Focus on Bolton: Q&A

Residential Estates recently announced a new investment opportunity in the shape of Stone Cross House, a new refurbish development right in the heart of the town. It isn't an area that we've discussed in any detail before, so in this post, we ask Business and Marketing Manager Jason Guest why Bolton is worthy of special attention.

Q. Jason, let's address that first big question straight away: why Bolton?

Well, you're right that there are some great opportunities in other northern towns and cities, and Bolton has certainly attracted fewer headlines. For the town's sake, that's a pity because planners are doing some amazing things there. There's a £1.2 billion regeneration plan now under way, and as you can imagine, sums like that can make a massive impact in a town that has fewer than 300,000 residents.

For investors, though, it's a good thing that Bolton's name isn't appearing in all the property news headlines. Manchester got very popular very quickly, and that pushed property prices up in quite a dramatic way. Bolton is only a short distance away - it's about 16 minutes by train - so it's well within easy commuting distance, and yet prices are much, much more affordable. The consequence of that, of course, is that investors can buy up properties at a fraction of what they'd cost in Manchester, but they can still count on strong rental demand. That's a recipe for some excellent yields.

Q. So Bolton's proximity to Manchester is a key attraction?

It's one of a number of attractions. But yes, being so close to Manchester means that Bolton is ideally placed to capitalise on the rising demand for rented property. Manchester's economy is booming and increasing numbers of workers are being drawn to the city, but not all of them will want (or can afford) to take residence in the city centre. For a lot of people, lower prices and a short commute make Bolton a perfect choice. As a result, landlords with property in Bolton are already seeing increasing demand for tenancies, and that's only going to continue.

It's also worth noting that Bolton is well placed to enjoy the ripple effect coming out of Manchester. Average property prices in the city have been rising steadily, for all the reasons you'd expect, and that has a knock-on effect upon outlying towns. Investors and domestic buyers are both eyeing Bolton as an attractive alternative to central Manchester and there are strong expectations of rising capital values. Market sentiment tends to be a good predictor of average price changes, and the signs are certainly looking good for Bolton.

Q. So what are some of the other attractions you mentioned?

Well, it would be ridiculous to ignore the regeneration that is taking place in Bolton itself. There's a rising confidence across many parts of Greater Manchester, and Bolton is a great example of that. We often talk about 'Manchester' being an economic powerhouse, but its success is widely spread; Bolton actually accounts for about 8% of Greater Manchester's economic output.

Economic growth is fuelling rising employment. Bolton has created around 3,000 new jobs since 2013 and economists have predicted that the town's population will grow by more than 16,500 between now and 2022. Numbers like that will mean a huge surge in demand for rentals, particularly in the town centre, around key employment zones, and in locations that make for an easy commute elsewhere.

What's more, a thriving economy is going to bring in yet more jobs, businesses and investment. Bolton's economy is currently worth about £4.6 billion, and it's been rising far more quickly than the UK average. It's even ahead of the average for Greater Manchester as a whole. Thanks to continuing public and private sector investment, that growth is strong and steady. The town's economy is expected to be worth around £7.5 billion by 2034.

That's all really good news for investors. Growth that continues well into the 2030s means that Bolton won't be some flash in the pan; it should enjoy rising fortunes for many years to come.  We've always said that property investment is a long-term business, and economic forecasts like that really give grounds for enthusiasm.

Q. But presumably, not all parts of Bolton will benefit to the same extent?

No, that's right. The property market never works like that. Whatever town or city you're looking at, there will always be areas that attract more or less demand. In Bolton, one of the areas most likely to benefit from all that's going on is undoubtedly the town centre.

Q. And why is that?

A big factor is the town centre regeneration plan. It was originally going to be worth £1 billion but that's already been revised upwards by 20%. It's happening right now and it's going to support a whole host of major improvements. All told, it's expected to create nearly 7,500 new jobs and to generate over £410 million per annum in new economic activity.

Bolton Council has already committed £100 million to kick start the whole thing, and the redevelopment work will continue until the early 2030s, so it's going to be giving the town a big economic boost for at least the next 15 years or so.

Much of this is taking place around the centre, building on regeneration projects that have already taken shape. For example, the town is now benefiting from a £50 million transport interchange, which opened in September 2017. Taking place not far from that will be The Trinity Gateway regeneration scheme, which will see big improvements to one of the most important approaches to the town. The central areas will see the redevelopment of a major shopping centre, the creation of around 1.5 million square feet of commercial floor space, and a subtle shift towards more residential, leisure and recreational spaces.

There's also a new multimillion-pound innovation zone based around Bolton University, and money is being poured into the expansion of 'Logistics North' which is the largest distribution centre in all of Greater Manchester. The continuing modernisation of Bolton will also see infrastructure improvements, better parking facilities, new office blocks, and new parks, walkways and public spaces.

The list goes on and on, but it's abundantly clear that the town is positively fizzing with investment and new energy. The consequences for the rental market are potentially huge. More jobs, more workers, more growth and higher disposable incomes - these are all positive factors from the property investor's point of view.

The other reason why the centre is popular, of course, is that it's where a lot of the jobs are arising; either that or it's where rail commuters want to be based in order to take advantage of a short and convenient hop into Manchester.

Q. You've mentioned more workers coming to Bolton; what sort of properties do you think will be most sought after?

It could be a fairly wide spread of styles and sizes, because there will be all sorts of jobs being created. But I'd say that one of the most attractive areas for investors will be at the more professional end of the spectrum. There's a pronounced shortage of good, marketable properties in the town centre itself, so there's a gap in the market there. Ironically, much of the centre is devoted to student accommodation, and while there's certainly a robust student body in Bolton, it's not necessarily where the best yields are to be achieved. There will be strong demand for attractive modern apartments, and although planners are creating new zones for housing, there's currently very little rental stock in the centre of town that will appeal to professional tenants.

The other important variable is tenure. There will always be steady demand for assured short-hold tenancies (ASTs), and that's probably going to rise a good deal in the coming years, but there's also a definite under-supply of properties for shorter term tenancies.

I spoke to a Bolton estate agent recently and he said that he gets loads of enquiries for rental periods of two to three months. That's below the usual threshold for ASTs, and a lot of existing landlords just aren't set up to meet that sort of demand. For those who can, there are some great returns to be made.  You might be looking at an average of £500 to £600 a month for a conventional AST, but when let on a short-term basis, the same sorts of property could be producing £80 to £125 per night. Even if you're only getting 80% occupancy, that's still going to translate into a much better return.

Q. So what do you think is behind the demand for short-term lets? Is it reliable?

I think it's a market that is likely to grow. Consider all the construction and regeneration work that's starting to take place in the town. That's going to be picking up pace over the next few years, and a lot of that work will be carried out by architects, engineers, specialist contractors and other professionals. They will come in to do a specific job and then they'll hand over to someone else. They might come for a week or they might come for a few months, but they're not going to be the sort of people who will be wanting to commit to staying many months under a traditional short-hold tenancy. Short-term lets will suit them much better, and I can see that pattern sustaining strong demand for years and years to come.

Q. Finally, then, with all this happening, why do you think Bolton isn't more widely discussed as an investment destination?

It's an interesting question. It could be that it's a little overshadowed by the sheer size of Manchester and Liverpool, or that - as a town - it's just overlooked by investors who only usually focus on the big university cities.

Whatever the reason, it's good news for the investors who do give it the consideration it deserves. Bolton can boast high rental demand, lower than average purchase costs, a rising population and a buoyant economy. All the ingredients are in place for a really excellent investment.

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