Manchester research

MANCHESTER THE CITY OF INVESTMENT AND OPPORTUNITY

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BUYERS SEARCHING FOR PROPERTY IN THE SAFE HAVEN OF THE UK MARKET ARE CONCLUDING MANCHESTER IS THE PLACE TO BUY.

The city has already amassed a reputation for offering the highest returns, and many indications suggest it is set for major growth.

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RESIDENTIAL INVESTMENT LEADER

Highest capital growth in the UK: Rank

Town

Annual capital growth in 2013

1

Manchester

21%

2

London

13%

3

Brighton

12%

4

Leicester

11%

5

Birmingham

10%

Full-year figuresi published on residential property growth in the UK show Manchester to be in a class of its own. Fuelled by sustained economic expansion and migration during the course of 2013, Manchester’s residential property outperformed London’s stock significantly. Investors with residential property in Manchester enjoyed capital returns that were nearly twice as high as their counterparts in London.

The investment capacity of Manchester is even more apparent in comparison to the UK market as a whole. Returns in Manchester were almost three times the average national capital appreciation of 7.1%.

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Manchester | The city of investment and opportunity

Manchester | The city of investment and opportunity

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CitySuites | Live in style

CitySuites | Live in style

MANCHESTER VS LONDON

According to Knight Frank, the Rental Revolution, a major new report covering the vast investment potential of the city centre rental market,“institutional investors are starting to look at the regions given an increased emphasis on income yields”.

It revealed rental growth averaged 2.9% across the prime UK markets of London, Birmingham, Manchester, Bristol, Leeds and Glasgow.

However, the regional variation showing the smallest rental increase in the last year was recorded in central London. Here, rental returns only grew at 0.4%. In Manchester, investors enjoyed average yield growth of 5.27% – a pace 13 times faster than the capital.

Manchester’s yield growth looks set to continue unabated. Knight Frank’s average rental growth forecast for the UK is 2.5% in 2015 and 3.5% for 2016, 2017 and 2018, but as Manchester has seen the lowest growth in housing stock of any UK city.

Manchester City Council’s State of the City Report 2014 believes the city’s commercial success and growing population is putting pressure on the existing housing stock, creating an urgent need for new housing.

Rental values in Manchester in the middle and higher quality end of the market have continued to rise and are directly linked to the constrained supply.

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Manchester | The city of investment and opportunity

NUMBER OF TWO-BED APARTMENTS AVAILABLE TO RENT IN MANCHESTER IN 2014: 377. THIS IS OVER 50% LESS THAN THE PREVIOUS QUARTER, HIGHLIGHTING THE SURGE IN DEMAND FOR RENTAL ACCOMMODATION.ii

0.4% LONDON RENTAL RETURN GROWTH IN 2014

5.27% MANCHESTER RENTAL RETURN GROWTH IN 2014

13 13 TIMES FASTER WHEN COMPARED TO LONDON

3.5%

Expert opinion is in little doubt.

Steve Hogg, Head of Residential at Jones Lang LaSalle, succinctly summarised Manchester’s investment potential, stating buyers currently receiving 4% gross yields in London will gain nearly double that in Manchester and the city has not even started its major capital growth curve yet.

“

MANCHESTER IS NOW THE FIRST CHOICE OUTSIDE LONDON, BOTH FOR UK INVESTORS AND BUYERS FROM OVERSEAS. OUR REGION HAS THE MOST MATURE MARKET. MANCHESTER IS A BRAND THEY RECOGNISE AND AN ECONOMY LARGE ENOUGH FOR THEM. EUROPEAN INVESTORS ARE INTRIGUED

BY THE STORY THE CITY HAS TO TELL. MANCHESTER HAS THE STABILITY THEY WANT, THE LIQUIDITY THEY WANT AND THEY CAN SEE STRONG DRIVERS FOR THE REGIONAL ECONOMY TO GROW.

“

Manchester offers investors much higher yields than more expensive property in London.

Jonathan Mills, Head of Investment at Colliers International in Manchester

PREDICTED RENTAL RETURN GROWTH FOR 2016, 2017 AND 2018

Manchester | The city of investment and opportunity

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CitySuites | Live in style

CitySuites | Live in style

Development

CITYWIDE INVESTMENT

Large-scale redevelopment schemes Residential property purchases made in Manchester are set to benefit from an abundance of infrastructural investment the like of which has been seldom seen in the UK’s history. Since the BBC’s relocation away from London to MediaCityUK on the outskirts of Manchester, investment has been continuous.

