Prime residential properties in London have not lost their appeal among international real estate investors, but soaring property prices in Central London and neighbouring boroughs are eroding absolute gains from rents.
For investors looking to generate cash flow, rather than park capital and wait, the capital’s appeal for this strategy is quietly eroding. Rising prices in Central London are turning yield compression into a structural not cyclical problem. Average gross rental yields in London range from 3-4% in most areas.
Real estate investors chasing higher yields, such as institutional and private funds, are increasingly turning to fast growing secondary cities like Manchester, where property prices are proportionately less compared to London, but demand drivers like universities and strong economic growth supports rental demand in key areas.
The spotlight is on Manchester – a city with the fastest-growing urban economy, excluding London – which has recorded economic growth at twice the national rate. Property values in Manchester’s city centre have posted an annual gross value added (GVA) growth rate of 3.1% since 2008, significantly above the national average of 1.4% over the same period.
Overall, residential property values in the North West region are on track to record price growth of 5.5% in 2026, part of an expected cumulative gain of 28.8% through to 2028, according to market research by Savills.
Meanwhile, JLL estimates that the five-year property growth in Manchester from 2024 to 2028 will clock in at about 19.3%, ahead of the UK national average of 17.6% over the same period.
The rental market in major cities in the North West is running hot
Private residential rents in the UK’s North West region have increased 6% on a yearly basis from Jan 2025 to Jan 2026, according to official housing data from the Office for National Statistics (ONS) in the UK, and this is more than double the rate of wage growth in some parts of the region.
Those numbers actually understate the trend in Manchester’s city centre, where rents for apartments have risen by nearly 50% over the past five years, according to data from Savills.
It forecasts rental growth of 17.1% for the North West over the next five years, among the strongest of any UK region. Meanwhile, JLL predicts that rental growth in Manchester’s city centre will increase 18.8% from 2026 to 2028.
Average rents in Manchester city centre hit £1,343 per month in January 2026, up 3.2% year-on-year, according to a report by Zoopla.
Residential rental yields tell a similar story. Apartments in Manchester city centre’s rental yields average 6% to 7.4%, depending on zone and asset type, already well above the UK average of around 5.8%. This performance is a different league from what some Zone 1 and Zone 2 properties in London typically offer.
Moreover, rising construction costs and a limited supply pipeline in Manchester mean that the market conditions driving these yields are unlikely to ease in the near term.
Factors driving up rental demand in Manchester
The fact that the surge in rental demand and rents for apartments in Manchester can be traced to several factors makes the property market a compelling case for investors.
The city is home to one of the largest student populations in Europe – comprising international and local students – including those from the Russell Group University of Manchester and Manchester Metropolitan University.
Statistics from the city indicate that about 51% of graduates choose to stay in the city after completing their degrees, which creates a structural floor of tenant demand that is difficult to dislodge.
The city’s economy is also buoyed by the presence of several listed companies with headquarters or major offices there. Close to 80% of the companies on the Financial Times Stock Exchange (FTSE) 100 Index have a commercial presence in Greater Manchester.
Global businesses like Amazon, PwC, Siemens, Booking.com and NatWest have clustered along and around the Oxford Road corridor, cementing the young professional demographic in the city’s economy. ONS data also shows that the North West region of the UK has consistently ranked in the top third of UK cities for business density across all UK regions, representing close to 10% of the national total.
However, the pipeline of new and upcoming residential supply is tight. Manchester has a five-year housing requirement of over 21,000 dwellings between 2025 and 2030, but net completions in the last recorded year came in at just 3,864.
The result is the persistent supply-demand imbalance that supports high occupancy rates, vacancy periods short, and continues to apply upward pressure on rents, none of which is bad news if you’re in the position of a landlord.
£1.7 billion rejuvenation project transforming a former university campus
An ongoing £1.7 billion regeneration scheme is reshaping a portion of the city centre in Manchester, transforming the former University of Manchester Institute of Science and Technology campus into a new technology and innovation district.
Located near Picadilly Station, the master planned project, jointly developed by The University of Manchester and UK developer Bruntwood, comprises more than two million sq ft of new commercial space, about 1,500 homes, and new public spaces.
The commercial areas will cater to companies in fintech, biotech, and green technology. Development of the entire master plan will take approximately 20 years and the first building opened in 2024.
A project of this scale and duration represents a sustained pipeline of new employers, workers, and residents looking for accommodation within walking distance of their workplace. This transformation is a long-term demand anchor for the Manchester city centre.
Another large-scale development project is also taking place in the vicinity by UK developer, Select Property, who has launched the sale of units at two completed residential towers.
Select Property’s Vita Living Circle Square North
Developers have been quick to capitalise on the expected growth prospects of the city, and some – Select Property – are positioning their projects to directly appeal to investors, selling completed projects and units with existing tenancies.
It is uncommon for a developer to sell units in a completed development, and will be a boon for many international investors who might be able to side-step finding a tenant after purchasing units.
The newest project launched by Select Property in Manchester is Vita Living Circle Square North, a 35-storey apartment block off Oxford Road in the city centre. The 417-unit development consists of studios as well as one- to three-bedroom units.
| Unit Type | Size (sq ft) | Price (starting from) |
| Studio | 425 | £290,000 |
| One-bedroom | 463 – 464 | £315,000 |
| Two-bedroom | 710 | £365,000 |
| Three-bedroom | 948 | £497,000 |
Purchases start with a 10% deposit, a reservation and admin fee of £5,495, with the remaining purchase price due in June 2027. Overall, the development is more than 98% leased and investors can expect rental yields of 6.75% to 8.2%, according to the developer.
Each unit is fully furnished with high-quality integrated appliances. The diversity of unit types supports a mixed tenant base from students to professionals, reducing concentration risk and keeping vacancy rates low.
Some of the features in this development include a 35th-floor Sky Bar with panoramic 300-degree views of the city, two outdoor terraces on the 15th floor, a residents’ lounge and social hub, two bookable private dining rooms, and a fully equipped gymnasium.
The co-working space, touted as the largest offering of its kind in a new residential project in Manchester, was significantly expanded after resident satisfaction surveys flagged demand for more flexible workspace. £500,000 was reinvested into private pods, communal desks, and group meeting areas. This operational responsiveness is reflected in its retention numbers.
This is the second completed residential development in Manchester that Select Property has launched for sale in less than a year. It previously launched the neighbouring 266-unit Vita Living Circle Square in May 2025, moving 230 units (86%) over the last 10 months.
That development was completed in 2021 and most units were also sold with tenancies. The remaining available units are priced from £379,810 for a two-bedroom and £484,195 for a three-bedroom, while all the studios and one-bedroom units are sold out.
At Vita Living Circle Square North, prospective investors will buy into a building that has been operational for four years. This benchmark matters because it produces real numbers rather than forecasted ones.
Whether Circle Square North is the right fit will depend on individual circumstances and risk appetite, and independent financial and legal advice is worth seeking before any cross-border investment decision. But for Singapore-based investors familiar with overseas property, particularly in markets like Japan where rental demand and attractive yields have been a recurring draw, Manchester could be a structurally different but complementary addition to your portfolio.
At Stacked, we like to look beyond the headlines and surface-level numbers, and focus on how things play out in the real world.
If you’d like to discuss how this applies to your own circumstances, you can reach out for a one-to-one consultation here.
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