We went Manchester flat-hunting - in Hong Kong
'It’s just so easy to sell to overseas investors'
|Oct 17|| 7||2|
By Andrea Sandor in Manchester and Harvey Kong in Hong Kong
In the 1840s, a young Friedrich Engels roamed the slums of Manchester’s Angel Meadow on the edge of the city centre. Families were packed into single rooms and rodents and disease ran rampant, the putrid stench from the River Irk wafting across the desperate neighbourhood. “Everything here arouses horror and indignation,” Engels wrote.
With the highest mortality rates in the country, an early guidebook called Angel Meadow a “depot for the dead” – a reference to its mass paupers’ graves, which held the bodies of more than 40,000 of the city’s poorest citizens. Half of those who died were under the age of five. Engels called the area “hell upon earth.” Around the same time, the journalist Angus Reach wrote that Angel Meadow was “full of cellars and inhabited by prostitutes, their bullies, thieves, cadgers, vagrants…”
Skip forward about 175 years and we sent a reporter to find out what has become of Angel Meadow, now branded as Meadowside by the developer building luxury flats around it. A reporter in Hong Kong of course, because Meadowside is as much a Hong Kong story as it is a Manchester one.
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The developer remaking much of the former slumland around Angel Meadow is the Far East Consortium, a Hong Kong-based developer who did a deal with Manchester City Council in 2017 to build 756 apartments, penthouses and townhouses overlooking the park. The development is called Meadowside and is the first part of The Northern Gateway - an ambitious, council-led attempt to regenerate parts of north Manchester by stitching them into the city centre.
One of the contractors building the apartments is China Zhejiang Construction Group Hong Kong (the Hong Kong subsidiary of Zhejiang Construction Investment Group Company Limited, a state-owned enterprise in China) which is working on a 22-story building called The Gate. And as our reporting for this story has confirmed, it is from Hong Kong that many of the buyers will come too.
A computer-generated image of The Gate and The Stile, two of the buildings that form the Meadowside development
Much has been made of the role of overseas buyers and developers in the Manchester property market recently. As an article in The Mill noted when the BBC series Manctopia was airing: “The fastest-growing sector of the Manchester building boom is funded by overseas investors, and is built for rental.” But how does this work? And how does Manchester sell itself as an attractive investment to professionals in Asian cities who have never been here and might never come? To find out, we teamed up with a Hong Kong journalist and went flat-hunting.
Our reporter expresses an interest in buying a flat in Manchester with a local agency and is soon invited for a meeting in an upmarket office building with sweeping views of Hong Kong’s Victoria Harbour. The agent tells him about the flats in Meadowside, which will have a video door entry system and a concierge. “It is slightly outside the city centre,” the agent tells him, boasting about the proximity to shops and Victoria station. She says it’s a better place to live than Deansgate and Spinningfields – greener and more liveable.
And there is another key benefit to bear in mind: it will rent well. "This is good for rent, people who maybe move from London where their company pay for their rent, then they will pick here,” she says.
An investor’s dream
She singles out a flat for him on the 13th floor of The Gate – a two-bedroom for £365,000. She shows him some photographs of the show flats and says the finishing is similar to flats in London. She says The Gate is completing in just over a year but is selling out fast. Oh, and just so he knows: “Not all the buyers are from Hong Kong.” She points to a certain section of the development, which she says “will have more Hong Kong people, but some of them are using it for investment and renting it out to local people.”
This is the new world of Manchester property. An agent in a plush business district of Hong Kong selling flats in a building built by Hong Kong builders and funded by Hong Kong investors to a Hong Kong buyer so that he can ride rental income from London professionals. This extraordinary global capital flow pumping through Manchester would have been unthinkable to Tony Wilson, let alone Friedrich Engels.
It’s worth pointing out that this development does seem to have made an effort to sell in Manchester before it powered up the sales machine in Hong Kong. "At their first launch, they didn't send it to Hong Kong, they launched it just in Manchester,” the agent says.
When The Mill took a tour of the Meadowside show flat in Manchester, we were told a similar thing. The agent in that meeting said she expects half of the developments will be sold to investors but is quick to point out that some flats have been held back for owner-occupiers to avoid them getting swooped up. But, she explains: “It’s just so easy to sell to overseas investors.”