1

First Street

6

NOMA

2

Greengate

7

MediaCity UK

3

Salford Central

8

Airport City

4

Sportcity

9

Manchester Life

5

Spinningfields

VICTORIA STATION

IA

PEL

CHA

RS

NS

RD

RKE

ST

ST

EY

SL O M ER

W LO

Sportcity

• Developed for the Commonwealth Games, continual investment has led to a sports hub that attracts over 4.5 million visits annually

5

Spinningfields

£1.5 billion

• 16,000 resident office workers • Five million annual visitors • 430,000 sq m of commercial, residential and retail space

6

NOMA

£800 million

• A 20-acre regeneration of Manchester urban land

7

MediaCityUK

£200 million initially

• Phase one occupies 14.6 hectares of a potential 81-hectare former brownfield docklands site • Could create employment for a further 15,000 people • Potential to accommodate over 1,000 businesses over the next decade, as further phases are developed

8

Airport City

£800 million

• One of the UK’s biggest projects since the building of the Olympic Park • Set to create 16,000 new jobs • Government-designated enterprise zone around Manchester Airport • Five million sq ft

Manchester Life

£1 billion

• Manchester City Council and Abu Dhabi United Group’s plans to build two emerging east Manchester neighbourhoods • 830 homes in Ancoats and New Islington • Provide a platform for the delivery of a further 6,000 new homes

SPORTCITY 2.5 MILES FROM CITY CENTRE

ST TH

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PICCADILLY STATION D ST

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ST

RD AD RO

1

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DO WN

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BR ST

8 AIRPORT CITY 10.5 MILES FROM CITY CENTRE

R

AD RO

BBC MEDIA CITY 3 MILES FROM CITY CENTRE

PE

RD

7

UP

FO OX

NIAN W AY

Manchester | The city of investment and opportunity

4

£150 million initially

FAIRFIEL

MANCU

6

£650 million

D LA N RT PO

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WHITWORTH

Salford Central

• Comprises the iconic Chapel Street and New Bailey developments.

• Expected to create 11,000 jobs

EY ST

PR

GMEX

• 13 hectares of high-value land • Set to create 5,200 jobs • Features £13.3 million Greengate Square and Greengate Park, the area’s largest proposed open space

D LON

SS

OX

GREAT NORTHERN

OAD

£400 million

Y IL

CE

R ST

RPO OL R

D

IN

PETE

LIVE

Greengate

E

PR

QUA Y ST

2

T

T

5

• 20 acres of city centre land • Expected to attract up to one million visitors a year

4

ST

DA L PICCADILLY GARDENS

SL

T

£750 million

EE STR

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AN

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CR O

BAIL

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CO AT S

A CC PI

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NEW

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First Street

AD RO

9

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ST. ANN SQUARE

DEA NSG ATE

SALFORD CENTRAL

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HIGH

ARNDALE CENTRE MA

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CHAPEL ST

3

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Few other cities can boast such top-level investment.

Key facts

1

3

The initial £200 million relocation generated more than £1 billion towards the local economy within its first five years.

Confidence is high and developers are no longer content to remain outside the city centre.

Investment Cost

ING

ST

9

Manchester | The city of investment and opportunity

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CitySuites | Live in style

CitySuites | Live in style

CITYWIDE INVESTMENT

Wider investment and commerce

List of major employers in Manchester with regional or national headquarters:

Persistent infrastructural investment is driving employment. Manchester has attracted more than 400 inward commercial investments in the past five years, creating and safeguarding over 21,000 jobsiii.

Business is flocking to Manchester with an estimated 80 of the FTSE 100 companies having representation, as well as more than 50 international banks and 600 major overseas companies having sites in the city.

The city is the UK’s strongest performer for foreign direct investment outside London, with more than 2,000 internationally owned companies now operating in Manchester.

As rental demands are primarily driven by corporate location and relocationiv and with 50% of private tenants working within the financial and services sector, Manchester’s status as the primary tertiary employment hub outside of the south-east indicates there will be sustained demand for rental accommodation in the region.

Adidas

The Co-operative Group

Gazprom

Google

Kellogg’s

168,000

KPMG

Royal Bank of Scotland

Barclays (from 2015)

IN THE PAST 12 MONTHS, THE MANCHESTER REGION’S TOTAL WORKFORCE HAS INCREASED BY 168,000 IV

Bank of New York Mellon

5% THIS REPRESENTS A 5% INCREASEIV

RBS MUFC MCFC Deloitte HSBC AstraZeneca

Baker Tilly

Brother International

KPMG

Renovo Siemens

8

Manchester | The city of investment and opportunity

Manchester | The city of investment and opportunity

9

CitySuites | Live in style

“

Business tourism market

Conferences and business events already generate £820 million annually, with the city attracting over five million delegates to its conferences and business hallsvi per annum.

Excluding the royal attractions of London and Edinburgh, Manchester is the UK’s most popular city among international visitors, with one million international leisure visitors travelling to the city on an annual basis, contributing to a tourism economy that is worth £6.6 billion per annumvii.

Manchester Airport processes in excess of 22 million passengers per year and provides direct flights to over 225 destinations worldwideviii, more than any other UK airport – including London Heathrow. By 2030 passenger capacity is set to increase to 50 million, showing Manchester Airport to have the second highest compound annual growth rate for passenger numbers in the UK. All indications show Manchester’s corporate tourism market is on an unmistakable upward trajectory, supported by the fact that domestic visits growth is five times higher than the national averageix.

