RISING COSTS AREN’T ALWAYS BAD NEWS
London has always been the UK’s financial and property hub, with high construction costs and inflated prices across everything from property to pints of beer.
According to a recent study by professional services company, Turner & Townsend, however, it would seem that the North is now catching up with the capital. But, for once, rising costs may not be bad news. Quite the opposite in fact.
While developers may find it more expensive to deliver schemes in the Northern cities than they have done in the past, Manchester, Liverpool, Leeds and Newcastle still offer excellent value for money compared to London. More importantly – and this is key to the escalating construction costs in the North – they also offer excellent potential for enhanced return on investment.
In the past, London has been able to support inflated construction costs because it provided a premium yield beyond the capabilities of other UK cities. That fundamental principle is now changing and, most significantly, the North is seen as a lucrative investment hot spot for both commercial and residential property, driving up construction costs, and raising the economic outlook, the employment market and living standards.
Turner & Townsend has singled out Manchester as the centre of this Northern boom in construction costs and property investment. Commenting on the report, the company’s global managing director for real estate, Steve McGuckin, said: “The devaluation of sterling has woken foreign investment up to the opportunities in many other UK regions, and Manchester in particular has emerged as the most attractive alternative to the capital – as can be evidenced in the huge volume of high rise schemes and residential activity.”
Manchester’s rise as a centre for construction and property investment has not happened overnight, however. The value of the pound may have given it a boost but encouraging property investment was central to Howard Bernstein’s strategy as Chief Executive of Manchester City Council for almost 20 years.
It’s also symptomatic of a considerable shift in the national dynamic that has been happening over a number of years. The move of several BBC departments to Media City at Salford Quays, the expansion of the major universities in the North and the Northern Powerhouse infrastructure agenda have all helped to make the North a viable rival to an overcrowded and overpriced capital.
For the construction sector in the North, it all spells one word: opportunity. Now is the time to invest in raising your profile to support growth. Don’t waste it.