Not so long ago you would have struggled to find homes in Manchester city centre that were not part of the set for the long-running British television soap opera Coronation Street. Groups of developers only began to follow the first, tentative projects by the likes of Urban Splash with more apartment buildings in the late 1990s. They were pioneers not just for Manchester but for many English regional cities, which, unlike their continental counterparts, rarely attracted residential populations in their commercial cores.
With city centre living now ubiquitous across the UK, Manchester still leads the way. The population of its central area has grown from a few hundred to an estimated 15,000. Residents have far more amenities at hand than they did a decade ago. And schemes have gone way beyond a few red-brick warehouse conversions. In the 47-storey Beetham Tower, completed last year, more than 200 apartments sit atop a Hilton hotel, crowning a building that is the UK’s tallest housing development and now one of the most recognisable emblems of the “new” Manchester.
Investors in early developments have done well, capturing significant capital appreciation. But, given current housing market jitters, buyers in later schemes could be forgiven for worrying that they’re unduly exposed to property with such a short track record of sustained values. One agent presently lists 50 properties for resale in the Beetham Tower. Studio apartments are available for about £150,000 and one bedroom units for about £250,000.
Stephen Hogg, residential partner at King Sturge, reckons city centre residences have appreciated by about 5-7 per cent annually over the past two years, compared with 18-25 per cent annual growth over the previous three. In some less sought-after buildings there have undoubtedly been stagnant or falling prices. “There is no doubt this is a tough market,” says Liam Bailey, Knight Frank’s head of residential research.
Julie Twist, one of the best-known estate agents in Manchester, says the market has changed from two years ago, when the central zone was an investors’ market and “buyers were going hell for leather” to get into it.
“That has now petered out a little bit. It was quite difficult to sustain values,” she says. It has become more of a buyers’ market for new-build developments, with would-be owners getting savvier and choosier. “People used to go in and buy. Now they know that the property will not be gone tomorrow.”
New schemes, most offering the same small apartments, are still coming to the market; 1,600 homes were built in the city centre last year, a further 1,900 were under construction as of June, according to Knight Frank, and another 3,500 have planning permission. Bailey says too many are of poor quality and his latest review of northern residential property warns: “Sidelining design standards will only weaken the market at a time when there is little margin for mediocre supply.”
John Broadbent, of Knight Frank’s Manchester office, thinks occupancy rates in city developments average about 70 to 75 per cent, with some schemes 100 per cent sold to investors.
Hogg says King Sturge is finding that expressions of interest in properties are down 30 per cent compared with last year. But the fall in sales has been much less dramatic at less than 10 per cent. Broadbent says: “Good schemes will still sell but sales rates will slow. I do not see a crash in values coming.”
In the context of fears of oversupply, it is a good thing that the pace of development is slowing. Hogg says this [fourth] quarter, normally an important period for starting the marketing of new schemes, is the first he can recall without such a launch.
Even if some investors in Manchester suffer, many of the trends that inspired a growth in urban living seem to be holding firm. Demographic change points to more, smaller households, while living near the office continues to have advantages; the growing financial and professional sector is creating many jobs in the heart of the city and no one believes commuting is going to get easier.
Manchester is also helped by a continued reputation as one of the UK’s more fashionable cities, with a substantial creative buzz and plenty of nightlife, including northern England’s biggest gay community. A coterie of footballers and television stars give a veneer of glamour. The BBC’s move to nearby Salford Quays in about five years should also underpin interest in property. Urban living has been an important contributor to the city’s renaissance, stimulating more bars and restaurants in popular areas such as the Northern Quarter.
Mike Swanick, a civil servant in his 20s, owns 50 per cent of a one-bedroom flat in the latter neighbourhood under a shared ownership scheme. “It is an ideal way for first-time buyers like me to get on the property ladder,” he says. “I work in town and everything is on the doorstep.”
He is concerned about oversupply in the market but thinks his property, in a conversion of a former mill, has enough character to be in demand. He paid £65,000 for his share in 2005 and values have probably risen slightly since then. The local area has meanwhile changed quite a bit; he says the building’s residents’ committee is increasingly concerned about noise and anti-social behaviour.
Development within the city centre has been so rapid that Hogg says land is scarce for residential schemes. Manchester’s revitalisation has seen commercial property values soar, giving developers ammunition to outbid domestic schemes for land. “In two or three years’ time, we will have run out of opportunities,” he says. “A few years ago we were still looking at bomb sites from the second world war.”
The most sought-after addresses include Number One Deansgate – a footballers’ favourite with a £2m penthouse – and the Century Buildings, which overlook the river Irwell on one side and the neat Parsonage Gardens on the other, where a two-bedroom apartment with valet parking is listed at £299,950. But Broadbent notes that apartments are “becoming a fashion label” in style-conscious Manchester, with people seeking the most eye-catching development du jour. Twist adds: “People want to be where the next big thing is.”
At least two schemes larger than the Beetham Tower have been mooted, including a 58-storey structure. Sceptics wonder whether market conditions are now buoyant enough for the plans to proceed. But, says Broadbent, “Manchester needs these tall buildings, they will further signify it as the second city” of the UK.
Given the shortage of available sites, developers are eyeing sites just outside the traditional core. Places such as Salford, Hulme, the east end and Ancoats are getting their share of often fashionable developments, such as Urban Splash’s New Islington project in the latter.
One facet of development has been more or less constant: the lack of provision for families. Few apartments are built to an adequate size and amenities are scarce. UK urban heartlands have been said by one think-tank to offer “conveyor belt” living for young, single people, who enjoy the atmosphere for a few years but move into the suburbs when they have children. “When my thoughts turn to starting a family, I will not be looking to do it in the city centre,” Swanick acknowledges.
“Until there is infrastructure, families are not going to live here. You have not got the green areas,” Twist adds.
Hogg, who used to live in the centre with his family, has moved out but retains an apartment as an urban base. “Families will never move in unless planners provide something for them,” he says. “The best my kids could do was play in some fountains.”
Julie Twist, tel: +44 (0)161-834 8486; www.julietwist.com
Knight Frank, tel: +44 (0)161-838 7744; www.knightfrank.co.uk/webuk//offices/manchester/
King Sturge, tel: +44 (0)161-236 8793; www.kingsturge.co.uk
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