Real Estate Investor Magazine South Africa July 2016 | Page 52

OFFSHORE INVESTMENT

A New Outlook

Manchester is now the city where you should buy UK Real Estate
BY GILES BESWICK

T

hink a rand-hedge, think the pound. Think
a rand-hedging asset, think British property.
And think about the best city to find all of
this, think London, right?

Not anymore.

For years London has been the go-to UK destination.
The country’s financial capital. Luxury homes in
exclusive postcodes. But above all else, rate of returns
that became legendary among the global investor
community. But things have now changed.

A rate of appreciation that is now slowing

London’s growth cycle is ending. Figures published in
April show that some properties in the prime central
London sector have seen asking prices slashed by as
much as 40% since coming onto the market.
London was also recently downgraded in
PricewaterhouseCooper’s Urban Land Institute’s
Emerging Trends in Real Estate index from a top
10 city to 15th, lower than even the volatile Turkish
capital of Istanbul.
Furthermore, with the high average cost of a
London property exceeding the limit South Africans
are permitted to move out of the country in a single
year, the British capital is quickly losing its investment
allure.
Now there’s another UK city on the lips of
international investors.

“Manchester is the UK’s property
investment hotspot for the next 10 years.” –
HouseSimple

Manchester in England’s north-west is currently
home to the UK’s highest yields. Investors here can
achieve average yields as high as 8% according to
HSBC.
Savills names it as the UK’s best regional city
for investment, while CBRE recently reported
that Manchester has received £8.2 billion worth of
commercial property investment over the last decade,
more than any other city away from London.
But it’s the residential property market that’s
driving investor sentiment.
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JULY 2016 SA Real Estate Investor

The fastest growing Generation Y city

Britain is fast moving away from being a nation of
homeowners to a nation of renters.
It’s Generation Y, the Millennial worker, that’s
driving this change:
• Half of Britain’s 25 to 34-year-olds were renting
privately in 2013/14 instead, twice as many as in
the previous decade.
• 60% of 20 to 39-year-olds will be renting by 2025.
However Manchester has one of the lowest levels of
housing stock in the country. The demand to supply
imbalance of rental property currently stands at 2:1.
This means that real estate in the city can command
strong rental premiums – and more international
investors are beginning to identify this.

A city with investment longevity

Manchester is also on the brink of years of sustained
economic growth.
The key city at the heart of the UK’s Northern
Powerhouse. As a result of huge levels of governmentbacked investment and interest from overseas
businesses, Manchester will witness thousands of new
jobs created, millions more people visiting the city
from around the world and investment deals worth
billions.
It will mean more young workers and more demand
for property.
In July Select Property Group will host the 2016 Property
Investment Masterclass to investors across the country. Follow
the links below to fi