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Liverpool and Manchester city centres flooded with off plan?


willv

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Hi there,

I’m looking at Liverpool L1 and Manchester city centre to buy a couple of 2 bed flats. I’ve been browsing RM and Zoopla and I’m quite astonished by the amount of new build investment aimed properties offered by the likes of RW Invest. It looks like more than 90% are off plan properties. 
I’m very new to property and I know some would argue there’s a lot of demand for rented property, but this doesn’t seem particularly healthy to me. 

There are also quite a lot of listings dating a while back (2019, sometimes, much further).

What do you make of this?

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I live and invest in Manchester, but not in the city centre for the reasons you mention. Have looked a few times, but always at the old building conversions which look a lot more interesting than the identikit new build blocks. 

Appreciate I'm at odds with the Robs on this, but I did some analysis last year of the typical sold prices in May across various postcodes over the previous 17 years (that sounds quite geeky when written down...) and the city centre did worse than various suburbs. The data is obviously a bit rough, and had to swap the month in a couple of years due to no sales or just one really expensive one, but the two city centre areas had grown by 30-55% in 17 years, whereas the suburbs (about 5 miles from the centre in different directions) had grown between 130 & 265%. Even allowing a margin of error, that suggests it would have been a bad place to buy.

Since then, more city centre apartments are being built, many of which are dubious as far being in the city centre, but very few houses are being built in the suburbs as there's little land available.

Add in the impact of coronavirus and will there even be the demand there was for city centre living over the next few years? Appreciate that's a black swan event, but not going to help

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  • 3 weeks later...

I would agree, the city centres of both Liverpool and Manchester are both being flooded with new build apartments. I think the effects of this will be felt more in Liverpool with its smaller population there is a risk element of there being an oversupply of stock. 

Tenant demand has changed since COVID-19, renters want more green spaces and are looking on the fringes of city centres. I think your money would better be invested within a 5 mile radius of the city centres. In Manchester, if you can find something near a Metrolink that would attract a lot of young professionals who can get the tram into the city.

Coming from someone who lives in Liverpool I would suggest doing a lot of research of areas before making an investment. Liverpool has some great up and coming areas but also has some areas you would want to avoid due to the type of tenants it will attract and high levels of crime. I've seen some of the new builds in L1 advertised and in my humble opinion I think the rental projections are very generous, which will make the investment look more attractive than they may be in reality.

 

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  • 2 months later...

Appreciate this is a slightly older topic, but came across it as I am looking now to invest in the commuter areas of Manchester.

Have to agree and maybe slightly disagree with some of the above,

I have lived in London for the past 15 years and recently moved to Manchester, the reason I mention this is that in that time, I have seen so many stories adn aeticles of oversupply and too many off plan develeopments, and have to admit at the time, I personally got put off by it. Remember looking around 2010 at an off plan flat in Stretford, but there were literally so many projects and cranes up and remember even reading Evening Standard about massive oversupply. I think the flat was about 170k.  Few years later the same apartments in this building were going for 300 plus and no sign of oversupply whatsover,  of course not going to suggest or try to compare London with Manchester, as here we will not benefit from the next Olympic Games and hundreds of billions, but some of the principles are the same. There seems to be a very good demand for places like Manchester, many big employers have relcoated and new businesses seeing the potential.

If I was to ignore for a moment Covid-19 and the current trend of work from home, less office space and people looking for more space that can be found out of the city, I think the argument for city centre living is very strong, and you can see that confidence and beleif in the many cranes you can see across the city.  THe developers would not be buying new land and building new flats if they did not think that they can sell it and at profit.  So I dont think that in general there is going to be oversupply in either Manchester or Liverpool. I started the paragraph with ignoring Covid, which of course cannot be done and no doubt that at least in short term, this may effect the supply/demand balance in the city centres. In my view, yes there will be some shift in what are people after, especially whilst we live in COvid conditions, but in long term,there will always be a strong demand for the city centre living and in my view this trend of moving from city will be short lived.

Now, having said that and to contradict personally to my own statement to an extent, I think that now is probably the right time to buy outside of the city centre, but not neccessarily because I worry that there is or will be oversupply in city centre, but more so with what the current trend and the foreseeable likely going to look like. I can see how houses will do well over the next few years and currently trying myself to pin point the best area for capital growth. It very much depends on your overall cicumstances and strategy, I bought a city centre flat during the height of the pandemic and made advantage of few sellers panicking and got a good price for it, but now for me with having few flats its time to diverse the portfolio and hence shifting to houses. I think flat is also easier to start with as its generally more hands off

 

The other point to make on City Centre and probably very relevant, is what I actually refer to city centre and what others, such as certain developers might advertise as City Centre. My comments above in relation to oversupply are based on what I refer to as City Centre.  I consider city centre areas in Manchester around Piccadilly, Spinningfields and Northern Quarter, dont think you can also go wrong in developments by Deansgate or Ancoats as both are being transformed and heavily invested in. IN Liverpool I am less familiar with, but around the Albert Docks and the Liverppol One shopping centre and upto the main train station to me are all pretty safe areas at low risk of oversupply and strong rental demand, despite Covid.

