Proper Wealth from the Nova Cafe EP 8 - The Liverpool Property Market - Nova

Proper Wealth from the Nova Cafe EP 8 – The Liverpool Property Market

Hosted in the Nova Cafe by our Managing Director, Paul Mahoney, Proper Wealth explores all aspects of wealth creation with a specific focus on Property. This 8th episode covers the Liverpool Property Market, changes in Liverpool over recent years, the gentrification and infrastructure underway and why it is a good place to invest with Alex Doonan from Acentus Real Estate. Click above to watch the 8th episode. Proper Wealth is broadcast in Property TV channel 198 on Sky.

Paul Mahoney:

H, I’m Paul Mahoney, and this is Proper Wealth, a show where we discuss all things wealth creation, including property. Today’s a very special show, as it’s a live link between Australia and the UK. Joining me today is Alex Doonan, from the Acentus Real Estate.

Alex, is it true that you were born in Liverpool, and lived there all your life? If so, you must’ve seen some remarkable changes over the past few years.

Alex Doonan:

Yeah, absolutely. I’m a very proud resident of Liverpool of 35 years, or just a little bit over. So, yeah, hopefully I’ll be able to offer a valuable insight to you today on the city.

Paul Mahoney:

What is it that you think has changed the most in Liverpool over recent years, Alex? Is it still stuck in the 60s, and the days of the Beatles, and the romance of Merseyside, or has it moved on from there?

Alex Doonan:

Unrecognizable from the city that I grew up in. Very much change has happened in the city. The big catalyst for that was in the early 2000s, the city achieved a lot of grants from European money, and stuff, and really done very, very well with the spending of that money, with the climax of that being in 2008, when Liverpool was awarded European City of Culture. That was a big boost for the city. Brought a lot of eyes and attention onto the city.

I’m very happy today. The city’s actually gone on from that point, which, as I say, was a lot of sort of funding coming into the city from grants. The acid test for that, I really think, is if the private sector moves in thereafter, and starts to put their money in. Obviously those guys are very focused on a return. I’m very, very pleased to say that since Liverpool has had that influx of funding, the private sector has come in, and really taken up the mantle now. We’ve seen some major developments in recent years, some £10 billion spent on the city.

Paul Mahoney:

Going back a little, Albert Dock was literally just a dock, wasn’t it? Now, it’s completely changed, with the refurbishment. 6.3 million tourists a year. It’s a UNESCO World Heritage site. That sort of regeneration and attractiveness, that must be affecting the buy-to-let market in Liverpool. Is it, Alex?

Alex Doonan:

Absolutely. I mean, it’s a great point that you make regards the Albert Dock. It’s a very relevant point to look at the city from, its history, and also where it is today. Liverpool was famously once the second most important city in the British empire. That was actually founded on the strength of its docklands, and its position inside of the United Kingdom. Obviously, there was a decline in the 60s and 70s, and whatnot, but I’m glad to say the city is now on a massive resurgence.

As you mentioned there, you have the Albert Dock, once scheduled for demolition, derelict, full of silt in the mid part of the 60s, and whatnot. We look at it today, it’s a UNESCO World Heritage Site. It’s the largest free tourist attraction in the north of England. As you quite rightly mentioned, [inaudible 00:03:19] 6.3 million visitors last year alone. We’ve seen huge increases in the visitor numbers year on year at the Albert Dock houses. Four fantastic museums, the latest being the Museum of Liverpool, which actually has the best window view in the UK. If you’re in the city, do come and pay some attention to that.

We have the world famous Tate Art Gallery in there. Plenty of shops, spas, and restaurants. As I say, the figures are improving year on year for that. Last year we saw a 29% increase in the amount of UK visitors visiting the Albert Dock, and that was just from the coaches alone. Obviously, there’s many more people visiting, trains, planes, automobiles, everything else, coming into the city now. Really, really positive signs coming from there, and that just expands to the rest of the city, really.

Paul Mahoney:

Can you tell more about Liverpool ONE, a massive regeneration project right in the center of the city. How has that affected Liverpool overall, and what is Liverpool ONE?

Alex Doonan:

Liverpool ONE is … say brand new. It’s been out from around two years now. Just shy of a billion pounds worth of investments. I think it’s around about 920 million. It’s the largest outdoor shopping center in the entire of the United Kingdom. It’s the fourth largest shopping center by any stretch of the imagination. Just next door, Hilton have just opened a brand new hotel. So yeah, that’s doing great things for the city, in terms of, obviously, keeping up the attraction for the tourists coming in. High end goods in there now, so you can see all of the designer goods, and everything are available in those shops.

