Manchester commercial property market potential attracts global investors
Manchester is one of the most up-and-coming locations in Britain’s property investment market. Over the last several years Manchester has enjoyed a significant economic expansion, with multi-billion pound redevelopment projects such as Spinningfields, First Street and Media City giving investors reason to believe that the city will continue to grow at a prolific rate.
According to a recent survey by PWC and the Urban Land Institute on real estate, regional UK cities have been attracting investors who are finding London too hot to handle. The intense competition, along with huge price tags and low investment yields in the capital are forcing investors, both foreign and domestic, to expand their horizons. The survey quoted one major Real Estate Investment Trust (REIT) as saying: “Well-run major cities with good local government; leadership is a key factor impacting business prospects. This includes cities such as Birmingham, Manchester and Leeds.”
According to a different participant in the survey: “We will start to see an improvement in values in the core regional cities – Manchester, Birmingham and Bristol – because the money is moving there”.
Last week M&G Real Estate snapped up the 178,508 sq ft 3 Hardman Square office building for £91.7million.The purchase is seen by some as the start of a £1 billion spending spree, with investors looking to secure assets in one of Europe’s fastest growing cities.
The acquisition follows the purchase of 1 Spinningfields Square – a 500,000 sq ft prime office scheme – which the property investor purchased last June in one of the largest ever regional office deals in the UK. Spinningfields is considered the key hub for financial and professional services tenants in the North West of the UK and includes occupants such as RBS, HSBC, BNY Mellon and Barclays.
Manchester’s potential for significant capital growth is well known throughout the investment community, with property across the city generating much higher yields than in London. According to Oliver Foster, director and head of the investment team at Savills in Manchester:
“Investor interest in Manchester city centre offices is not about to stop because property in the city still offers attractive returns to other forms of investment. We’re going to see some big lots coming forward. And we‘re going to see the ownership of the city change.” He added that a decade ago the city was mostly owned by British institutions, but global capital has started to flood into the city due to a large amount of German investment.