Towering ambition shows no sign of diminishing

Investor appetite in Manchester city centre’s residential sector shows little sign of waning. Neither is the demand for quality accommodation.

If evidence of that was needed, Maslow Capital’s announcement last month provided it. The investor revealed that it has made its biggest UK commitment to date – providing a £123m development facility for the construction of two residential towers in a prime city centre location.

The project, by Renaker Build, has an estimated gross development value of £230m and will deliver a total of 664 apartments in towers reaching 21 and 52 storeys at Crown Street.

The taller of the two towers will offer 360-degree views across the city and developers say it is set to become one of the most iconic on Manchester’s skyline.

Residents will benefit from facilities including a resident’s lounge, a rooftop garden, a co-working space and one of the highest swimming pools in western Europe on the 44th floor.

It is Maslow Capital’s 11th facility in the city, which continues to see huge demand with one of the highest proportions of young workers and highest retention of graduates in the country.

Dan Searle, partner, valuation and advisory at Knight Frank Manchester, advised on valuations for the funder.

He said: “Manchester continues to see strong residential growth with young professionals attracted by the quality of lifestyle and accommodation now on offer. But prime locations like this are becoming scarcer and this scheme continues to push the standards in terms of position and facilities.”

Maslow Capital partner and deal originator Matt Pigram said: “Despite a large increase in supply over the past few years, our market research shows an on-going shortfall of supply of residential dwellings in the Manchester region.

“As a lender we are delighted to see a residential development of this scale under construction by a proven developer that is fully committed to meeting the housing demand in the city.”

Maslow Capital chief executive and co-founder, Ellis Sher added: “We are delighted to be supporting the delivery of a scheme of such scale and quality by such an accomplished and experienced developer.

“Despite the political and economic uncertainty, all the parties involved have done what they said they would do and remain focused on the delivery of this important project.

“It’s easy to lose sight of the housing shortages that many parts of the country face with all the Brexit noise around us.

“It’s important to Maslow that we support high quality developers throughout the cycle, ignoring some of the near-term volatility and focus on the long-term fundamentals.”

Looking at the overall health of the residential market, Searle says that despite the continued demand, there are challenges. He said: “The balance is always between build costs and sales prices.”

He cites projects in the city where the numbers “did not stack up” with office, hotel and employment space schemes now offering viable alternatives.

Searle adds that alongside continued high construction costs there has been a shift in the dynamics in Manchester and in Salford around affordable housing.

He said: “Manchester is continuing to see strong demand, nothing is being left unsold or stood empty, but despite the relatively small number of prime city centre sites still available I think prices will plateaux for the short term and we will not see the significant price gains that have been witnessed over the past four or so years.

“Will the investment spread out across Greater Manchester? Investors like Maslow Capital are prepared to support development in satellite towns like Bolton and Stockport.

“But it is more a long term play and pricing is a bit more of a risk while construction costs remain potentially difficult to confirm over a long development period.”

‘Education, football and family’ – Manchester’s winning formula

Miz Herrera is in no doubt about Manchester’s continued appeal as a place to invest. He explains: “It is down to three things – education, football and family – and we don’t see that changing.”

He is business development manager at Salboy. The developer is currently on site developing six residential schemes across Manchester and Salford that will deliver a total of 1,366 new homes.

The business has set up Salboy International to handle sales abroad. Herrera adds: “In China individual buyers are investing in their children’s future.

“They would rather buy an apartment for their son or daughter while they study at university here for five to seven years, than pay £1,000 a month in rent. They then plan to sell and recoup their investment with potential capital increase.

“People buy off recommendations and after one purchase we often see sales to extended family members. Plus, Manchester has the third biggest Chinatown in Europe and they are familiar with the city, they have local knowledge and often family connections.

“While our market has been predominantly the Far East, through Salboy International, we are increasingly seeing buyers from the Middle East, from Kuwait and Qatar and that is because of Manchester City Football Club. It gives buyers there a connection with the city.

“Our sales are roughly split 60/40 between overseas and UK and the domestic market has been tougher with changes to taxation and uncertainty over Brexit. That has not been a factor for overseas buyers who continue to see Manchester as a safe haven.”

Nick Legget, is senior development manager for Mulbury City, which currently has two schemes under construction in Manchester.

Excelsior in Castlefield is aimed at owner occupiers and Blossom Street is a 143 unit PRS scheme in Ancoats.

He says: “If you want a city to continue to grow by attracting new talent you have to offer a range of accommodation.

“And they have to offer very different things. Young professionals who are renting want to live in buildings that offer the best amenity and lifestyle.”