As you quite rightly mentioned, as well, the local economy benefits massively with that, with regards to employment, directly for the shops and services that at are there, and also in the service industry supporting all of those retailers in Liverpool ONE as well, yeah.

Paul Mahoney:

We can’t really mention Liverpool without mentioning the football. Where do you stand on the football, Alex?

Alex Doonan:

Well, I stand on football as football’s a beautiful game for everybody to enjoy. I do have an affinity for one of the local teams in Liverpool, that being Everton. Combined, Everton and Liverpool are the two most successful football clubs in the entire of the country. Nowhere else has done better, in terms of winning trophies, and leagues, and everything else like that.

Both world famous teams steeped in history, and are both doing their part for the city as well, with regards to the economy. Liverpool have recently redeveloped Anfield stadium, making that one of the largest stadium in the UK, with hospitality facilities second to none. Everton Football Club have recently purchased a site in the northern docklands in Liverpool from Peel. That’s on the Bramley Moore dock. That is going to be a brand new, 50 to 60,000 seater multipurpose stadium going in the city. That’s going to require all kinds of new road, and rail, and infrastructure links going over to the site. Again, all positive news for the city.

Paul Mahoney:

Okay. Moving back to property. Have property prices risen in Liverpool, and are they set to continue to rise, would you say?

Alex Doonan:

Absolutely, yeah. I mean, we see now a massive influx of interest, particularly from the south, southeast, and our overseas investors. One of the major attractions to Liverpool is its absolutely fantastic average property value. Standing currently today, depending on which figures you look, somewhere between £120 and £130,000, the UK average being slightly over £200,000, and that does exclude London as well.

So, very, very quickly, we can all see that we’ve got around about £70,000 worth of appreciation to move into, just to get Liverpool on a level playing field with the rest of the country. Prices are appreciating between 6 and 7%. Have done for the last four or five years in the country. So, yeah, the property market’s really strong up in Liverpool at the moment, and rightly so. It’s attracted an awful lot of attention, as I say, from the south, and particularly overseas.

Paul Mahoney:

With property prices in Liverpool still well behind London, and also some of the other Midlands and northwest cities like Birmingham and Manchester, it’s obviously quite attractive to buy-to-let investors. Would you say there’s still a lot more potential to be had in Liverpool, so far as beyond the current growth in price it’s already had?

Alex Doonan:

Absolutely. As I say, I mean, for the past four to five years, we’re looking at sort of 6 to 7% capital appreciation, year on year. That’s borne out of a multitude of things, really. Obviously the strength in local economy, the relatively low property price, and the slowing of the appreciation in the rental yields that buy-to-let investors are able to make elsewhere in the UK.

Paul Mahoney:

Before we go to a break, Alex, can you talk to me about Brexit? How would you say that might affect Liverpool?

Alex Doonan:

Absolutely. I mean, Brexit will bring about a lot of change, and in terms of change, there are winners and there are losers. Obviously, everybody is trying to get in a … and I hate to say the word, but the best deal for themselves at the moment, and that goes down regionally as well as it does for the entire of the UK.

When we look at Liverpool particularly, the strength of Liverpool lays in its docklands. The city is now returning to that point. We’ve recently had a major development scheme based up in the northern docklands, and that is part of the Peel project. That’s Liverpool2. That’s a deep water [inaudible 00:08:37] container terminal. That had a staged opening from the end of 2016, meaning Liverpool’s now able to take two trans-Panamax vessels simultaneously into the docklands, which are the most modern docklands available in the United Kingdom at the moment. That actually makes Liverpool the trans-shipment hub for the UK and Ireland.

So, when we look at our trading relations, as they stand today, around about 65, 70% of the goods we consume in the UK arrive at southern ports, and they will be transferred at great expense up towards the north of the country at road and rail, and we all know now that’s not particularly the best in the UK at the moment, HS2 coming in, and everything else. So Liverpool’s perfectly positioned.

When we look at the fact that we’re, as a country, Great Britain is now actually looking further afield for its trading relations, so it will make perfect sense to take advantage of the most modern docklands available in the country. We’ve recently signed an agreement with four of the northern ports, so we’ll actually be taking the goods into the docklands in Liverpool, off-loading them, and sending them out to the four northern ports.

So Brexit will make a real opportunity for Liverpool. Yes, it will have its difficulties, as it will for everybody involved, but we must look at the opportunity, and the opportunity is certainly to capture back the vast majority of ocean freight coming into the United Kingdom. We’ll certainly take that in Liverpool.

Paul Mahoney:

Alex, thanks very much for that. That’s all we have time for, for now. We need to go to a commercial break. Please don’t go away. Join us again after the break for more discussion on the Liverpool property market, and how that can be utilized as a buy-to-let investor.

