The Northern Powerhouse Powers On
The massive development and growth in the North West is continuing at an unprecedented rate. And Andrew Percy, the minister charged with making the Northern Powerhouse a reality, has recently declared that, whilst there is some concern about Brexit’s effect on the property market elsewhere, the vote to leave the EU has brought the North West a “world of possibilities”.
Percy went on to say that “the economic potential of the North of England is huge. Investors around the world can already see that for themselves, with foreign direct investment in the area more than doubling over the past two years”.
He’s not wrong.
In 2014, overseas investors injected £3.4 billion into prime property in Manchester. In the same year, the Government committed £476.7 million to boost Manchester’s economic growth, and they’ve just added another £56.6 million to the pot. This influx of Government support is set to create a wealth of jobs, stimulate inward investment, develop the region’s infrastructure and boost growth in general.
A total of 40 major infrastructure projects are about to start in the North West. A £600 million Northern Hub rail project is underway, providing 700 extra trains every day, building a strong and modern network between Manchester and its major satellite towns and cities, as well as the rest of the UK, and – crucially – London. Then there’s Manchester Airport, which is expanding into the UK’s first ‘airport city’ with leisure facilities, offices, on site logistics and manufacturing. This comes via a £800 million cash injection from the Beijing Construction Engineering Group.
At present, residential prices are about 19% below the UK average, but this is about to change, and probably dramatically.
Almost half of the Top 500 businesses in the North West are based in Manchester, along with a wealth of FTSE 100 companies, and plenty more foreign-owned ones. The Manchester Enterprise Zone has offered plenty of incentives for businesses, causing a massive influx of businesses relocating to the area. Existing companies continue to expand and to thrive in the region; all these promising evidences of growth will only be increased by this continued Government investment.
Manchester is also increasing in affluence. Residents’ wages in the Manchester area have gone up 15% in just 8 years, with employment up 8% over the last 5 years. Employment is forecast to grow by a further 16% in the next 20 years.
Finally, and perhaps most interestingly for our investors, HSBC research has recently revealed that Manchester has the second highest buy-to-let investment yields in the UK, an average of 7.98%. The only higher yields were in Southampton. Further research from LendInvest concluded that the North West produced the best average rental yields over the last 5 years. Investors could achieve yields some 200% higher with property outside of London, LendInvest found.
4000 new built-to-rent properties per year are planned, to meet the massive demand for rental accommodation within the city – which is currently outpacing supply. At present, 85% of households within the city are within the private rented sector.
This surplus of demand in Manchester is showing no signs of stopping, as people increasingly flock to the city for its wealth of employment opportunities, as well as the thriving culture and infrastructure the city offers.
As evidence continues to mount in favour of Manchester, we will continue to provide our investors with some of the best potential property investment opportunities to be found in the UK. As always, there are no guarantees, but we will let the stats speak for themselves.