Manchester will outperform UK, says JLL

MANCHESTER’S property market is set to outperform the UK average next year, despite the current threat caused by the ongoing eurozone crisis, according to Jones Lang LaSalle (JLL).

Speaking at a breakfast seminar in Manchester on Friday, JLL’s head of forecasting Andrew Burrell said that all property markets would witness a slow but sustained improvement in fortunes as tightening credit terms before the recent recession meant there hadn’t been a huge over-supply of properties being built.

He said: “Although the economic outlook looks highly uncertain, the UK, its regions and cities are better placed than the Eurozone to ride economic storms.

“In Manchester and the North West, rental growth in both the office and industrial markets has been achieved earlier than expected and we predict that this will continue at a steady rate.  Retail also reflects the trend, although consumer spending over the next two years will continue to face pressures from the fiscal squeeze.

“Prime property is holding up, despite difficult times, with our forecasts showing the top end of the industrial market, in particular, achieving rental growth from next year, rising to a rate of 1.8 per cent by 2015. The office market shows a 3.4 per cent rental growth next year from this year’s level of 1.8 per cent, although this will drop slightly in 2013/14, regaining its position in 2015.  Yields will remain broadly stable in all sectors.

“North West economic growth, although slightly behind Manchester, is surprisingly resilient, given the importance of the public sector, which is still suffering from severe cutbacks, as the revival in its manufacturing industry continues to compensate for this.”

However, Matt Stretton, the firm’s director of investment, said that confidence among investors remained “low” across all sectors.

“There are requirements for prime opportunities, although this is met by a lack of supply.

“The gap between prime and secondary may continue to widen, particularly on secondary assets where the key property fundamentals do not exist.”