The risk of oversupply is in the so called City Centre schemes, in areas geographically actually out of the city centre, these are often closer to the suburb areas already , so your tenant profile changes, I can see some people that were looking into a 1 bed flat in the so called city centre, which is cheaper then the actual city centre, noe reconsidering their options and perhaps getting a two bed terraced for same price jsut slightly more out of town. I can see maybe some drop in demand and prices in these schemes. I rememeber looking at a scheme advertised as City Centre, called Middlewood Locks in Manchester. Its  a huge scheme and a lot of regeneration to the area, but when you actually look where it is, in my view thats not City Centre or what I would refer to as Prime location.

 

So in my view, if you are going for City Centre, go for City Centre and not the "so called" centre because its 50k cheaper.  Go for prime stock and dont think you can go much wrong, as long as you do your research on the off plan developer, because jsut becasue they are building in prime location, it does not mean it will be autimatic success, so do your due diligence.

Lastly, buying off plan, if you get it right, could be a good kick start to your portfolio especially if you secure at a good price in the construction phase.

 

Good Luck

 

 

 

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  • 3 months later...

I've noticed a huge amount of apartments for sale in Liverpool by  RW Invest. They all seem dreadful - many of them overpriced tiny studios. I am sure RW Invest is in serious trouble and won't be able to move these. Who would buy a tiny studio in endless lockdown? Are any international students coming to study in Liverpool, with lockdowns, closed universities and forced quarantine? It looks to me like they were having problems moving these apartments even BEFORE the government imposed these draconian measures.

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I don’t know because I lack any good comparison. I’ve somehow never managed to get PropetyHub to send me any of their flats in nearly a year despite asking a few times. 

I also only checked out 1 and 2 beds, not studios. 

Because I haven’t been able to go and visit Liverpool and Manchester and I’m not ready to invest where I haven’t spent a few days, I have only kept an eye on what’s going on, and RW Invest are very active. 

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RW Invest are doing very well, don't worry about them. They haven't got enough stock to meet demand. However, like all the other new build stuff in Liverpool, it's all significantly over-priced: 2-beds in Parliament Square, for example, are going for around 210k, whereas you can pick up decent 2-bed flats around that area that are a few years old for 150k. As for studios, I almost spat my coffee out this morning when I saw Knight Knox (of Manchester new-build fame) was selling studios in Fox Street Village (not even a good area and not the true city centre) for 85k, and even 95k for the "penthouses" - meaning just the same style of flat, but on the top floor (bid deal). Those same flats are not even selling for 50k in the completed blocks. It's amazing what investors (mostly from abroad and London) will pay for new-build flats in Liverpool. None of the capital-gain projections are realistic, and the service charges are subject to massive upward adjustment at the drop of a hat, leaving you with a property worth a fraction of what you paid for it. My advice is to stay well away from off plan altogether (it's far too risky and you'll be overpaying every time) and go for freehold houses or else flats that are being sold at auction (usually for around 60% of what the original investor paid for them a few years ago). That way at least you'll get a decent yield and have limited your downside risk.

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Thanks @adiel stephenson

To be honest, the attractive part of off plan and RW Invest type of flats is the hands off approach, especially since I don’t know the area. I won’t be committing to anything before having been to the city and had a feel for the area (that’s going to be easy, thanks Covid), but even once I’ve decided a few areas I’m happy with, auction houses are probably not a good idea for me (I have no experience in property). 
Second hand though, maybe. 

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On 2/18/2021 at 7:40 PM, adiel stephenson said:

RW Invest are doing very well, don't worry about them. They haven't got enough stock to meet demand. However, like all the other new build stuff in Liverpool, it's all significantly over-priced: 2-beds in Parliament Square, for example, are going for around 210k, whereas you can pick up decent 2-bed flats around that area that are a few years old for 150k. As for studios, I almost spat my coffee out this morning when I saw Knight Knox (of Manchester new-build fame) was selling studios in Fox Street Village (not even a good area and not the true city centre) for 85k, and even 95k for the "penthouses" - meaning just the same style of flat, but on the top floor (bid deal). Those same flats are not even selling for 50k in the completed blocks. It's amazing what investors (mostly from abroad and London) will pay for new-build flats in Liverpool. None of the capital-gain projections are realistic, and the service charges are subject to massive upward adjustment at the drop of a hat, leaving you with a property worth a fraction of what you paid for it. My advice is to stay well away from off plan altogether (it's far too risky and you'll be overpaying every time) and go for freehold houses or else flats that are being sold at auction (usually for around 60% of what the original investor paid for them a few years ago). That way at least you'll get a decent yield and have limited your downside risk.

How do you know RW Invest are doing well? Are you part of RW Invest? :)

They have a lot of expensive studios for sale. Who would want to buy an expensive studio in Liverpool? Who would want to live in an expensive studio in Liverpool in a season of unending lockdown? How many foreign students are coming to study in Liverpool? I'd be interested to know what the figures are for reductions in overseas enrolements.

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On 2/18/2021 at 9:50 PM, willv said:

Thanks @adiel stephenson

To be honest, the attractive part of off plan and RW Invest type of flats is the hands off approach, especially since I don’t know the area. I won’t be committing to anything before having been to the city and had a feel for the area (that’s going to be easy, thanks Covid), but even once I’ve decided a few areas I’m happy with, auction houses are probably not a good idea for me (I have no experience in property). 
Second hand though, maybe. 

It's great that we can still travel around the country for our business as property investors. After all, you can't inspect a new purchase virtually. Well, you could, but it's definitely a reasonable excuse to go and inspect it in person.

 

 

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