Why overseas investors are gobbling up property in Manchester

Manchester is a mecca for buy-to-let investment

Manchester has become a magnet for property investors from the UK and abroad. It benefits from terrific transport connections, exceptional educational establishments, and a hyper-effective economic policy that is transforming the regional economy. It’s a lifestyle city, with the best of urban life and rural recreation within easy reach of all residents.

The property fundamentals are seriously strong here, and it shows in the recent price performance of Manchester’s property. Even so, Manchester offers an entry point below the national average and higher-than-average rental yields.

Manchester property is more affordable, but prices are growing fast

According to the latest Hometrack UK Cities House Price Index (August 2018), average house prices in UK cities increased by 3.9% between August 2017 and August 2018. The rate of price growth is higher this year than at the same time in 2017. The average property price in the UK’s top 20 cities is now £254,400.

Manchester property is far more affordable than the UK average. The average price here is £168,300. However, the gap between Manchester’s property prices and the national city average is closing. Manchester’s average property price has increased by 6.8% over the last year – almost twice the rate of city prices nationally.

With high levels of foreign direct investment and forward-looking business planning by the local authority, high-income job numbers in Manchester are growing rapidly. It is forecast that 70,000 new jobs will exist in Manchester by 2026, as the population grows by 125,000. Demand for property is set to continue in a city in which supply is currently failing to keep pace with demand.

Manchester is a mecca for buy-to-let investment

The life sciences, health, creativity and innovation, advanced manufacturing, and financial and professional services sectors are all growing rapidly in Manchester. Investment in industrial parks and economic quarters has been immense.

MediaCityUK is attracting national and international businesses, as well as providing a hub for innovative start-ups. The BBC has relocated here from London.

Manchester is a huge financial centre, and many of the world’s leading banks and financial institutions have a presence here.

Manchester is also home to one of the largest student populations in the country, with 90,000 undergraduates studying in the region’s universities. As many as 20,000 of these choose to remain in Manchester each year after graduating, encouraged by the many job opportunities and the lifestyle that Manchester offers.

Inward migration to Manchester is high, with many young professionals tempted to move here for exciting job opportunities, a lower cost of living, and a higher quality of living.

The result of so many graduates staying on and a high level of inward migration is a high demand for rental properties, especially in city centre districts. Such demand is fuelling rental price growth above the general rate of inflation. JLL expects rental prices to rise by 3.5% per year for the next three years in Manchester. It also forecasts that capital growth will average 4.2% over the next five years – almost twice the rate at which it predicts the national average to increase.

The average rental yield in Manchester is around 6.1%. Coupled with rising rental prices and increasing property values, the potential for a very healthy total return is clear.

Foreign investment into Manchester’s property market rockets

Despite Brexit (or, perhaps, because of), foreign investment into Manchester’s property market has rocketed. Leading the way has been Chinese buyers. Carrie Law, the CEO of China’s largest overseas property website Juwai, recently revealed that enquiries for Manchester properties had increased by more than 250% over the course of a year. Chinese investors are attracted by the economic prospects for the region, and the weaker pound means they get more property for fewer yuan.

These Chinese buyers are mostly investors, with few buying to live in Manchester. Carrie Law points out that “Manchester currently has the greatest dynamism and momentum in attracting Chinese buyers”. Law expects the gap between Chinese buying interest in London and Manchester to close.

We’re in full agreement with JLL and Juwai. We think the prospects for profitable property investment in Manchester have never been better. The local economy should continue to grow rapidly, and this will suck in more people seeking to benefit from high-paying jobs and a fantastic lifestyle. Businesses are moving here because of the dynamism of Manchester and the local authority, and the transformation that will be further enhanced when High-Speed Rail services start running.

We believe it’s a great time to invest in property in Manchester. Which is why we have put a great deal of effort into sourcing some exceptional property investment opportunities in the Manchester and surrounding region. To find out more, all you need to do is contact one of the Gladfish team today on +44 (0)207 923 6100.

Live with passion

Brett Alegre-Wood

Brett Alegre-Wood
October 2, 2018

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