Welcome back to Proper Wealth, the show where we discuss all things wealth creation, including property, with me, Paul Mahoney. Joining me today is Alex Doonan, from Acentus Real Estate. Alex is joining us from Liverpool, and we’re discussing the Liverpool property market. Thanks for joining me again, Alex.

Alex, in the break there, we were discussing the fact that a quarter of property in Liverpool is privately rented, and that forecasts expect that figure to increase by about 20% by 2020. How do you feel as though that might affect the Liverpool property market, and how will it affect yields, specifically?

Alex Doonan:

Well, from the statistics that you just said there, I think it’s worth actually looking at those statistics in a bit more detail. As you say, around about a quarter of the properties in Liverpool are privately rented, which is, obviously, a real strong indication for the buy-to-let market. As you quite rightly say there, the National Housing Federation are predicting that the rental demand in Liverpool will continue to rise. I believe their figures are forecasting till 2021, and they’re forecasting a further 22% increase on those figures.

So, the city’s rental market is strong. Obviously, people will be looking at these figures and thinking, “Well, it can’t go on forever and a day. Is it going to sort of plateau out?” At no time soon is anybody who would look at statistics predicting that Liverpool is going to plateau out. As we mentioned in the earlier part of the show, with regards to the average house prices and everything in Liverpool, there’s still an awful lot of room for moving into, for Liverpool to be even on a level playing field.

So, yes, whilst the gains are large … 7% in terms of appreciation is big, yes a quarter are already currently rented, but the figures for the next four or five years are predicting a further 22% increase. I think, from a BtL investor point of view, I think everybody can take heart from those figures, and look at them with some certainty, that we can certainly imagine, for the next five to ten years, the rental demand is going to be strong. I shouldn’t imagine that would waver at all, really.

Paul Mahoney:

Okay. Thanks for that, Alex.

What I find really interesting about Liverpool is the fact that economic growth last year was 15%, which significantly outperforms other cities in the UK, and the UK overall, quite substantially. That must be having quite a big impact, especially on central Liverpool, the jobs the available, and the types of people that are living there. How is that affecting everything?

Alex Doonan:

Absolutely, yeah. The changing demographic in the city is clear to see. See, now, I’ve been in the city for 35 years, and a real simple viewpoint on that would be sort of 20, 25 years ago, if you wanted to pop out for a family meal, you were very limited in the amount of cuisines that were available to you. You could have Chinese, Indian, or pretty much English, and that was pretty much about it. When you look around the city now, there are some 30 to 40 different cuisines available in all the restaurants. The latest, a brand new Japanese restaurant’s opening. That gives you some indication of the change in the city, in terms of its inhabitants, in terms of its visitors, and also in terms of its desires and wants for new things actually coming in to the city.

The city’s now becoming more demanding, so it’s very much more cultural. Yeah, we have seen a big change in the demographics, particularly when you look at the age of people inside of Liverpool. Liverpool has a very young population compared with the rest of the UK. I think it’s around about 35% of the city’s residents are actually under the age of 30, which again, for the buy-to-let investors, is a really good indication of a young city. Younger guys are obviously much more difficult to achieve regular mortgages at the moment in the UK, so that should be a real good indication for the buy-to-let investors.

Paul Mahoney:

Okay. Certainly seems like the cost of living, and sort of overall, the ease of living in Liverpool is quite good, compared to a lot of other major cities. Perhaps that’s driving some of the attraction.

Alex Doonan:

Yeah, absolutely. I mean, Liverpool has a growing population, and that’s a key point to mention. Also, in terms of its demographics, Liverpool has one of the youngest populations in the UK, out of any of the major cities. 43% of our residents are under the age of 30, which is obviously a massive indication for buy-to-let investors of the potential inside of the city. Yeah, a great point there.

One of the major attractions to young guys in Liverpool are some of the four universities that the city boasts. We have around about 66,000 students, representing just over 10% of the population of Liverpool, which is, again, an astounding figure. These guys come from all over the UK, indeed, all over the world.

When these guys come to Liverpool, a lot of them will have come from other major cities in the UK, or indeed, from further afield, and they will have experienced high prices of rent, difficulty in obtaining some kind of employment to help them through their studies, really expensive to get around, to eat. Cost of living’s really high in many of the places. When these guys arrive in Liverpool, they can’t believe that they can have their cake and eat it. They’re continuing with their education, they’ve got a fantastic social scene available for them.

I refer to Liverpool as the 15 minute city. You can pretty much be from one side of the city center to the other in 15 minutes, eradicating the need for cars and, indeed, paying for public transport. A fantastic bike scheme around the city helping these guys get around. So, yeah, the students are really important to the city there.

