manchester Airport city project, which intends to create 11,500 jobs once completed in the next 10 to 15 years.
For now, Manchester still lags behind London in terms of overall overseas investment, recording £1.4 billion worth of commercial property investment in 2017, compared to £25.2 billion in London.