£50.4m subsidised loan for Salboy’s 76-storey Manchester tower
The Greater Manchester Combined Authority has selected the Nobu-branded scheme, which features a 133-home social housing block next to a luxury skyscraper, for a sizeable cash injection.
The £50.4m loan for Salboy’s Viadux 2 will come from GMCA’s £2bn Good Growth Fund, set up to address viability gaps identified in schemes across Greater Manchester’s 10 boroughs.
It will plug a viability gap that is evident in part due to Salboy’s commitment to deliver a standalone affordable block next to the luxury 76-storey skyscraper, which will feature a 130-bed Nobu-branded hotel and 452 branded residences.
“The overall scheme does not deliver a sufficient level of investor return and developer profit for it to proceed without support,” a GMCA report states.
The loan for Viadux 2 will be provided on a “subsidised basis” – meaning the interest rates will be lower than commercial rates – for the overall scheme rather than the skyscraper or affordable block in isolation, according to the report.
The scheme is expected to complete in 2032, at which point the loan would be repaid.
McGoff Group will also benefit from the latest round of Good Growth Fund allocations.
The developer has been selected for a £27.4m loan for a 153-bed build-to-rent project on Rochdale Road. The 17-storey project does not yet have planning approval.
Salboy and McGoff’s s funding allocation follows the GMCA’s search for stalled commercial and residential schemes with a “clearly evidenced viability gap which can be addressed through recoverable, below-market interest rate loans”.
The three schemes selected through that call for sites – HBD’s 200,000 sq ft Colloco office development, Salboy’s Viadux phase two, and McGoff’s Rochdale Road BTR – are all deemed to have a lower risk profile than other projects selected for allocations from the Good Growth Fund to date, due in part to their being located in Manchester city centre, where values are higher than in outlying boroughs.
The three projects will get a combined £101.5m. To date allocations totalling close to £1bn for 30 schemes have been made including the £90m for the Carrington Relief Road and more than £40m for the conversion of the Kendal Milne building on Deansgate into offices.
A GMCA spokesperson said: “The Viadux Two scheme will include Manchester’s first city centre high rise which is exclusively made up of homes for social rent. It will deliver 133 high-quality homes for social rent with a mix of one, two and three-bed apartments.
“As well as bringing new truly affordable homes to the city centre, our investment in this project will help create around 60 apprenticeships, support around 2,100 construction jobs, and generate £185m of investment in Greater Manchester.
“This is just one of many allocations from our Good Growth Fund, which is bringing investment and much needed new homes to every part of Greater Manchester.
“Back in March, we invested £26m to kickstart delivery of 423 new homes in Wythenshawe, including 233 for social rent, 109 extra‑care units, and 81 affordable rented homes. And the Good Growth Fund will be making further investments in social and affordable housing, with new allocations every six months.”
