I live about 8 miles outside of Manchester on the side of a hill. From my house I can see lots of red lights glistening over the city centre. Some are attached to high buildings, but most are attached to cranes, the centre of Manchester is being rebuilt. Residential developments are everywhere you look, I understand that developers will complete around 15,000 units this year. That is 15,000 new homes and all of them in Manchester.
Red lit cranes also hover over new hotels. Some estimates expect over 10,000 hotel rooms to be available in the city centre by the end of this year. In addition, there is about 2 million sq feet of office space under construction.
Manchester is in a property boom but who is buying? With the value of the pound sinking under the weight of Brexit foreign buyers are making their presence felt and the Chinese are leading the way. There are about 300 million middle class Chinese which if compared to the entire population of the EU at 512 million gives you an idea of their buying power. Apartments in Manchester city centre can cost from £210,000 upwards and with rents starting at around £1,000 PCM the maths still work even with the increased stamp duty.
Even footballers are building hotels. Ryan Giggs and Gary Neville now have planning permission to build a new 5-star hotel in the city centre. There has been a challenge to the proposed development which was rejected in the High Court, so it looks like the scheme will go ahead. With the total cost reputed to be as high as £200 million including a residential element, Giggs and Neville will make a big impression on and off the pitch.
Almost £1 billion was spent on buying and building office developments in Manchester last year. Rents for prime office space are closing in on £40 per sq foot which equates to around 4.5%-4.75% yield for investors. The flexible office concept is taking off led by WeWork who now have three locations in Manchester. Bruntwood who own and operate several office locations in central Manchester tell me that they too are developing a WeWork style of flexible office offering. I expect many more Manchester offices will offer this concept to clients which will attract still more businesses to the city centre.
I expect the property boom to continue in Manchester with no end in sight as the city expands into every nook and cranny developers can find in the city centre.