We attended two meetings in Hong Kong – one with the agent who was trying to sell Meadowside, and another with a male agent who was focusing on Elizabeth Tower in Deansgate, Oxygen Tower near Piccadilly and Local Crescent in Salford. Both agents describe investing in Manchester property like it’s a well-oiled machine. “Once you complete the transaction, you can start collecting rent," the male agent tells our reporter.
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This is how it works. If we decide to buy, the agent’s company will handle the mortgage arrangements and lawyers. They will also recommend that we buy a furniture pack because, one agent explains, the kind of people we will be renting to want furnished flats. The Hong Kong agent will then connect us with Manchester letting agencies, which will charge 8% plus VAT for the letting management fee. If we wish to sell the property in the future, the Hong Kong agency will connect us with Manchester property agents.
A promotional picture for Local Crescent in Salford, which promises to offer buyers “unrivalled views across the River Irwell and the acres of surrounding parkland.”
The agents are confident there’s a big market for renting. "For the foreigner [Brits],” one agent says, “they don't like to buy apartments, they don't like to buy a flat, they like to spend everything on beer, alcohol or food. They don't have much savings. So, for rental, the market is quite good."
When approached for comment on this story, Salboy, the developer behind Local Crescent, told The Mill that overseas investment “has its place in the property market” because it helps developers “off-set risk at the early stages of off-plans sales where owner-occupiers might not be in a position to wait 2-3 years for a property to get delivered.” The company says it is “not interested in a quick turn,” and added: “Our schemes are a balanced mix of investors and owners, blending sales and rentals—allowing everyone to live in a Salboy property development.” The Far East Consortium and the developers behind the other buildings mentioned in this story did not reply to our request for comment.
Hong Kong insurance
Hong Kong has the most expensive property market in the world, with the average property costing £970,000. As the Financial Times reported earlier this year, that’s twice as expensive as London. While one of the most unaffordable cities in the world, a 2018 study by the University of Hong Kong also found that Hong Kongers are savers, tucking away around £700 a month. This goes part way to explain why for some time the UK has been considered a good place for Hong Kongers to invest.
The male agent puts it this way: "It's really ridiculous. If it's around the price of $2 million HKD (£200,000) and it's in Manchester, then they sell really quickly." He continues, “You can't even buy a parking space in Hong Kong with that amount of money, so they are really selling quickly, I'm not making this up." Reports suggest buying a parking space in Hong Kong can be four times more expensive than buying a luxury flat in Manhattan.
The agents say London continues to be the most sought-after market in the UK because it’s the most stable and developed. One agent tells us the types of people buying an investment property in London are bankers, doctors, and high-ranking company executives. “They will pick London and never consider Manchester.” In her experience, the people investing in Manchester are teachers and people “who aren’t very rich.”
The maths make sense. Saving £700 a month in Hong Kong won’t go very far when average house prices are nearly £1 million. But buying a £200-300,000 investment flat is feasible. Thanks to the free flows of globalised capitalism, middle-class people living in the most expensive city in the world, anxious about having enough for retirement, can buy a bolt hole across the world to help prop up their savings, especially when interest rates are so low.
In the past few months, Hong Kong has become an especially hot market for Manchester property. Earlier this year, in response to moves by China to limit freedoms in Hong Kong, the UK government opened its doors to Hong Kong’s 3 million residents with eligibility for British National Overseas (BNO) citizenship and their close family members. According to a recent article in the South China Morning Post, 7,000 UK properties have sold in the past two months to BNO passport holders.
The BNO pathway, combined with the stamp duty holiday and the weak pound, have made it a propitious time for Hong Kongers to invest in UK property since the pandemic. The turbulent political environment means wealthy Hong Kongers are also looking for safer investments. "Some are using this as an insurance,” the male agent explains to our reporter. “We won't know what will happen here in the next few years. You buy it, collect rental income for a few years. If you need to use it, then you can take over the flat."
“Recently, a customer had the idea to just invest in UK property to move his assets abroad, as he didn't know whether he would be able to move his money later,” the agent recalls. Another client saw that the market in Hong Kong was dropping so decided to buy property in the UK. “You have to diversify your investment portfolio,” he tells us.
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