Manchester and Salford: A Tale of Two Cities
The North West of England is considered one of the strongest regions in the UK for property investment; rents have increased by 6.6 per cent since 2002 – the highest increase in the country and a significant achievement when you take into consideration the so-called North-South divide that is bandied about almost daily in the national press.
Of the five major counties which make up the North West, Greater Manchester is the largest. Consisting of the metropolitan boroughs of Bolton, Bury, Oldham, Rochdale, Stockport, Tameside, Trafford and Wigan, it also contains the two historic cities of Manchester and Salford, located on opposing sides of the River Irwell.
As would suggest by their city status, the larger portion of Greater Manchester’s population is concentrated in Manchester and Salford. Famous for its music venues, shopping, architecture and Premiership football clubs, the eclectic social scene in Manchester and its surrounding areas has enabled the city centre to become one of the most sought-after addresses in the country. A combination of soaring petrol costs, an influx of international students and the arrival of the BBC in Salford Quays has increased the trend for city centre living, placing enormous pressure on the housing markets in both cities.
After experiencing a sharp decline in construction since the property market crashed in 2007, the two cities have to now manage a major imbalance between the demand from a soaring population and the number of properties available to buy and rent in the area.
Whilst construction has gained some momentum over the past 18 months, both cities continue to experience a shortage of stock. This imbalance is driving property prices up, resulting in an increasing number of people turning to the rental market which is, in turn, causing fierce competition amongst landlords and a lucrative avenue for investors, who are looking to diversify or expand their portfolios.
The UK’s third largest urban economy, Manchester has an illustrious history as a city that has truly shaped the modern world. Proud to bear the title of the world’s first industrialised city, it is also the home of the world’s first railway station, Britain’s first public library and where scientists first split the atom.
The city has changed dramatically over the past 160 years; after being awarded city status in 1853, Manchester continued to be known as an industrious place to live and work, particularly with the building of the Manchester Ship Canal in 1894, which effectively turned Manchester into an inland port. Fast forward 45 years and the toll of the Second World War, plus a move away from textiles and manufacturing, saw a fall in the economic fortunes of the area, a trend which continued until the late 90’s when, in the aftermath of the IRA bomb, the city re-built itself into the economic powerhouse it is today.
Home to over half a million people, Manchester is a city whose population has out-grown its current housing supply and is in desperate need of new stock, paving the way for a raft of new investment as the construction industry begins to pick up pace. Currently the top area in Britain (outside of London) for new constructions orders – more than £1.2billion worth of new orders were won by contractors in the period July to December 2013, the highest amount since 2009, indicating a level of confidence in the market not seen since before the 2007 property crash.
The proud new home of the BBC, Salford started as a small village on the banks of the River Irwell, which grew to prominence during the industrial revolution as a result of its rich textile industry. Whilst the industrial age allowed the population of the city to boom, the rapid influx of people led to high levels of poverty which, after the introduction of aggressive means testing by the government, meant the city gained a certain level of notoriety in 1931 during the ‘Battle of Bexley Square’, when 10,000 unemployed people marched on the Town Hall.
This resilience and determination is something that the city has carried through to the present day. Since gaining city status in 1926, Salford has flourished into a thriving urban metropolis that is currently in the thrall of an ambitious regeneration program costing over £1bn. Salford Central and the Chapel Street Corridor are both major projects which are destined to create new homes, offices and retail opportunities in the city, in addition to the Port Salford scheme – a new inland port combining road, rail and sea (which is the first of its kind in Britain), creating more than 3,000 jobs in the local area.
Previously overshadowed by its neighbour across the water, the City of Salford is fast becoming the destination of choice for new businesses, commercial enterprises and residents; its creative and media sector has contributed more than £1bn to the local economy since 2006 and MediaCityUK is a prime example of how targeted investment can influence a surrounding area. Since the arrival of the BBC in 2011, Salford has experienced a phenomenal property boom, with the average house price rising four times faster than the national average. This increase has led to an explosion of buy-to-let activity within the city, as investors compete for stock.
Manchester Fact File
- Occupancy in the city centre recorded at 96 per cent in 2012
- Manchester house prices set to grow by 4.5 per cent over the next five years (Jones Lang LaSalle)
- HSBC identified Manchester as being in the ‘Top 4 Buy-to-Let Hotspots’ in the country, showing an average rental yield of 7.6 per cent
- Manchester recorded as being the ‘third most visited city in the UK’ in 2013
- 65 per cent of the FTSE 100 companies are based in Manchester
- Manchester is the top performer in the Deloitte UK Cities Crane Survey (963 residential units and 1,246 student bed spaces under construction)
- Development is underway for a £650million World Logistics Hub at Manchester’s Airport City Enterprise Zone. The scheme will create over 1,600 jobs and will include, upon completion, one million square feet of; logistics and industrial space, offices, advanced manufacturing, hotels and retail.
