Manchester has ridden the past couple of cycles better than any other market outside London. With the pace picking up in the city once again, it’s looking well placed for the next one.
As three developers fight to be the first out of the blocks, privately funded spec development is happening for the first time since before the crash. NOMA, Hines, and Titan Investors are lining up 100,000+ sq ft schemes. Meanwhile, Morgan Stanley is selling three of Manchester’s most notorious stalled development sites off market (p23).
With demand in the city unsatisfiable with current stock – and lenders’ appetite for risk growing again – spec development has looked inevitable for a while. Still, the scale of the imminent offer has surprised some.
Morgan Stanley’s marketing of Origin at Piccadilly, alongside the Ramada Renaissance Hotel site and Owen Street development site in Deansgate and Owen Street, signals another turning point. Buyers which have gobbled up distressed assets in recent years are readying to sell them into a fast-rising market.
If Manchester has been a somewhat lone regional beacon in recent years, it needn’t be the only one in those ahead. Birmingham has an HS2-driven opportunity on which it can, and should, capitalise, while Leeds is also determined to get its act together.
Labour will be in Manchester next month for its annual conference, while the Tories will be in Birmingham. Both cities should make the most of their opportunity to showcase themselves in front of the (potential) next government.
¦ Bilfinger lost its chief executive this week after a second profits warning, but it has gained the buy-in of the senior team at GVA following last month’s completion of their merger. Rob Bould is now chief operating officer of the combined real estate business under the executive presidency of Aydin Karaduman. The business will continue to report UK numbers – a welcome change from too many other UK advisers bought by listed overseas corporates – and, say the two men, their teams are now chomping at the bit to capitalise on a slew of opportunities.
Neither Bould nor Karaduman will sign up to a commitment to challenge the big two global consultants, but that is clearly the playing field on which they hope to be contesting. In some ways that reluctance is refreshing: I have always found it a little limiting when a business sets out its ambition to be the world’s third biggest property adviser.
But there is a long way to go before the business can deliver. Bilfinger has bought a strong UK firm which it wants to use as a launch pad for its global ambitions. The GVA Worldwide network will help but unless it makes further acquisitions on at least the scale of GVA – and that could come from within that network or beyond – it will be a slow burn.
¦ A lot can change in two years. And not just at home. Reporting interim results this week Savills said flourishing UK and European commercial property markets had offset sharp declines in Asia. Overall pretax profits were up by a healthy 15% to £24.7m, with revenues up 8% to £431m on the back of rising transaction fees. But while UK transaction fees soared by 19% to £89.9m, Asia Pacific fee income fell by the same percentage to £44.6m as China suffered a major downturn in its property markets. And the biggest rise in transaction fee income? Why from continental Europe of course which rose by 39%.
Contrast that with its 2012 half-year. Then, transaction advisory revenues were down 4%, China was expected to reverse its slowdown and, said chief executive Jeremy Helsby, “despite the continued deterioration of European transaction markets, we have materially reduced losses in our continental European businesses”.
It’s not just in the UK that markets have changed direction, sharply and quickly.
