Rapid growth in the Manchester property market could offer a profitable solution for South African property investors
The South African economy is increasing, with growth expected to hit 1.7 per cent by 2019, however, although there is some growth present, the rate in which the local economy is growing is almost half as slow compared to the rest of the world. This is leading investors in South Africa to diversify their portfolios and look for investment opportunities outside of the borders.
Adam Price, managing director at Select Property Group, said: “Economic volatility and a fluctuating rand means that simply cashing money into overseas banks is no longer a viable investment strategy. Investors need to be looking to diversify their investments and establish a portfolio globally in order to provide good capital growth prospects.”
South African property investors looking to spread the risk and delve into the international property market are being encouraged to look to regional cities in the UK. Even with Brexit looming in the UK, the statistics are speaking volumes; the City of Manchester is clearly a new ‘hot spot’ to invest cash in residential property.
The northern city boasts over 530,000 residents and a huge student population of 85,000 – strong. With demand for city centre living, urban generation programmes and growing commerce credentials, as a result of the Northern Powerhouse initiative, it’s being cited as the property investment hotspot for overseas investors in 2018.
Buoyed by strong performance levels, investors from around the world have identified the huge potential of owning real estate in Manchester. Property prices rose by 30.8 percent between 2014 and 2017 and, by 2021, values are expected to surge by a further 28.2 percent – 15 percent faster than the UK average. Monthly rental rates are also expected to accelerate by a further 20.5 percent by 2021 – 2.9 percent faster than the UK average. All pointers indicate that Manchester’s popularity is set to continue to thrive and, with it, the demand for sales and letting.
The effect of Brexit has had a positive impact for overseas investors
Adam Price, managing director at Select Property Group, said: “We’ve seen an increase in interest in Manchester from overseas property investors – and not just from South Africa. During a recent survey, we found that almost 80 per cent of GCC investors agree that the UK is a strong place to invest in property, with 13 per cent of those highlighting Manchester as the top place that appealed to them, second only to London. Over 70 per cent also agreed that the rental yields in northern cities are greater than London.
“Brexit has had a huge impact. The uncertainty surrounding Brexit has subsequently caused a fall in value of the pound, meaning UK property is now as much as 12 per cent cheaper to new investors. This has led to an increase in interest from overseas investors.
“We found that over 70 per cent of GCC investors believe that Brexit has made UK property more affordable. This is something we’re increasingly hearing from South Africans, as anecdotal reasons for wanting to invest in regional cities.
“However, once Brexit negotiations with the EU conclude, uncertainty is lifted, and Britain’s economy begins to stabilise. Those who invest now will see the strongest capital gains and ROI in the coming years – a win-win for savvy South African property entrepreneurs.”
All the statistics indicate in favour of Manchester’s continued growth and it’s showing no signs of slowing down – this is just the start. There are a planned 12,000 residential units due for completion over the next two years in the city centre alone, so the opportunities for South African investors are endless.
Select Property Group has also appointed a business development manager for the South African region, Tigran Smith. Tigran spends half of the month on the ground in South Africa, visiting both clients and agents.
SOURCE: Select Property Group