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Why Manchester is a Prime Location for Property Investment
Although we’re here to discuss why you should invest in off-plan property in Manchester specifically, it’s important to understand why property investment, in general, is profitable here.
When it comes to property investment, Manchester is right up there as one of the best spots. This city has completely changed itself in the last few years and has become a real magnet for investors. But why is Manchester such a great place for investment? There needs to be a mix of strong economic growth, great transport, and a big need for housing. Let’s break it down.
Strong Economic Growth: £62.8bn and 6% Growth Rate
One of the first things we look at when investing is the strength of the local economy, and Manchester’s is booming. The city’s economy is now worth £62.8 billion, growing at around 6% a year. That’s massive, and it really drives the local property market.
It’s pretty simple: if the economy is doing well, property prices tend to rise too. This is why so many of us are seeing significant capital appreciation in Manchester. Also, the north-west has consistently done better than other UK cities, which gives investors even more faith. If you look at the bigger picture, you can see that the city is growing, and it’s growing quickly.
Excellent Connectivity: Metrolink Tram, Bus Network, Trains, and Manchester Airport
Another major reason Manchester is such a hot spot for off-plan real estate investment is its connectivity. Let’s be real, nobody wants to live in a place that’s hard to get around. With the Metrolink tram network running 40 million journeys a year and a strong bus system, getting across the city centre and out to the suburbs is easy.
Plus, with train stations like Manchester Piccadilly and Victoria, the rest of the UK is just a quick train ride away. We’ve even got the recently upgraded Manchester Airport, which just completed a £1 billion overhaul. Good transport links like these make certain city centre areas really desirable for young professionals, which is key if you’re looking for strong rental yields.
High Demand: +56,000 New Residents and +25.8% Property Price Rise
Manchester’s home market is in a huge need. More than 56,000 new people are expected to move into the city in the next few years, and there aren’t enough homes to accommodate them.
This has already pushed house prices up by 25.8%, and we’re expecting that trend to continue for at least the next five years. In August 2024, the average house price in Manchester was £248,000. The best part for investors?
When the need is high and supply is low, you’ve got a recipe for serious capital appreciation. This is exactly why we’ve seen so many investors, both seasoned and new, getting into off-plan investment properties here. With limited space and growing interest, Manchester is one of those cities where getting in early can pay off big time in the long run.
Source: Office for National Statistics
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Benefits of Investing in an Off-Plan Property
Investing in an off-plan property can be a great way for those who want to get into a growing real estate market early. If you buy a house that hasn’t been built yet, you lock in the prices that are good now. The house could be worth a lot more when it’s done. If you invest in a hot market like Manchester, this can be a great way to make sure your money keeps going up over time.
Lower Prices: Secure a Property at a Lower Price Before Completion
One of the biggest advantages of buying off-plan property is the pricing. Developers tend to offer prime properties at below-market prices to attract early investors, which gives you the chance to secure a property for significantly less than its value at completion. It’s not uncommon to see properties off-plan priced 10–20% lower than similar completed homes.
Source: Office for National Statistics
For example, new-build apartments in Manchester city centre—especially in popular spots like Northern Quarter or Castlefield—are often sold at a discount because developers want to hit their pre-sale targets.
As the construction progresses and the development nears completion, property values usually rise, which means you’re sitting on potential capital appreciation without having done much more than signing the contract.
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Customisation: Choose Your Finishes and Make the Property Your Own
One more thing investors like about off-plan investments is that they give them creative freedom. When you buy a finished buy-to-let property, everything is set in stone.
But when you go for a property off-plan, you’ll often have the chance to change some things according to your preferences. With expert guidance, you might be able to choose your preferred flooring, kitchen finishes, or bathroom fittings, meaning you can put your personal stamp on the property before it’s even built.
This also means that when you rent it out or eventually sell, your property stands out because it’s tailored, modern, and fits the tastes of today’s investors or renters. Tenant moving to areas like the Manchester City Centre who want new, fashionable residences that suit their own interests may find this especially enticing.
Modern Living: Enjoy the Latest Amenities and Features
The possibility to provide new homes with contemporary characteristics is one of the nicest aspects of purchasing off-plan. These days, developers often add high-end features like smart home technology, energy efficiency, and sleek architectural design.
A study by UK Construction Online found that over 70% of new-build investors now put energy-efficient homes at the top of their list of priorities. Many of Manchester’s new developments, like X1’s residential developments, are made with this in mind. They offer a modern way of life that draws tenants who value modern features.
This not only makes the property more appealing but also increases its rental potential. For property investors, it’s a win-win: you’re getting a home that’s desirable now and built to last with tomorrow’s skyline in mind.
Why Choose Off-Plan Over BRR Strategy for Property Investment?
Off-plan property sales have become a go-to strategy for many savvy investors, especially in competitive markets like Manchester. In simple terms, off-plan sales mean you’re buying a property before it’s built.
This strategy has several advantages over the popular BRR strategy (Buy, Refurbish, Refinance), which has been widely used across the UK for increasing property value through renovations. While BRR can be effective, off-plan investing often offers a more hands-off, less stressful route with some financial perks that BRR simply can’t match.
