City Residential: Liverpool welcomes investment boom
The city represents a “near perfect” environment for investors across the residential sector, according to Alan Bevan’s latest quarterly update on Liverpool’s property market, thanks to rental growth and property value increases.
- Prices up 1.24% on quarter and 3.98% annually.
- Rush to beat the stamp duty deadline on 3 March 2016 increases sales
- Increasing interest in city from high net worth, long term investors buying prime stock
- Chancery House scheme launches with remarkable success in first week
- Orleans House in for planning for potential PRS scheme
- Primesite to develop Mersey House scheme on The Strand into apartments
- Signature Living buys West Africa House and 1 Arthouse Square for residential schemes
- Exciting large schemes around Leeds Street, by Eldonian, Bevington Bush
- Prices up 0.99% on quarter and 3.46% on year.
- Stock levels remain low and tenants keen to stay in existing tenancies
- Higher priced apartments renting very well to outside residents moving into city
- Liverpool licensing delays causing issues/lack of confidence in system
Private Rented Sector
- Inhabit’s purchase of Heaps Mill scheme for a £130m development
- Announcement of second phase £45m 257 apartments at The Keel by Glenbrook
- Moda Living’s scheme for Princes Dock/Liverpool Waters gathering momentum
- Grainger’s purchase of Kings Dock Mill apartments for £14.5m
- Two large schemes announced at Bevington Bush (1019 units) and Norton St (453 units)
- Pipeline of just under 10,000 units although slight softening in new activity
Writing in the City Residential report, managing director Alan Bevan said: “The market in Liverpool city centre continued to push ahead in the first quarter of 2016 building on the momentum we saw in autumn/early winter 2015. We saw prices accelerate compared with the final quarter of 2015 showing an average increase of 1.24% over the three months to 31 March 2016 and an annual increase of 3.98%.
“We have highlighted over the last two reports the increasing influence that the Government, or more particularly George Osborne, is trying to exert over the market, particularly the buy to let market. Whilst the jury is still out as to whether this sector of the property market will be hit hard; his changes to interest rate relief, furnishings allowances and stamp duty will have an effect on some landlords/investors. The first evidence of this was the logical ‘panic’ to get any buy to let/second home deals completed by 31 March to avoid the 3% increase in stamp duty that he ‘kindly’ introduced from April 1 2016.
“Whilst we have discussed institutional investment in the city through PRS, we are also beginning to see an increase in general residential investment from high net worth/smaller investment groups who are realising the potential that the city offers on a long term view. With many of the existing and proposed developments targeted towards overseas investors or PRS funds there is a real gap in the market (as we have highlighted in Q3 2015) for ‘proper residential stock’. Smart investors are waking up to this fact and trying to secure apartments in those few schemes that are being sold in a more normal manner which offer long term capital and rental growth.
“The rental market in the city continues to perform strongly with limited voids across most property types/locations. This was reflected in the circa 1% rise in the first quarter of 2016 which has continued the acceleration in rental growth we had seen towards the end of last year. Whilst some commentators believe that this level of growth is not particularly strong (and if you compare it with the likes of Manchester which has/is experiencing high single digits) we would suggest otherwise. Together with the steady and continual growth in capital values buy to let landlords/investors are continuing to experience a near perfect environment without the excessive volatility that has been seen in the past or may be happening in other cities.”