Higher interest rates may have softened market sentiment and impacted price growth but, this has not stopped rental rates from increasing, particularly in the UK’s growing cities where there is a severe lack of available rental supply.
Recent data puts Manchester in the UK’s top spot for rental price growth, at a whopping 20% increase, outperforming London again.
Manchester continues to make waves in the real estate market. Defying economic uncertainties and global challenges, the city’s rental market has surged ahead, outpacing its peers across the country. Recent data by Rightmove and JLL reveals that Manchester’s average rental rates have grown by 20% in the past year, outpacing other major cities in the country including London (15.8%).
The statistics are a compelling reason why Manchester is a property investment hotspot, given the backdrop of COVID-19 and subsequent inflation, which have impacted many sectors of the economy. Here’s why:
Top 5 Factors Driving Manchester’s Remarkable Ascent:
#1. Economic Resilience
Manchester’s diverse and resilient economy has played a pivotal role in bolstering its rental market. With a thriving technology sector, burgeoning creative industry, and a strong presence of multinational companies, the city has become an attractive hub for professionals and young job-seekers from all over. Its capacity to provide stable employment opportunities has driven rising demand for housing. A great example is Enterprise City, one of Manchester’s newest city centre neighbourhoods poised to become the UK’s leading digital, media and enterprise cluster, which will create 10,000 jobs upon completion and attract the country’s best and brightest. Jobseekers relocating to the city will naturally drive demand for housing.
#2. Population Growth Constricts Chronic Housing Undersupply & Drives Rental Rates
The growth of office spaces in the city has risen above the average of the last 15 years. JLL reports that the Mancunian economy grew by 32% (GVA), whilst job opportunities increased by 28% over the last decade, far outpacing the national performance of 15% and 11%, respectively. Population, meanwhile, increased by about 10%, further constricting tight vacancy rates. The pace of house building has not kept up with population growth. The Manchester Crane Survey 2023 reports that the delivery of houses has declined for the first time in 7 years, further compounding shrinking supply and driving rental rates.
#3. Educational Excellence
Manchester’s reputation as a centre of educational excellence cannot be overstated. Home to renowned institutions like the University of Manchester and Manchester Metropolitan University, the city hosts one of the largest student populations in Europe, averaging around 100,000 in the city region and in excess of 70,000 within the city centre; with 1 in 5 being international students. Studies show that 44% of the student population choose to remain in the city upon graduation. This influx creates a consistent demand for accommodation, fueling growth in the rental market and contributing to increased rental rates.
#4. Infrastructure Investments & Regeneration
The Manchester of today couldn’t be more different from the 1960s and 70s. The UK’s Most Liveable City owes its urban renaissance to mammoth regeneration plans that have been crucial in creating jobs, driving the economy and population, and improving transport links, facilities and amenities since the 2000s, beginning with the redevelopment of Spinningfields. Other regeneration initiatives have since followed, including NOMA, MediaCityUK, and currently Victoria North and Middlewood Locks, which will continue to drive job, population, house price and rental rate growth. Case in point: In the subsequent 10 years since the conclusion of the Spinningfields and MediaCityUK regeneration, the population in Manchester and Salford more than doubled, driving property prices to grow by more than 70%.
#5. Foreign Investment
Key industries in this remarkable city include digital tech, creative media, life sciences & advanced manufacturing. International investors have recognized Manchester’s real estate potential and continue to pour capital into the city’s property market. Outside of London and the South East, Greater Manchester’s has been ranked as the most attractive location for foreign investors outside of London and the South East according to recent statistics. This foreign investment has stimulated demand for rental properties and contributed to the city’s overall growth as well as its surroundings.
Looking Ahead
Manchester’s commitment to sustainable urban development, ongoing infrastructure projects, and a strong job market all contribute to its long-term potential as a rental market powerhouse.
CSI PROP was one of the first few firms to start focusing on Manchester in 2015, when the spotlight was still very much on London. The city’s steady growth over the years strongly validates CSI PROP as a property investment education firm. Click HERE to stay updated and register for our property investment webinars, or to learn about our proven G.O.L.D.M.I.N.E. Strategy and S.A.F.E.T.Y. 1st Criteria for investment.
By Vivienne Pal
Source:
- https://residential.jll.co.uk/insights/research/big-six-residential-development-report-summer-2023
- https://www.theguardian.com/business/2022/jul/14/private-rents-in-uk-reach-record-highs-with-20-rises-in-manchester
- https://hub.rightmove.co.uk/content/uploads/2022/07/Rental-Trends-Tracker-Q2-2022.pdf
- https://www.placenorthwest.co.uk/manchester-rents-are-20-more-expensive-than-last-year/
- https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/july2023#:~:text=London’s%20annual%20percentage%20change%20in,series%20began%20in%20January%202006
- https://www.manchestereveningnews.co.uk/business/business-news/allied-london-enterprise-city-manchester-14837740
- https://www.manchestereveningnews.co.uk/business/business-news/aviva-investors-enterprise-city-manchester-15359216
- https://www.placenorthwest.co.uk/dentsu-signs-for-15500-sq-ft-at-enterprise-city/
- https://www.wpp.com/en/news/2023/07/wpp-opens-new-creative-powerhouse-in-manchester
- https://www.prolificnorth.co.uk/news/next-generation-start-ups-join-enterprise-city-programme/
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- https://democracy.manchester.gov.uk/documents/s30092/Student%20numbers%20and%20graduate%20retention%20in%20the%20city.pdf
- https://content.knightfrank.com/research/1663/documents/en/knight-frank-ucas-student-accommodation-survey-report-2023-10118.pdf
- https://csiprop.com/house-prices-grew-over-70-percent-here-in-the-last-10-years/
- https://www.youtube.com/watch?v=ssocRmN0_-0
- https://foleon.irwinmitchell.com/uk-attractiveness-index-summer-2023/the-best-cities-to-invest-in
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