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Liverpool and Manchester key cities for property investors

The strengthening of the Rand against other major currencies offers a great opportunity for South African investors to purchase international properties.

  • The much-anticipated release of the Global Real Estate Outlook (GREO) report reveals the property hotspots worth investigating.
  • The report shows England’s Northern cities, dubbed the Northern Powerhouse, to be providing compelling investment opportunities – mostly due to promising rental yields for investors in the buy-to-let market. 
  • Liverpool and Manchester, in particular, are seeing rapid growth and rising land values. Berlin continues to present itself as a promising destination for property investors too, with Frankfurt vying to take up London’s mantle when Britain leaves the common market. 

Although London holds firm as a sure bet for property investors with rental growth in Greater London expected to increase by a further 16.4 % over the next three years, England’s resilient North has emerged as a strong contender in the property market. The property boom in the North has, in part, been bolstered by a government strategy known as the Northern Powerhouse initiative, which is beginning to pay dividends in the region.

Cities like Manchester and Liverpool offer promising rental yields for investors in the buy-to-let market, according to property investment firm IP Global’s annual GREO report, which analyses trends in major cities across the globe. The Global Real Estate Outlook (GREO) examines the viability, affordability, performance and future potential of several fast-growing metropolises.

  • KEY TAKE-HOMES FROM THE GREO REPORT
  • Manchester: Price growth forecast to increase 22.8% from 2018 to 2022.
  • Birmingham: Rental yields of 4.25% recorded for prime property in January 2018.
  • Liverpool: Employment has risen by 3 million since 2010, while unemployment is the lowest since 1975.
  • London: Low-interest rates and FX advantage are driving foreign investment in the short- to medium-term.
  • Leeds: Fastest-growing private sector in the UK with over 6% annual job growth.
  • Dublin: Europe’s fastest growing economy since 2014.
  • Berlin: Almost 400,000 new residents expected by 2030.
  • Frankfurt: House prices increased by approximately 55% between 2009 and 2017.
  • Lisbon: The country has had the steepest decline in unemployment across the EU over the past 5 years.
  • Bangkok: The population has increased by nearly 3.1 million since 2000, and is projected to grow by another 22% by 2030.
  • Hamburg: Apartment prices have risen by more than 70% since 2009.
  • Düsseldorf: Apartment prices up 81% between 2009 and 2017.
  • Newcastle: Highest average rental yields in the UK.
  • Seattle: Fastest-growing home prices in the US since September 2016.
  • Portland: Forbes ranked Portland the No.1 city for business and careers in the U.S. in 2017.
  • Paris: Paris is poised to top the global prime residential market in 2018, with 9% capital growth.
  • Istanbul: Istanbul’s economy accounts for approximately 40% of Turkey’ economy.

“The recent strengthening of the Rand against other major currencies offers a great opportunity for South African investors to purchase international properties with the intention of leasing the unit out to cover the bond,” says George Radford, Director for Africa at IP Global. “For any savvy investor, the GREO is an invaluable resource on which cities to bank on in 2018.”

“The recent strengthening of the Rand against other major currencies offers a great opportunity for South African investors to purchase international properties with the intention of leasing the unit out to cover the bond.” – George Radford, IP Global.

Berlin

Once again, the UK features prominently in the report. Regarded as the birthplace of the Industrial Revolution, England’s North has a history of innovation, but the decline in heavy manufacturing over the years had led to a reduction in jobs and a broadening of economic disparity between the North and South. “Things have begun to change in recent years with the introduction of the Northern Powerhouse concept, which has been credited for driving job growth, investment, and positive market sentiment,” says Radford.

Radford explains that with rapid growth taking place, the urban land values in Manchester rose 24 % last year, compared to the 4 % national average. “In addition, the price of homes has also risen by 8.6 % between 2016 and 2017, which is more than double the national average.”

Manchester’s booming property market has attracted a host of international buyers. In a rebounding Northern economy, these investors can expect to receive higher rental returns over the next four years.

“The demand for well-located rental stock is driven by a large working population, continually fed by a stream of new university graduates,” says Radford, who points out that rent is forecast to increase by 22.8 % from 2018 to 2022.

The Northern Powerhouse concept which is spurring the property boom in Manchester and Liverpool has reportedly delivered more than 8 000 jobs over four years.

“There are also plans to revitalize the economy through investment in transport infrastructure and 5G technology, which will create an enabling environment for businesses to flourish,” Radford explains. 

“There are also plans to revitalize the economy through investment in transport infrastructure and 5G technology, which will create an enabling environment for businesses to flourish.” – George Radford, IP Global. 

Manchester

Liverpool is one of the UK’s best-performing property investment locations with average rental yields of 6.2 %. Liverpool is the second largest regional economy, boasting notable gains in employment and a growing housing sector. “With a large student population, many of whom are expected to enter the job market, demand for rentals in the city is expected to rise,” says Radford.

According to the report, London continues to be one of the world’s leading business capitals, and a degree of confidence is returning to the market after the initial shock of the Brexit vote. Even though it’s regarded as an “alpha city,” London remains amongst the most competitively priced cities in the world. PwC predicts an additional 1.8 million homes will be privately rented by 2025, while rental growth is also likely to rise by a further 16.4 %.

Elsewhere in Europe, Berlin continues to present itself as a promising destination for property investors, according to the GREO report. The dynamic city, known as the main start-up hub in Europe, is expected to draw nearly 400,000 new residents by 2030.

Germany’s financial hub of Frankfurt is vying to take up London’s mantle when Britain leaves the common market. In the process, the population has been steadily increasing. Demand for new homes in this growing city has continually outstripped supply; this is having a profound effect on sales and rental markets.

Moving further afield, the residential market in Bangkok has witnessed strong demand from both local and foreign buyers. “The high demand for houses in a city where disposable income is much higher than the rest of the country, has the effect of driving up property prices,” says Radford. “This has led to growth of 16 % in the past five years and healthy rental yields.”

The Global Real Estate Outlook by IP Global can be accessed here.  

www.ipglobal-ltd.com