According to a recent report by PwC, UK infrastructural spending is set to increase to £110bn by 2025. Of that, 85% is spent on transport projects.
With such intense investment across a diversity of projects, it’s difficult for investors to know which projects are worth following closely. In this post, we’ve identified three ongoing infrastructural projects in the UK that we feel are going to have a real impact on the UK property landscape.
Dubbed Europe’s largest infrastructural project, Crossrail has a total spend of £15.9bn. The new Elizabeth line will run west to east from Reading and Heathrow to Shenfield and Abbey Wood.
According to the Financial Times, in the past five years, there have been two million sq m of new residential and commercial spaces built around Bond Street and Tottenham Court Road Crossrail station. It’s not just central London that’s feeling the effect. Slough and Reading, two towns that will benefit from new connections to central London has witnessed a soar in house prices, rising 39% and 33% respectively since April 2014. That’s compared to a national average of 22% since the same year according to a special report by Nationwide.
House prices of properties within a 15-minute walk to a station along the Elizabeth line have increased by an average of 30 to 60 per cent more than house prices away from the route since the project was announced in 2009. Strong figures and a prime reason Delph Property Group’s acquisitions team is constantly on the lookout for sites in the area.
High Speed Two, the second phase of the Government’s high-speed rail network plan is a project worth an enormous £56bn. The aim of HS2 is to enhance connectivity between the north and south of England, running in a Y shape, from London in the south to Birmingham in the Midlands, before splitting north-west to Manchester and north-easterly to Leeds.
Looking back to Crossrail, the majority of house price increase came from 2014 onwards, five years after construction officially commenced and five years prior to scheduled completion. That gives us an indication that the market saw real effect at the mid-way point of the project.
HS2 was approved formally by the Government in 2012, with a scheduled completion of the first phase between London and Birmingham in 2026. That means that in 2019, we’ll be mid-way through the project and following Crossrail’s logic, we may see a significant jump in property prices around Birmingham.
That means that now may truly be the last opportunity for investors to achieve excellent yields in Birmingham.
The Government has forecast that it will be the north that stands to benefit the most from HS2, projecting that 70% of the jobs created by HS2 will be in the north of England. Greater connectivity will no doubt lead to businesses northshoring to centre operations where land is cheaper and populated by high value graduates from some of the country’s leading universities. As graduates remain, the north benefits from ‘brain gain’ creating an influx of demand for quality apartments for this valuable demographic.
Manchester Airport expansion
As the debate around Heathrow expansion rumbles on in Westminster, Manchester airport has been quietly progressing with its own mega expansion project, worth £1bn. The largest upgrade in the airport’s history, terminals 2 and 3 will merge to form a ‘super terminal’ capable of carrying up to 50 million passengers per year. The airport itself will employ over 20,000 people once completed and the provision of extra secure jobs will create further demand from both first-time buyers and investment buyers.
Interestingly, Manchester will receive the UK’s first US pre-clearance facility where passengers travelling to the US will be able to clear customs before boarding their flight. This is thought to make Manchester more attractive to US airlines as a new route. Its inclusion will undoubtedly also make Manchester a more desirable departure point for business travellers and frequently travelling HNW individuals, giving real potential to bring increased foreign direct investment in the city.
We are very pleased that we entered Manchester’s residential property market with The Hallmark when we did. This city’s economy is only going to get bigger, stronger and more diverse, and property prices are set to rise in line with this trajectory.
If you’re looking to fund a residential property scheme of 50 to 400 units in a UK regional hotspot, contact us today.