Northern Powerhouse

Northern Powerhouse lures foreign investors up north

This weekend saw Hong Kong play host to hundreds of Chinese investors who were educated on the benefits of the North West as the new prime location for investment in the UK.

Lured in by Osborne’s propagation of the Northern Powerhouse, the M62 upgrade and the high speed railway, HS2, this weekend delivered a veritable smorgasbord of reasons why it’s not only profitable to buy homes in Manchester, but also to build them.

With house prices in Manchester and Liverpool expected to rise as a result of the Northern Powerhouse, the Royal Institute of Chartered Surveyors (RICS) reported that house prices in London are to fall significantly over the next three months as investors begin looking further north.

Up North

Prime residential sales and leasing agent, Hong Kong Homes has already sold more than 400 flats in Manchester, Liverpool and Sheffield to numerous Chinese clients, and the sales don’t look like slowing anytime soon. As organisers of this weekend’s seminars, the property giant has kept a close eye on the North West in recent years and has cited the Northern Powerhouse as one of the key reasons for investment.

Charis Chan, senior manager of Hong Kong Homes international property division, said;

“First of all it’s the Northern Powerhouse - because they’ve heard that much new infrastructure is coming to the North. And another thing is the railway.“

Another reason for the move up North is the recent increase in stamp duty, with the top rate of duty on a property worth more than £250,000 now standing at 8%.

“If they go for the North, they can find something in the city centre below this budget,“ said Chan.

It’s not just the Chinese getting in on the act

A recent development in Salford Quays highlights the shift to overseas buyers with just half of the apartments sold to locals, while a quarter were sold to Chinese investors with the remaining quarter going to ex pats.

With the steady rise in house prices across London, rental yields have ultimately become less attractive. Whereas in the north, house prices are yet to catch up with the increase in demand, meaning a more generous yield and a greater chance of capital appreciation.

Investing in long term opportunities

The Chinese are not just buying in Manchester; they’re building for the future.

The Beijing Engineering Construction Group is investing £800m in Manchester’s Airport City, with an inclusive hub for other Chinese firms to set up. Even the street names will be reflective of the Chinese investment with names on the development being in both Mandarin and English.

It seems no area of Manchester is impervious to Chinese investment, with Manchester City Football Club recently selling shares to the Chinese.

Richard Willis-Woodward, an entrepreneur who helps wealthy Chinese invest in the UK, described their attitude to the Northern Powerhouse as “insatiable”. He went on to highlight the 300 million middle class Chinese who have money to spend saying:

“These people are coming. They’re investing in the Northern Powerhouse because they’re looking at long-term opportunities. These guys are looking at 20 or 30 years ahead.“

Will local people suffer?

It’s not all good news, housing charity Shelter believes that the influx of foreign buyers could affect local families who are already struggling to keep up with rising house prices.

Toby Lloyd, Shelter’s head of policy said;

“As the London property market plateaus, investors are turning their attention to other cities,“

He added;

“Ordinary families are already struggling to keep up with rising house prices in those regions, and investors flocking in to speculate on homes that haven’t even been built yet will only push prices further out of reach.“

What next for UK investors

It’s clear that the Northern Powerhouse is strengthening the reputation of the North West, though how much of the investment interest will benefit local people is still up for debate. The increase in property developments will help the economy with more people put to work, but if house and land prices soar to meet demand, British developers could find themselves priced out.

If Manchester house prices ever reach the inflated prices of London, we may end up with a restricted property market for the next generation. Either way, if you’re thinking about investing in property, Manchester is the place to be.

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