Despite the many challenges faced in 2021, Manchester was one of the UK’s leading cities in terms of resilience and growth, and the odds look good for this to continue into 2022.
Economic growth in Manchester in 2021 was the second highest of 30 major European cities, according to new research released by Avison Young. The north-west city’s economy expanded by 8%, and experts predict this could remain high for the year ahead at 6.5%.
Manchester often competes with Birmingham for the title of the UK’s second city, but the new figures show just how important the location is. Its recovery post-Covid has been driven by a number of factors, with particular strength in the employment market and the housing sector.
Avison Young’s report also notes that it is not just the city itself cheerleading for the north-west; surrounding areas, including Stockport, Bolton and Preston, are all seeing the benefits of regeneration and becoming major contenders as investment hotspots in the area.
Manchester residential market: a cut above the rest
Price growth and transaction activity were among the highest in any urban area in the UK over the past 12 months. When looking at Greater Manchester, house price growth outpaced the rest of the country.
Communal amenities are a big selling point in the city right now, says Avison Young’s report. In line with this trend, the build-to-rent sector, which is creating waves across the country, is also prevalent in the area.
Around 45% of Manchester’s population is aged under 35, and it has the highest student retention rate after London. Avison Young says these factors are a key driver behind the rise of build-to-rent and co-living. Furthermore, this demographic will continue to create high demand across all areas of the rental market.
The report adds: “Build-to-rent opportunities will continue to attract a lot of investor attention in 2022, particularly in prime locations and as with the wider market we expect an increased focussed on suburban schemes.
“Manchester’s lack of affordable housing supply is a constraint. The city will see an increase in supply from for-profit registered providers.”
High demand for flexible office space
Office take-up in the city exceeded one million square feet in 2021, which is only 10% down on its 10-year average. This demonstrates appetite in the city despite recent work and lifestyle changes that have affected most city centres throughout the pandemic.
One trend that won’t come as a surprise is the increase in flexible office space. Avison Young believes this demand will only continue, with landlords having to create more diverse offerings to attract interest. Many buildings are investing more in ground-floor cafes, collaboration spaces and wellbeing facilities.
The report adds: “Relatively robust levels of new demand and limited grade A supply will help underpin rental growth in the short term and underpin prime rents at the top end of the market. However, as a whole, the market has more available space than at any point over the last five years which will drive greater bifurcation.”
In terms of employment in the city, the number in employment is forecast to increase by more than 10,600 to 449,000. This is a record high, and is being led by growth in the professional, scientific and technical services sector in 2022.
Exciting plans in the pipeline
Manchester continues to be one of the most appealing cities in the country for investment, and there are a number of regeneration plans that are set to enhance this.
Avison Young points out some of the biggest plans on their way to the city. This includes Therme Manchester, a new wellbeing resort that will the first city-based facility of its kind in the UK, located in Trafford Park. The addition of the resort could see Trafford Park attract as many as two million visitors each year.
There are also a number of new hotels in the pipeline. This includes the Leonardo with 275 rooms, the Clayton with 329 rooms, the Maldron with 278 rooms and the Motel One with 330 rooms.
BuyAssociation has long since recognised the importance of Manchester as a property investment hotspot. To find out about some of our opportunities in the city and surrounding areas, get in touch today.