Julian Cotton, Associate Director at Cushman & Wakefield, has spearheaded the firm’s move into the Manchester residential market and here discusses the agency’s motivations for establishing a new homes sales team in the city, as well as the current market and upcoming launches.
What were the main drivers of Cushman & Wakefield entering the Manchester market?
Whilst the business has had an expert residential team in Manchester, the principle catalyst for Cushman & Wakefield entering the new homes market in Manchester was its success in being instructed as agents on Far East Consortium’s (FEC) landmark residential development within the city, Meadowside.
An architecturally striking 756 unit scheme set around the beautiful green space of Angel Meadow, Meadowside is widely regarded as the first piece of the jigsaw in spearheading the wider regeneration of the Northern Gateway, an investment partnership between FEC and Manchester City Council, which is set to deliver over 10,000 new homes across the north side of central Manchester over the coming decade.
Fuelled largely by a rapidly growing economy, an ever increasing population and at the heart of some of the UK’s most important future infrastructural developments, in recent years Manchester has thrived to emerge as a globally influential city.
Recognising the buoyancy of the residential marketplace and the bright future firmly underlined by the strength in economic and demographic forecasts, Cushman & Wakefield saw the distinct opportunity to not only take an integral role in the delivery of one of the foremost residential projects within the city, but draw upon our extensive new homes and International project marketing capabilities, coupled with our wider residential capabilities within Manchester, to shape and build an exceptionally strong new homes offering within the North West.
Who are your typical purchasers in Manchester and what do they look to buy?
There are two clear buyer profiles within the city; investors and owner occupiers.
A fundamental driver in the popularity of both Manchester as a destination and a city in which to invest in recent years has been price. Price points perceived as affordable, particularly from an emergent overseas market have proved immensely popular with buy-to-let investors acquiring new-build and second hand stock, typically tending to prefer studio, one and compact two bedroom apartments, minimising capital values and capitalising on strong rental demand and subsequently healthy yields.
Investors, both UK based and overseas, seeking high performing investments, consistent, robust rental yields and strong capital returns, are drawn to a market that over the past 7 years has seen rates of house price growth regularly outstrip the national average. Manchester has a proven track record of growth and benefits from a particularly active investor market with over 52% of the entire housing stock lying within the private rented sector (PRS). Despite high rates of house price inflation, rental yields remain strong at present pricing, averaging 5.3%, demonstrating a resilience and a clear indication of the underlying strength in tenant demand as rates of rental inflation come near to keeping pace with capital growth.
The owner occupier market within Manchester is exceptionally strong, fed largely by the aforementioned increase in population and growth in economy. With anticipated growth of 6.3% in population within the city over the next 5 years, there is an underlying and growing requirement for housing within the city. Owner occupiers invariably prefer greater living space, larger one and two bedroom apartments, duplex apartments and houses, ideally with some form of outside space.
Manchester has an incredibly buoyant rental market, why do you think that is?
Firstly, there is a growing trend of high value jobs in the city, second only to London, with large London centric businesses – such as legal firms and insurance brokerages – moving up here. This surge in jobs being created, coupled with the city’s 100,000-strong student population mean that rental stock is high in demand.
Additionally, Manchester retains 50% of its graduates, and I expect this will grow as more and more jobs become available, meaning the demand for rental properties will continue to grow.
Are you finding people are migrating from London to Manchester and how does that impact the rental market?
The number of people moving from London to the North West increased 24% from 2013 to 2016, and there are several reasons for this. Given the term northshoring, businesses are making the move to access cheaper commercial rents, a highly skilled workforce and excellent local, national and international transport links.
Manchester is the UK’s largest and fastest growing economy outside of London with a proud tradition of entrepreneurship, creativity and innovation, transforming itself into one of Europe’s most dynamic and exciting cities in which to live and work. Seen as the regional centre for finance, commercial and retail and boasting world class transport links, Manchester is now perceived to be one of the best cities in Europe in which to do business As a result, major corporations such as the Co-operative Group, Royal Bank of Scotland, Freshfields, BBC and ITV have all chosen to establish key operations within the city.
How do you see the property market faring over the next ten years?
Latest forecasts record stable growth in the UK housing market over the coming two years, before accelerating from mid 2020 onwards. Manchester however is predicted to consistently outperform the wider UK market over the coming decade. Similar trends are forecast for the rental market, with rental inflation running at c.2%p/a to 2021, before returning to a more typical rate of 3%+p/a from 2021.
Overall, we’re extremely upbeat with the direction the market is heading in and we as an agency have an ever growing pipeline of stock coming forward to service the increasing demand.
As it stands within Greater Manchester today, there are approximately 16,000 new homes currently under construction and in the region of 40,000 new homes that are either in pre-planning, planning, or having received approval to be built, a fundamental demonstration of Manchester’s popularity and strength of demand from both international and domestic markets.
What does Cushman & Wakefield have coming up in the North West?
With a number of incredibly exciting city centre projects already on the open market, coupled with a handful of new releases and fresh to market instructions in the pipeline, the next 12 months looks set to be exceptionally busy for the Cushman & Wakefield new homes team.
In the coming months we are due to launch the much anticipated sales and marketing suite and second phased release of Far East Consortium’s outstanding Meadowside.
Having been instructed in June, we anticipate a productive Summer selling Middlewood Plaza, a striking residential scheme of 125 units within the heart of the much heralded £1billion Middlewood Locks regeneration zone and a 10 minute walk from Manchester city centre.
We are also delighted to have been instructed on a unique and immensely exciting residential conversion project in Preston, Union Lofts. The significant regeneration of an historic Victorian warehouse within the city centre will deliver the first residential conversion scheme in Preston and in retaining and showcasing a significant tranche of the buildings beautiful original features, will undoubtedly set a benchmark for quality, design and space. Union Lofts is due to be released to market in Autumn 2018.
To find out more about Cushman & Wakefield, please visit: www.cushmanwakefieldresidential.com