Paul Mahoney:

Okay, so let’s talk about your young professional, either coming out of university, or moving to Liverpool. Are there the right jobs for these people now, and are they able to earn the right level of wages? Because I know in London, for example, that there’s lots of graduates coming out of university, very well educated, and there’s just not the jobs for them, really. They struggle to find the employment they need. How would you say Liverpool is positioned for employing that type of person?

Alex Doonan:

Yeah, so postgraduate retention in Liverpool’s on the up, and it is a big thing for the city. Obviously, I’ve mentioned earlier in the show, many, many major develop schemes are coming into the city, and that is really the tip of the iceberg. All of these really sort of high end schemes, employers, they require a really high end staff.

These guys who are inside of the city, quite simply, yeah, they do wish to stay inside of the city once they’ve been here. You quite rightly made the point, and it’s a very good point to talk about, fall in love with the city. That’s exactly what pretty much anybody who visits Liverpool does. The city’s inhabitants are famed for their humor, and their welcoming attitude towards strangers coming in. You’re never short of anyone to stop and have a chat with you.

So yeah, the city does sort of grab hold of people, and keep them inside, especially the young people. Why would they want to live anywhere else? They can have really a high end, city center living, all of the amenities that they would require, and as I said before, the statement have their cake and eat it is perfectly valid. They can see a career and a future.

Our educational facilities are fantastic in Liverpool, both from a high end, in terms of further education and universities, and then both from a sort of a regular school, juniors and senior school, and on to the colleges. The Ofsted ratings for Liverpool are on the up, each and every year. The vast, vast majority of educational facilities and organizations in Liverpool have recently been voted outstanding by Ofsted. So all these are major points as to why people put roots down into this city, start a family, and continue to stay. As I say, population increase year on year, for the past decade.

Paul Mahoney:

Okay, Alex. Talking about buy-to-let, what is the current average property price in Liverpool at the moment?

Alex Doonan:

I’d say the average property price in Liverpool is around about £125,000. If we’re talking typically city center locations, we look at maybe a one bed apartment, a one bed new development in Liverpool, you can expect to pay anywhere from sort of £100 to maybe £110,000. Two beds, anywhere from sort of £165 up to around about £200,000. So, very, very well priced, comparatively, with the rest of the UK, certainly, with the yields that the city is predicting for buy-to-let investors being around about 6 or 7%. You quickly knock that back to the rentals, and you can see that the one beds and two beds are more than achievable for the guys who are going to be renting them.

Paul Mahoney:

Well, look. I can see why that’s very attractive, especially to people that were more used to higher price points, London investors, for example, where they’re paying, in some cases, ten times those prices, and about half the yields. I can see why they’re being driven to places like Liverpool, especially when you look at the fundamentals that we’ve been discussing there, so far as economic growth, employment growth, and infrastructure spending.

I’m going to ask you to get out your crystal ball now, Alex. Where do you see Liverpool going, over the next five to ten years? We’ve spoken about things like employment growth, and economic growth. I doubt those things will continue at that height, over the coming years. It’s great to see that it’s happening now, but how do you think that will flow through Liverpool over the coming years?

Alex Doonan:

Other than Everton becoming really successful, and the best football team in Liverpool, the future is particularly bright for Liverpool. As I say, all its facts, figures, statistics that we can look at are in upward trajectory. The outside investment promised into the city is continuing.

Many schemes are planned for the next sort of five and ten years. In recent times, we’ve had the complete redevelopment of Lime Street train station. That has been done. We’ve had extra platforms added, and we’ve had platforms lengthened. The rail company is actually planning on doubling the capacity of Lime Street station. Those are guys aren’t doing that for nothing.

We’ve had the brand new Royal Hospital in the city. That was £340 million worth of development. We’ve already covered the Liverpool ONE. Liverpool Waters scheme, which is a mixed use development, encompasses a multitude of developments going in there. These are all big schemes. Peel are there for the next, well, 25 years. Two years in already. So, Peel are there for the next 23 years moving on.

So, there’s really a big indication that the private sector are there for many years to come, and that should give a big indication that the city will continue to grow and thrive, at least for the next ten years.

Paul Mahoney:

Alex, that’s been incredibly insightful. Many thanks for joining us. Some great information there on the strength of Liverpool as a whole, but also very specifically the property market.

Unfortunate that’s all we’ve got time for now. Thank you very much for joining us, Alex, and also the viewers. Join us next time on Proper Wealth, with me, Paul Mahoney, for more discussions on wealth creation, including property.

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