Place RESI

2015

Where are we

going with

Planning and

the Housing

Market in 2015?John Cooper & Graham Stock

Deloitte Real Estate

26 March 2015

2

Welcome

John Cooper Graham Stock

Place RESI 2015 – John Cooper and Graham Stock, Deloitte Real Estate3

Welcome

The UK economy

An improving picture

4

5

Sustaining growth

6

CFO risk appetiteGood time to take greater risk

7

Construction outputGrowth rebounds at the start of 2015

8

Source: The Markit UK Construction survey

National Household Growth

2001

21.7 million

14.9m home

owners and

6.7m renters

2011

23.4 million

15.0m home

owners and

8.3m renters

1.7m

increase

35%

65%

Rent Own

31%

69%

Rent Own

Owner Occupier Rise: 110,000

Renter Rise: 1.6million

Source: www.ons.gov.uk

The North West

An Emerging

Powerhouse?

North West Recovery

• RBS Regional Growth Tracker for Q4

of 2014 – North West Economy

experienced an 3.1% growth on 2013

• Service Sector dominant force with

entrepreneurial spirit a defining factor.

• ‘A renaissance in the property and

commercial real estate sectors’

11

Manchester is a national engine

of economic growth

• Population of 515,000 at the heart of a

conurbation of 3 million people

• Recognition of dynamics of global

market chances.

• North West Economy – 3.1% year on

year growth in Q4 2014 – RBS

Regional Growth Tracker

12

Greater Manchester Economic Outputs

(Source: GM Key Facts, July 2014)

A Growing City, A Younger City

13

41,400 (25%) increase in 20-24

year olds in Greater Manchester

(Census 2011)

50% of Manchester’s population

Under 30 (Census 2011)

Graduate Retention Key

14

Figure 2: Proportion of graduates from 2012/13 originally domiciled, and proportion of graduates who

went to university in each region, working in the region six months after graduation

Source of data: HESA’s Destinations of Leaver from Higher Education 2012/13

The Northern Powerhouse

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Source: M.A.G

Manchester

Housing Market Signals

Pattern of Residential Change

• Greater Manchester experienced a

larger level of household growth than

average across England and Wales

• Higher proportion of private and

socially rented tenure homes in

Manchester comparable to the

England and Wales average

37.8

0.731.6

28.4

Owned outright or with mortgage

Shared ownership

Social-rented

Private-rented

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Government Support in Place

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A New National Growth Cycle?

• Economic downturn impacted housing

price but latest statistics show a

recovery.

• Greater Manchester Forecasting

Model provides a more positive

outlook

• With few new starts in the last 5 years,

occupancy rates are now very high in

the City Centre.

Source: GM Forecasting (2014-2024)

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100,000 jobs

expected to

created by 2024

across Greater

Manchester

Over the next

decade, GVA

growth is forecast

to average 2.8%

per year in

Greater

Manchester,

The Link Between Housing and

Economic Growth

20

The Current Position: Supply

21

“Manchester is Full” (Sir Richard Leese, August 2014)

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9.2% projected

population growth

(2013-2023)

100,000 jobs projected

across Greater Manchester

(2013-2023)

60,000 units required in

Manchester (2010-2027)

28% of total housing

supply in City Centre

20% population

growth (2001-2011)

How does Manchester City

Council counter this?

23

Recently committed development

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In the Near Future – City Centre

Northern Fringe

25

Study Area Boundary from Ancoats and New Islington NDF (Oct 2014)

In the Near Future - St Johns

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2015 and Beyond

Future Trends

PRS

28

Residential Area Design Guide

A new Residential Design Guide discussed at Manchester

City Council Executive March 18th

An interim solution has been adopted whilst a Manchester

Design Guide can be prepared.

What does this mean for developers?

29

The Impact of Rising Land Value “An acre of land on the more challenging edge of Manchester is now £5m.

Pause for a second and let that sink in.

Eighteen months ago it was probably more like £1m

Which is great if you own an open surface car park or a derelict shop, not so good if

you are a developer looking to build a high quality residential scheme with spacious

homes, good amenities and open spaces.

Which means it's not so good for the long term ambition and success of the city.

At £5m you are going to have to go very tall to make the scheme stack up, so to

speak. In other words make a profit for the developer. This is fine for the city core,

but not appropriate for Ancoats or its immediate fringe or other areas such as the Irk

Valley.

So how do you curtail the gold rush?

The other ace is to draw up development frameworks for all the remaining key areas

of the city fringe, the Irk Valley, New Cross, Holt Town etc, so anyone coming in will

have to deliver to that framework.”

Jill Burdett, Manchester Confidential, reporting from MIPIM 2015

30

The Impact of Rising Land Value “An acre of land on the more challenging edge of Manchester is now £5m.

Pause for a second and let that sink in.

Eighteen months ago it was probably more like £1m

Which is great if you own an open surface car park or a derelict shop, not so good

if you are a developer looking to build a high quality residential scheme with

spacious homes, good amenities and open spaces.

Which means it's not so good for the long term ambition and success of the

city.

At £5m you are going to have to go very tall to make the scheme stack up, so to

speak. In other words make a profit for the developer. This is fine for the city core,

but not appropriate for Ancoats or its immediate fringe or other areas such as the Irk

Valley.

So how do you curtail the gold rush?

The other ace is to draw up development frameworks for all the remaining key

areas of the city fringe, the Irk Valley, New Cross, Holt Town etc, so anyone coming

in will have to deliver to that framework.”

Jill Burdett, Manchester Confidential, reporting from MIPIM 201531

More Stalled Schemes on the

Return?

32

Previous scheme for the Origin site on Princess Street – previously West Properties

now owned by Urban and Civic

#devomanc and the Greater

Manchester Spatial Framework

• Devolution powers gaining

pace

• What will the reality be

upon adoption of the

GMSF, earmarked for 2018

• The reaction of Greater

Manchester Authorities

differs – although most

have Core Strategies in

place.

33

Back to the Boom?

34

Concept visuals presented by Mike Ingall at MIPIM 2015 for St Johns

• Economic recovery is underway

• An increase in proportion of renters

• Manchester is an increasingly young city in a region which

has experienced strong graduate retention

• A critical need for new housing which is vital for economic

growth

• Recently committed developments coming forward and

strategic areas for housing are emerging.

• Forthcoming changes in terms of policy and guidance will

seek to shape future development.

35

Key Themes

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