Salford Fact File
- Average house prices in Salford rose 6.8% in 2013, the largest increase in any city outside of London
- £400m scheme approved to regenerate the South East of the city
- £650m regeneration project on Chapel Street corridor, leading directly into Manchester City Centre
- £138m Port Salford regeneration project under way
So what does the future have in store for these two great cities?
Although both have been granted city status in their own right, Manchester and Salford are more than just mere neighbours. For many, particularly outside of the region, it is difficult to tell where one city begins and the other starts. In the absence of its own centre, the people of Salford will refer to Manchester city centre as their go-to destination of choice for shopping, restaurants and bars. Indeed, some Salford residents live closer to Manchester city centre than those in its surrounding suburbs.
As the traditional borders become blurred over time, investment appears to have become focussed on the wider area, not simply concentrated on those areas deemed to be in Manchester, as has been the case in the past. Whilst traditionally not as ‘famous’ as its larger neighbour, Salford has made headlines of late over its phenomenal growth in such a short space of time. MediaCityUK and Salford Quays are the integration point between the two cities, with many city centre workers choosing to live there due to the extensive public transport network that connects the two cities.
The main mode of public transport within the county is the Metrolink system. An ambitious but necessary investment programme, when it is completed, Greater Manchester will have the largest tram network in the UK. With the majority of its lines now in operation, the final stage, which has been confirmed for funding, will be the Manchester Airport extension and is due to be completed in 2016 at which point, a phenomenal £1.5billion will have been spent on the programme. Further expansion plans include lines to Trafford Park, the Trafford Centre, Salford Stadium and Port Salford, although funding is yet to be secured for this part of the project.
The expansion, alongside other transport projects, is expected to create 21,000 jobs, adding £1.3billion of output to the local economy each year and linking together all areas of the county. This increased connectivity is anticipated to be a boon to homeowners, with Estate Agent Nationwide reporting that tenants and buyers are willing to pay a significant premium for the convenience of living near a Metrolink stop. Homeowners should therefore expect to see a rise in the value of their properties, once the network has been completed.
The Office for National Statistics (ONS) revealed that more than 5 per cent of construction orders in Britain in the final two quarters of 2012 were for new building projects in the Greater Manchester area, which suggests that order values have recovered at least to the levels seen between July 2009 and December 2011, where they hovered around the £1billion mark. As the level of construction activity in Manchester and Salford continues to build, so do the opportunities for buy-to-let investors to snap up property in prime sites, particularly in the city centre and commuter zones, which will yield strong returns for years to come.
Areas to look out for:
Salford Quays, Salford: The arrival of the BBC, in addition with the tram extension connecting residents to the rest of Greater Manchester, has caused property prices in the area to boom. Local attractions like Old Trafford, the Lowry Theatre and the Imperial War Museum are also a major draw for the area, allowing for a pleasant place to work and live. Investment in the area continues to grow, with the ITV site at MediaCityUK expanding and new restaurants and cafes opening up at a rapid pace, to the delight of local residents and office workers.
Wythenshawe, Manchester: Located immediately next to the airport, this area of South Manchester has been given the go-ahead for a multi-million pound regeneration plan including; the new Airport City Project, the location of which will be an easy commute for residents, a re-vamp of Northenden Riverside Park and village and a Wythenshawe town centre master plan, which will see new retail and office developments, refurbishment of the multi-story car park and a new superstore.
Pendleton, Salford: Situated in the North East of the city, Pendleton is currently undergoing a £650million mass regeneration project which will include; the re-modernisation of 1,250 homes, 1,600 new homes, a re-invigorated park and new green spaces, sports pitches and cycle routes, 500 jobs, 2,000 work experience opportunities, a co-operative and a new theatre square. This complete transformation is intended to re-vamp the area and create an inclusive, community spirit in this once thriving area.
Withington, Manchester: Straddled between the trendy areas of Chorlton and Didsbury, there are a multitude of bars, independent shops and eateries springing up around the already established centre of Burton Road. House prices have steadily starting climbing to match those in the surrounding suburbs, although there is still a bargain or two to be had, and the addition of the tram line is certain to bring an influx of visitors to the area, as they are now connected to the city centre and surrounding areas.