They say a week is a long time in politics. It was for Greater Manchester last week, as Sir Howard Bernstein announced his retirement from Manchester City Council and former chancellor George Osborne launched his Northern Powerhouse think-tank, all in the space of 48 hours.
The changes in national and local political leadership could have far-reaching implications for property in the region. So EG’s Question Time debate between political and business leaders at Manchester Town Hall on Thursday 15 September could not have been more timely.
Who leads the Northern Powerhouse?
It may not quite be a Bernsteinless or Osborneless future, with both political heavyweights declaring their intentions to continue to contribute to the city. However, without their positions of power, and with prime minister Theresa May yet to add real detail to her “industrial strategy” for skills and infrastructure devolution, is the Northern Powerhouse agenda safe?
“What ministers have been saying very clearly is that they are still fully behind the Northern Powerhouse,” said Sir Richard Leese, leader of Manchester City Council. “But we need to hold them to that.”
Theresa May has pledged to rebalance the economy by committing investment to infrastructure projects. “A politician has made a promise to us; let’s make sure she keeps it,” Leese said.
Jim McMahon, Labour MP for Oldham West and Royton, said: “I am sceptical about the Northern Powerhouse brand. I believe in devolution, sending power to Greater Manchester. But we need to see some serious cash behind it.”
In May 2017, Greater Manchester will appoint its first directly elected mayor, who will oversee a cabinet of the region’s 10 local authority leaders. Will the new mayor have real power?
“The new mayor will have quite a limited number of executive powers, but they are effectively going to be the team leader of a very powerful cabinet,” Leese said. “With any mayor, real power is the power to bring people together.”
Follow the money
Manchester has steadily cultivated the status of “favourite regional city” for investors looking for higher-yield returns outside London. Transaction volumes in Manchester’s office market totalled £304m in the first half of 2016, 3% higher than the five-year average, according to Savills. Overseas investors accounted for 70% of those H1 transactions.
Can the city continue that growth? “The market probably hasn’t kicked into life properly since the summer break,” said James Evans, head of Savills’ Manchester office. “Where we have seen a slowdown is on the investment side of things… I think, occupationally it is OK. Investment-wise, there are still things happening, with some degree of price adjustment.”
Property Alliance Group chief executive David Russell disagreed that there has been a weakening of investor confidence since the EU referendum vote.
“We have not seen a drop-off,” he said. “There was an initial pause after the vote for six to eight weeks, and then you get into August and it has already picked up a huge pace.”
In the past month, he said, Alliance has met with investors from the Far East and Middle East. He added that he has also done three deals in the past four months with a South African investor who chose Manchester over anywhere else in the UK. “We have a huge demand from overseas buyers,” he said.
Northern city leaders have raised concerns about the loss of EU funding post Brexit. However, Dr John Whittaker, senior lecturer in economics at Lancaster University said money received from the European structural fund (£130m per year in the North West), represented just 0.1% of GDP.
Luxury sales
International interest can also be quantified in tourist numbers and luxury brand sales. Jane Sharrocks, chairwoman of Manchester BID and general manager at Selfridges Exchange Square, said the post-referendum exchange rate and tourist number had increased demand for luxury brands.
Lyslee Li, business development manager at Gibbs Investment, whose role is to attract Asian investment to the UK, said that since the Brexit vote Asian investors who were previously interested in Manchester had started to look at London again because of “liquidity and lower risk”, as well as properties being sold at a discount.
However, the panel agreed there was no competition with London. “The investment value and yield return is far greater in Manchester,” Russell said. “And there is more capital appreciation.”
McMahon added: “Many people who were born and bred there can’t afford to get on the property ladder. You have got a lot of foreign investment coming in but it’s completely artificial. It is just a place to keep cash. Now that is OK up to a point, but at some point you have to create a place where people can live, work and have a cohesive society.”
Leese said Manchester did not compete with London because the scale and values were completely different.
“There is no direct comparison,” he said. “We need to demonstrate that the potential is greater here and that has been the case for a long period time.” As for his view of Shoreditch? “Poor man’s Northern Quarter”.
