Do you go where the majority go, or do you follow the smart money?
Whilst there may be an obvious answer to that one, identifying which money is ‘smart’ and which is just part of the herd isn’t as straightforward as it seems.
That holds particularly true for residential investment in the United Kingdom. The country is thriving, with virtually full employment and an economy that has enjoyed seven years of continuous growth. Nor does it show any signs of slowing, Brexit or otherwise.
A rising population is fuelling demand for housing across the UK, but investors are advised to pick their locations carefully. Even within cities the capital gains and yield growth can differ markedly.
In Liverpool, the booming north west port city that gave us the Beatles, the Titanic and one of the world’s top five soccer clubs, the situation is no different. What marks Liverpool out overall is an almost remarkable alignment of value, high demand for rental properties, a growing population and earnings and a thriving economy. But within that golden constellation sits a ‘pull’ factor like no other: a quite majestic waterfront with available development land.
Marketed as ‘Liverpool Waters’, the land sits immediately to the north and west of the city’s large central office quarter and is the beneficiary of the UK’s largest – and longest – planning permission, giving developers with vision the room to express themselves properly. A £5bn, 20-year programme, it promises early entrants sustained capital growth due to continuous improvement and enhancement to the built environment, facilities and infrastructure, from new parks, cultural venues, restaurants, bars and shops and on to a major new cruise liner terminal, hotels and office blocks.
Greg Malouf at Romal Capital says it is an ‘almost unbelievable’ confluence of factors and the reason why the successful Australian developer has backed the instinct he honed over more than thirty years in Sydney’s thriving real estate market to plough millions of his own money in to acquiring a range of prime waterfront sites.
The first of his developments, Quay Central, is rapidly taking shape and is now sold out, allowing him to progress with Park Central next door, a 13-storey apartment building bounded by a canal, a dock and the majestic river Mersey. “Water, everywhere,” says Malouf, pointing to what he considers a ‘magic ingredient’ in successful residential development.
“People just love living by water and we’ve got some of the best, prime waterfront sites on what is the UK’s most recognisable skyline.”
The deal with Liverpool Waters land owner Peel – one of the UK’s largest property companies – has enabled Malouf to focus on the other ingredients to success, such as design, fit-out, landscaping and the wider place-making agenda.
“Peel really get the importance of place-making to the overall composition of Liverpool Waters. The need for parks, squares and open spaces that encourage dwell time and which provide frontages for restaurateurs, bar and café owners. These things are like the glue that hold a community together and reduce tenant churn for investors. Add our very hands-on block management regime and you have the ingredients for long term rental success and capital growth.”
Now a hive of activity, Liverpool Waters will, says Malouf, provide an environment to rival other great water-based cities such as Amsterdam and Sydney. “Okay, we don’t quite have Sydney’s sunshine record, but our apartments do boast stunning views of the cruise liners and shipping lanes and onwards to the Welsh mountains,” he smiles.
Looking ahead, Malouf seems relaxed about Brexit, noting that any headwinds are likely to be short-lived. “The fundamentals that the UK offers international investors won’t change,” he argues. “Low taxes, a reliable legal system, stable government and the huge soft power of ‘brand UK’ will carry us forward. Interest rates remain low, the pound offers huge value and the country has a very benign regulatory environment, which encourages entrepreneurship and job creation in a way you don’t get in many other European countries.”
Back to Liverpool Waters, Malouf suggests that the partnership land owner Peel enjoys with the city council will continue to push the development forward, with new investment in roads, metro stations, multi-storey car parks, hotels and landscaping all recently announced. He welcomes, too, news that other developers are hoping to replicate Romal’s success.
“Look, we’re developing one of the greatest waterfront neighbourhoods anywhere, and the more variety and quality that is brought to the table within the wider masterplan the better it will be for us all. Our site supply is finite and no-one has the quality of locations that we offer so investors can purchase stock comfortable in the knowledge that not only will they have the best locations, their investment will be enhanced by others’ efforts. As the community grows and matures, so too will the assets within it.”
As more tower cranes punctuate the skyline of Liverpool’s waterfront there’s no doubt in Malouf’s mind that this is where the smart money is at work: “I’ve invested millions of my own cash in Liverpool Waters and I can tell you, it’s not on a hunch,” he says with finality.
Sales enquiries to Louise Pearce on 07500 830 382