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Manchester | The city of investment and opportunity

THE GREATER MANCHESTER STRATEGY FOR THE VISITOR ECONOMY 2014STAYING – 2020 VISITOR INCREASE OUTLINES COMPREHENSIVE NUMBERS FROM 10.3 LONG-TERM PLANS TO: MILLION MILLION TO 13.7

13.7M

N

INCREASE STAYING VISITOR NUMBERS FROM 10.3 MILLION TO 13.7 MILLION

1.27M

N

INCREASE THE NUMBER OF OVERSEAS VISITORS FROM 1.09 MILLION TO 1.27 MILLION

8.8B

N

INCREASE THE VALUE OF TOURISM FROM £6.6 BILLION TO £8.8 BILLON

MANCHESTER HAS SEEN PHENOMENAL GROWTH OVER THE PAST 20 YEARS. THE CITY SWELLS WITH VISITORS REGULARLY THANKS TO THE CITY’S LOVE OF FOOTBALL, AS WELL AS MAJOR POLITICAL PARTY CONFERENCES. FAST ROAD AND RAIL CONNECTIONS AND AN EXPANDING AIRPORT PROVIDE UNRIVALLED ACCESS TO INTERNATIONAL MARKETS AND THEREFORE IT IS NO SURPRISE THAT INVESTOR SENTIMENT IS HIGH.

“

NEW PROPERTY INVESTMENT OPPORTUNITIES

With arguably an unrivalled regional commercial platform, Manchester’s business tourism market is thriving. In terms of its business tourism infrastructure, Manchester is the UK’s leading non-capital host and on a global scale is comparable with Chicago, Moscow, and The Haguev.

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JLL HOTEL INVESTOR SENTIMENT SURVEY, JUNE 2014 The continued expansion of this corporate tourism market is guiding investors, showing them that accommodation that caters for an executive tenant should provide further opportunities.

In July 2014, hotel occupancy figures in Manchester reached their highest levels since records began. The city’s hotels averaged 80% occupancy for the month, regularly peaking at 97%x. STR Global states the primary drivers of these superior occupancy rates are domestic and international visitors staying in serviced accommodation for leisure and business purposes.

Manchester recorded a 5.1% room yield growth in 2013 against a national average of 3.5% and now the average room rate in the city stands at £60.74 This performance has not gone unnoticed.

The UK continues to be the top liquid market for hotel investments, with total transaction values last year recovering to peak 2007 levels. BDO has stated that overseas investors “flocked to the UK hotel market, looking both at London and at primary regional opportunities such as Manchester”.

Knight Frank also highlights that targeting workers looking for flexible tenancy may The strong summer built on the performance offer the biggest benefit to investors. The seen last year. Throughout 2013, city centre strength of the Manchester property market Manchester hotels averaged an occupancy has given rise to many residential blocks, and rate of 77%. This was the joint highest annual those which are able to capitalise on flexible rate ever, only matched in 2006, before a 58% tenancy could offer the most potential for increase in the number of rooms in the city long-term growth. centre.

Manchester | The city of investment and opportunity

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All quotes and statistics used in this document are taken from third-party reports in the public domain and are listed below. Should further information be required please contact Select Property Group and we shall endeavour to provide you with the appropriate report

i

Nationwide House Price Index Q4 2013 http://www.nationwide.co.uk/~/media/ MainSite/documents/about/house-priceindex/q4-2013.pdf

ii

Manchester City Council

iii

Manchester City Council

iv

Savills: 12 Cities: http://pdf.euro.savills.co.uk/residential--other/12-cities-h2-2014.pdf

v

ONS http://www.ons.gov.uk/ons/ dcp171778_376014.pdf

vi

vii

ICCA Statistics Report 2013 http://www.iccaworld.com/cdps/cditem. cfm?nid=4036

viii Manchester Airport Master Plan to 2030 http://www.manchesterairport.co.uk/ manweb.nsf/Content/AirportSummary http://www.manchesterairport. co.uk/manweb.nsf/alldocs/10F5 10F56C819A51454E8025739300388C1D /$File/Masterplan.pdf ix

Greater Manchester Strategy for the Visitor Economy http://www.marketingmanchester.com/ media/66882/tourism%20strategy%20 2013.pdf

x

STR Global http://www.marketingmanchester.com/ media/74823/hotel%20occupancy%20 july%202014.pdF

Conference Value & Volume 2012: http://www.marketingmanchester.com/ media/52566/doc3%20executive%20 summary%20for%20media.pdf Greater Manchester Strategy for the Visitor Economy http://www.marketingmanchester.com/ media/66882/tourism%20strategy%20 2013.pdf

Information in this document has been produced with great care and is believed to be accurate at the time of distribution. This is intended to be a summary of CitySuites products and services only and should be read in conjunction with other information we have made available for further consideration. Some details about specific CitySuites developments may be subject to change from time to time in accordance with final designs and approvals. We endeavour to ensure that any statistics, forecasts and market opinions are accurate and well researched however we do not warrant the accuracy of this information and should therefore not be assumed to be liable for any reliance you may make on it.