The Rise of Property Investment in Manchester

Manchester used to be the hot insider tip for property investors in the know. Now, it’s an international hotspot for property investment. This has led to concerns that Manchester has reached its peak and is hence poised for, at least, a slowdown. While these concerns are understandable, they’re also misplaced. Mark Burns, Director at Pure Investor, discusses this topic further.

Manchester is physically better-placed than London

Throughout most of history, London’s southerly position gave it a huge advantage when it came to interacting with other countries. This advantage was, however, based on the fact that it was easy to reach by ship. Ships are still hugely important for transporting cargo over long distances. Modern ships, however, are more than powerful enough to take the extra 200 or so miles to Manchester in their stride.

When it comes to transporting people across long distances, air travel is generally the preferred choice. Here, Manchester might not be quite the equal of London but it comes pretty close. It certainly has direct connections to the world’s key leisure and business destinations. It also has straightforward, fast connections to London for Heathrow if you’re really going off the beaten track.

This means that businesses (and residents) in Manchester now have essentially the same international transport options as London has long enjoyed. They are vastly better off for intra-UK travel. Quite simply, the fact that London is so far to the south, literally by definition, means that most of the UK is to the north. This increases the amount of travel people have to do if they want to meet in person.

Manchester, by contrast, is within easy travelling distance of most of the UK’s major business centres, including the ones outside England. This is part of the reason why a lot of major names have been moving to the city in recent years. It also helps that Manchester has great local transport. The Metrolink is arguably a much pleasanter user experience than the London Tube.

Manchester has more room to grow

Post-COVID19, London may be able to repurpose some of its existing buildings or take them down and rebuild for a post-pandemic environment. This would really be the only way to create any meaningful new building space within the city itself. The potential challenge is that this would increase the cost of new-builds and hence could make them less attractive to both investment and residential buyers.

Even outside the main city, there’s very limited room for growth. Part of the reason why London has been working to improve its local transport network is precisely the fact that there have been so many housing developments around it. Crossrail may open up some new possibilities. That said, even if London could find the space for significant new developments in its surrounding areas, building these new homes will increase the pressure on its transport system and hence negate the benefits of Crossrail.

Manchester, by contrast, still has plenty of existing buildings and brownfield it can repurpose. It also has more room to expand outside the city centre without compromising its greenbelt and the famous surrounding countryside. This means that it’s reasonable to expect property prices in Manchester to remain lower than property prices in London (on a like-for-like basis).

One of Manchester’s particular strengths is the build-to-rent sector. This has led to a growth in the number of buildings created specifically with modern renters in mind. In particular, they tend to have pet-friendly policies. These are often hugely important to modern renters, especially those working from home.

Manchester attracts students

Tertiary education looks poised for a major shake-up post-COVID19. It’s still early days but, realistically, it looks like the tertiary education market is going to mirror the job market. In other words, remote and hybrid learning systems are going to make a real push forward against full on-site learning models.

If this does happen, then Manchester is well-positioned to benefit from it. Fully-remote learning is really only suitable for courses that are mostly, in not wholly, knowledge-based. Courses that are largely practical generally need to be taught on-site. Of course, many courses have a mixture of knowledge-based and practical elements. These are candidates for hybrid teaching.

Hybrid teaching requires accessible physical venues with both enough space and suitable equipment. Manchester is easily reachable from anywhere in the UK and has plenty of venues course-providers could use. In fact, hybrid courses could be run with or by Manchester’s local universities. If this did happen, it could potentially create interesting opportunities in the short-term lettings sector.

Furthermore, Manchester is well-placed to retain its popularity with students who do choose on-site courses. The University of Manchester, Manchester Metropolitan University and The University of Salford are all recognized as leading, and therefore desirable, institutions. Furthermore, they’re all based in an affordable location with a wide range of leisure options.

Manchester holds onto young adults

Gone are the days when students graduated from a university in Manchester and then headed straight down to London to start their proper career. These days, it’s more likely to be students from London heading up to Manchester to start a career somewhere they can actually afford to rent and save up for a deposit. Students from Manchester are increasingly likely to stay put, in part for this exact reason.

The simple fact is that Manchester now has the full range of standard city attractions, meaning retail, entertainment and leisure. It also has its own local attractions plus it's surrounded by amazing countryside. If you want even more, then Manchester’s transport options will get you to the destination of your choice, quickly and easily.

In other words, Manchester offers young adults the chance to enjoy city life at a price they can afford. What’s more, it’s relatively easy for people to change their position on the housing ladder as their life moves on. For example, in Manchester, it’s still feasible for a couple on average wages to buy a single-family home in or near the city. In London, this is much more of a challenge.

This creates an attractive situation for property investors. Manchester’s relatively low prices for starter flats mean that landlords can let them out at attractive prices while still earning solid yields. In many cases, they can expect tenants to stay with them until there is an active change in their circumstances, for example, plans to start a family.