In the second of this blog series our Real Estate team investigate property investment, commercial construction, real estate challenges and international investment in the context of the Northern Powerhouse.
20.400. 20,000. These are not just random numbers that have been plucked out of thin air. 20 years ago Manchester city centre had 400 residents; today it has 20,000 and it’s increasing daily.
£2.3 billion was purportedly poured into Manchester for property investment during 2014 and 2015. Other northern cities: Liverpool and Leeds and Newcastle have also seen high levels in property investment with figures between £842m and £979m.
Architect, Ian Simpson was quoted in the Financial Times as having said that Manchester’s current population of 20,000 should be “pushing for 200,000”.
The northern powerhouse cities are also expected to benefit by the continuing rise in London property prices, which is pushing property investors to look further afield. Leeds and Manchester have succeeded in attracting institutionally funded housing blocks but other northern cities continue to struggle to attract institutional investors.
In Manchester, commercial construction projects for office complexes (One Spinningfields and Two St Peters Square); as well as the new rush to build institutionally–funded housing blocks for private rental signifies continuing growth and the city’s rising economic status.
Economic recovery post-2008 has also helped to spur on the growth of the Northern Powerhouse. The Manchester legal community have welcomed the arrival of a number of larger firms including BLP and Freshfields. The latter has recently announced an intention to lease an 80,000sq ft of brand new office space. Other London firms are expected to follow when they tire of the high rents and are enticed by the lower business costs that the northern cities have to offer.
Cushman and Wakefied reported that “businesses seeking 20,000 sq ft of office space or more are at its highest level since 2008 in northern England.
Real Estate Challenges
Further London’s property investment in the last two years significantly championed Manchester at a huge £43.1 billion and this demonstrates the difficult task that the northern powerhouse cities face in order to regain the economic balance between the north and London.
Experts have stated that in order to succeed the Northern Powerhouse cities must think internationally. In recent years international investors have been attracted to London but are now looking to other British cities and this is where the northern cities should focus its attention. There has been growth in Chinese and Middle Eastern property investment into some northern cities but there is huge potential to offer property investors greater returns than they would get for their money in London.
Government initiatives are slow to get moving but will most likely be driven by the north’s appetite to take on a northern powerhouse structure. Once the government, investors and inhabitants themselves can see the full extent of the north’s potential, they will be able to realign the balance between north and south.
In conclusion, the “Northern Powerhouse” is in its early days but through unity and focus the cities can attract economic growth not just from national investors and government incentives but also by modernising its thought and direction towards the global economy.
 Figures taken from Financial Times, referenced from Cushman and Wakefield.
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The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.