With the BRR strategy, as soon as you take out a mortgage to purchase the property, you’re immediately on the hook for monthly payments—whether you’ve started the renovation or not.
Because of this, it can be hard on your finances, especially if you have to pay the mortgage and repair costs at the same time. You also won’t get any return until the property is ready to rent out or sell. This is a daunting process to keep track of all these financial obligations that don’t pay off right away.
When you buy an off-plan home, on the other hand, your mortgage doesn’t start until the building is finished, which is usually one to two years later. This gives you lot of time to get ready; by the time your mortgage starts, the house is usually ready for rental, which will assist in mortgage payment.
Another significant advantage for property investors is that the Bank of England’s base interest rate recently dropped from 5.25% in August to 5%. As of November 2024, the average rate for a five-year fixed mortgage was approximately 3.89%. This shift has contributed to a slight decrease in mortgage rates, making financing a bit more affordable.
Looking ahead, interest rates are anticipated to continue falling. The Office for Budget Responsibility (OBR) even says that the Bank Rate might reach 3.5% in the next few years. Rates for five-year fixed mortgages may also go down to around 3.5% by the end of 2024, according to some lenders.
As an off-plan investor, what does this mean for you? Changes in interest rates can happen in either way, but the current outlook suggests that interest rates may be lower by the time your house is finished and your mortgage starts.
This could result in lower mortgage payments compared to what you’d pay if you took out a mortgage now using the BRR strategy.
Essentially, the off-plan for-sale investment allows you to ride out the market fluctuations and potentially benefit from more favourable mortgage terms when the time comes.
How Does Off-Plan Sales Work? From Research to Completion
Investing in off-plan real estate starts with a thorough study of the development and the neighbourhood. Once you have located a Manchester property fit for your investing objectives, you will need to reserve your unit usually by paying a reservation fee.
This secures your property and locks in the price, protecting you from price hikes as demand increases during the build. After that, you’ll exchange contracts and pay an initial deposit—usually 20-25% of the property’s value.
While the property is being built, you won’t need to start paying your mortgage right away—one of the key benefits of off-plan.
Your mortgage begins only when the development is finished and you pay the outstanding sum. By now you will be able to rent the house, and the rental revenue will help to pay the mortgage.
Given how the housing market might evolve over time, and with the potential for decreasing interest rates in the future, there’s a good chance that when your mortgage begins, your monthly payments will be lower than they are today.
You can get a lot more out of your investments when you delay your mortgage payments and take advantage of low interest rates. This will set you up for long-term growth.
So, the BRR approach can bring in rental income quickly, but buying homes before they are built usually gives better long-term returns. Let’s simplify this with two examples.
Investor A (BRR Strategy): This investor buys a property for £200,000 but negotiates a 20% discount, reducing the price to £160,000. After spending £20,000 on renovations, the property’s value rises to £240,000 in six months. With a rental yield of 6%, the BRR investor earns £14,400 annually. But, the ongoing maintenance costs can eat into their profits.
Investor B (Off-Plan Investment): This investor opts for a newly built property and puts down a £60,000 deposit on a home valued at £240,000. Once the building is finished, the property increases in value to £322,000. When they rent it out, they achieve an 8% rental return, boosting their equity. They also benefit from price increases during the construction phase and avoid the costs of renovations.
In short, while the BRR strategy can bring in cash quickly, investing in off-plan properties usually leads to better overall returns. This approach allows your property to appreciate in value and saves you from the hassles of renovations.
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Expert Tips for Successful Off-Plan Property Investments
Although off-plan investments could be a wonderful strategy to get ahead in a difficult market, you should exercise caution when making them. You should also choose the right location and a reliable developer. Start by doing the following:
Doing Your Research
Doing research is crucial when it comes to off-plan investing. The developer’s glitzy brochures and assurances that it will be a success are not to be taken at face value. What are the current home values, and how do you think they will grow in the future? Look at upcoming infrastructure projects or regeneration areas where you might get in before the Manchester property market really heats up.
For example, here in areas like Ancoats and Salford Quays, property values have surged dramatically over the past several years, indicating fast reconstruction. Further, do remember to review at the developer’s previous work as well. Have they successfully finished comparable projects within the allocated budget and on schedule?
Have previous customers voiced any concerns? Investigate reviews, talk to prior investors, and visit a few finished properties. Later on, this kind of exhaustive due diligence will help you avoid much trouble.
Choose the Right Location
When it comes to real estate investment, location is everything. For off-plan investment opportunities, this becomes even more crucial because you’re purchasing into future potential. Areas with high demand, have good transport, and have nearby shops, schools, are the top choices when it comes to real etstae investment.
In fact, young working professionals are especially interested in neighbourhoods like Castlefield and Deansgate in towns like Manchester because they are close to places to work and have fun. Areas that are part of ongoing regeneration projects can offer even greater potential for capital appreciation.
Think about the rental needs too. Are there enough tenants in the area to ensure your property is let quickly? Is the area appealing to the demographic you’re targeting? If your off-plan property is in the right location, then you can expect higher rental yields and better long-term growth, so it pays to think ahead.
Work with a Reputable Developer
When you’re buying off-plan property, you’re putting a lot of trust in the developer. For this reason, it̵