Manchester is one of Europe’s fastest growing cities and recently named the UK’s number one property hotspot. The city is proven to be an exceptional location for investors, with a total population of Greater Manchester exceeding 2.8 million people.

A source we use to conduct our own research on key cities here at Gower & Mae are the Crane Reports carried out by financial advisory and audit organisation, Deloitte. The takeaways in this article focus on the 2018 published survey, evaluating the year of January 2017 to January 2018.

To download your own copy of the latest Deloitte Manchester Crane Survey, click here.

In this update, we look at some of the key takeaways of the Deloitte Crane Report and why you should make your investment in the Manchester area.

1) The Rise of Residential New-Build Developments

With cranes now taking over much of Manchester’s skyline, residential property significantly leads the way in this development with 11,135 residential units currently undergoing construction (at January 2018, the time of Deloitte’s publication). This figure exceeds the levels recorded in 2017 levels by a substantial 4,172 residential units, demonstrating the increase in property demand year-on-year from investors and owner-occupiers. In addition, this higher number of units reflects efforts to attempt to resolve the current under-supply of available property across the city, with over 3,000 homes fewer than needed in 2017.

This year of 2018 will see 32 new projects started, which is almost double the 10-year average of a total of 17 projects started. In terms of completion, 5,203 apartments will enter completion status in 2018 vs an average of 1,251 per year since 2002. These developments will focus around the Inner Ring Road, often built on vacant land or ground level car parking, in which multi-story car parks have replaced the potential parking need.

Digging deeper into these projects and apartment units’ figures identifies that a significant percentage of the upcoming supply are 2-bedroom apartments at 59{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} of construction. 2-bedroom apartments offer the ideal structure for sharers, while just 8{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8} are 3 bedrooms or larger. This therefore puts studio and 1-bedroom apartments at 33{32a70e766e49c95f504e78d863f700cc0bc860776959e311316a05ffc4828dc8}, making up a third of all apartments constructed in Manchester and the ideal setup for couples or young professionals.

Driving this surge in construction and new projects is a large under-supply of property in the Greater Manchester area. A recent study by Savills outlined that 7,000 new homes are in the pipeline to be completed in Manchester in the next two years, but the housing need is estimated to be just over 11,250 per year and therefore a noticeable under-supply number.

On the graph below, 2018 is currently projected to have a spike in the delivery of residential developments, with a decrease projected for 2019 and 2020, although still higher than up to 2017. We would expect further projects to be added to the pipeline as time progresses.

2) Organisations and Commercial Space 

Increasingly, Manchester has become a go-to destination for large corporations looking to take advantage of the highly skilled labour pool, cheaper cost per desk than London and a lower wage expectancy than other major industrial hubs including London and Birmingham.

Multinational organisations currently occupying large regional office space in Manchester include the BBC, ITV, AstraZeneca, Barclays, Deloitte, Google, The Guardian, KPMG, Marks & Spencer and Sky. In addition to this, well-known organisations who have their main UK headquarters in Manchester include the Co-Op, Betfred, Adidas, Kellogg’s, Pannone, PG Tips, Thomas Cook, McVitie’s, Siemens and Stagecoach, overall reinforcing the attraction and business prospects in the UK’s third largest city.

Booking.com, the world’s third largest ecommerce company, invested £100 million in August 2018 in a Manchester HQ. In doing so, the organisation consolidated four existing offices across the UK into this one location, involving the movement of 1,500 staff into Manchester city centre.

Many businesses are set to follow a similar pattern, reinforcing the city’s under-supply of property even further as these new employees require quality accommodation. From the perspective of property investors, this naturally means an exceptional opportunity to invest in Manchester residential property due to often having no issues renting out prime located and high specification apartments.

According to Deloitte, currently a total of 1,509,092 square foot of commercial and office space is currently under construction, with many multinational organisations identifying the attraction of Manchester. Taking just Q3 of 2017 into consideration, 435,000 square feet of office space was let out to new businesses out of a year total of 973,780 sq ft. In 2017, Manchester has experienced a 2.4x increase in the level of retail and commercial units currently in the process of being constructed.

Overall, these facts and statistics together show clear evidence to commercial occupiers being attracted to high economic growth cities such as Manchester, either moving from London for cheaper rents and larger space, known by the term ‘North-Shoring’ or dismissing the capital altogether. London, although extremely prestigious, is a very expensive location for a company to operate due to often higher rents. In addition, often multinational organisations require significantly large spaces which are often difficult to locate in the high density of London and they simply do not need to be based in the capital anymore, with the international links now available from a city such as Manchester, with its airport flying as far as the US and Asia.

3) City Centre Focus Point

Manchester’s city centre is circled by it’s inner ring road, of Trinity Way to the north and west, Great Ancoats Street to east and Mancunian Way to the south, with the vast amount of development within, or a fraction outside of this perimeter, shown in the road map below. With the centre being close to a square mile in radius, many retail, leisure and social amenities are all within very close proximity making it a highly desirable residential location, a key factor in the decision making of those looking to move to the area as they wish to have these amenities positioned on their doorstep. The relatively small centre means that a location just outside the inner ring road still gives a very short commute to reach the central business district. Despite its size, there is currently a total of 41 developments combining office, commercial and residential which are currently in construction within Manchester city centre.

Manchester is also home to two large mainline train stations, Manchester Victoria and Manchester Piccadilly. Piccadilly takes passengers direct into London Euston in just 2 hours 5 minutes, with 29 trains per working day completing this route. Victoria connects passengers with Northern England, particularly to cities such as Liverpool, Blackpool, Leeds and Newcastle. Both stations are situated either side of the city with Victoria to the north and Piccadilly to the south-east. With the introduction of the HS2 rail line in the future feeding into Manchester Piccadilly, journey times will be cut even shorter into central London, allowing the prospects of the UK’s northern cities to advance even further.

It is clear from this report that the prospects of property investment in Manchester are incredibly strong, particularly with a high demand and generating strong revenue streams.