Manchester's Local Lockdown Is Hurting The Property Market

Last weekend Rusholme, the usually boisterous heart of the annual Eid celebration, was silent and deserted, and its many restaurants empty. 

Manchester’s long-anticipated local lockdown has begun, amidst some anger, some confusion and growing signs of frustration from the city’s property industry.

The lockdown imposed by the UK Government on Greater Manchester and neighbouring parts of Lancashire and Yorkshire limits social contacts but not economic contacts. Yet the early signs are its economic impact will be significant.

Beyond Rusholme there is also mostly compliance with the new restrictions on private gatherings, but also much annoyance. The Manchester character being what it is, it is being vigorously expressed. Why, many ask, are Manchester residents forbidden to sit in their own gardens with their families but still allowed to sit in a crowded, poorly ventilated pub or office with dozens of strangers? More than a few in the city are finding their patience stretched to breaking point by the lockdown rules.

For the Manchester property industry the timing could not have been worse, coming just as the city’s economy began to bounce back.

At this most unlikely of moments Manchester-based consultancy OBI Property announced six new hires. Yet talk to OBI co-founder Will Lewis and what looks at first like an upbeat story turns out to be more complicated. The new recruits were hired before lockdown and resigned from their existing jobs. Lewis and his team did not feel they could then leave them stranded.

“It is so bizarre taking on new people, then telling them they can’t meet the rest of the team and imposing an immediate wage cut. It’s mental,” Lewis told Bisnow.

“We didn’t panic in March when the national lockdown began. Others panicked, but we didn’t. We kept our cash and planned to get through to 1 September, expecting the final quarter to pick up. But I see now we were totally wrong because the end of the year will be tougher than anything we’ve seen so far. The worst is yet to come.”

The latest local lockdown is multiplying the problems caused by the national lockdown, Lewis said. 

“Our team is back in the city centre, working safely, but the big city-centre employers are not bringing staff back and the consequence is that the city centre is dying. Big businesses need to return. And now the local lockdown causes even more confusion. For instance, I couldn’t work out whether I could meet for lunch with a French investor who has come over to talk today.

“So it’s crazy, and everyone is confused, and I think the result is that lots of people are just doing what they want because its hard to understand why you are allowed to sit in an office with 30 people but can’t sit in a pub with them after work,” Lewis said.

Lewis called on the government to rethink its approach. “The world has to keep on turning,” he said, appealing for a balance between health risks and economic risks.

CBRE Regional Managing Director John Ogden shares the mood but prefers to see the upside, even if there's a touch of gallows humour about his approach.

“We are still doing viewings and our office is busy, the one thing about lockdown is that you know if people want to come out and look at office space they really want to come and look at office space, so the chances of doing a transaction are greatly improved,” Ogden said. 

“There is no question that investment activity is slow but there are stirrings and I don’t think this short term lockdown for Manchester changes the macro picture. We know that investors and sellers are out there and with a bit more certainty in the world there are a lot of property deals to do, the potential is phenomenal.”

However, Ogden confesses it is too early to say whether the city’s economy will slip backwards, adding [that] “a vaccine can’t come soon enough.”

There will be consequences too for the residential sector, and they come just as it recovered momentum.

Whilst the Greater Manchester lockdown rules do not prohibit house viewings, or visits to sales offices, the expectation is that visitors from outside Greater Manchester will be scarce until the local lockdown is ended. This restricts the pool of potential buyers and places the emphasis on online and remote sales.

Developer Salboy was predicting strong demand when it announced the launch of a 40-storey residential tower at Viadux, near Deansgate. But that was a whole week ago.

Despite the impact of the coronavirus, Salboy Director Simon Ismail said enquiries for off-plan investments continue to be buoyant with interest from within the UK as well as overseas.

“This is a long-term investment in Manchester and from the level of enquiries we know many people are very confident in what Manchester will look like in four years’ time and want to be part of it,” Ismail said.

The first phase release will see one- and two-bedroom apartments and penthouses with off-plan sales handled directly by Salboy’s in-house sales team. Viadux prices are mid-range, which widens its appeal, Ismail said.

For the Manchester property market this week has an unreal quality: Nobody knows what comes next.

Even thoughtful pricing will not help, if the buyers aren't able to be there.