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Abu Dhabi funds to transform Manchester with private rented project

Abu Dhabi United Group, which owns Manchester City football club, is to back a £1 billion project to deliver up to 6,000 new homes in central southern Manchester.

The deal is set to leapfrog efforts by other local authorities, and by the mayor of London, to encourage housing development and the growth of a professional private rented sector. While talk in London is now of a talent drain, as workers cannot find affordable places to live, Manchester looks set to deliver.

A partnership with the city council will see an initial phase of more than 830 private rented homes delivered in the Ancoats and New Islington areas, close to the Etihad stadium. The 10 year deal under the name Manchester Life aims to deliver more than 6,000 new homes.

“The planned transformation of the eastern edge of the city centre is the single biggest residential investment Manchester has seen for a generation,” said council leader Richard Leese. “Building thousands of quality new homes will be a fundamental part of our growth story, and will deliver significant socioeconomic impact.”

According to the Manchester Evening News, the deal is significant for the inroads it makes into the city council’s housing development goal; and as a great example of public-private partnership with a major investment.  “Most of homes will be aimed at the 25-39 year old young professionals,” says the publication, “who may struggle to get on the property ladder but are eager to live on the fringes of the city in private rented accommodation.”

Construction on the new homes could start early next year.

Investors pick and choose in European private rented sector markets

An increasing number of European investors are looking to the private rented sector as a suitably stable place to make medium term investments. And alongside established mainland markets, they are turning their attentions to the activity in the UK market.

Among them is the German insurance sector, which is increasing its allocation to property from 7.3% last year, to 7.7% in 2014, according to a report from EY Real Estate. Consolidation is taking place in the German residential rental market, with listed company Adler Real Estate receiving shareholder majority approval for its takeover of fellow German company Estavis, and the acquisition of a further 7,700 homes from seller Swiss Corestate. This grows Adler’s residential portfolio to nearly 25,000 units.

Some commentators are now suggesting investment values in the German residential market have strengthened too far in key urban German locations. Outside the main cities, prices are less strong, but other options include the Dutch market, which offers medium term appeal, as well as the possibilities offered by the growing UK institutional market.

In Holland, Bouwinvest has purchased a further 572 Dutch apartments, paying EUR150 million for a package of properties in Amsterdam, The Hague and Rotterdam. And Dutch pension fund manager APG has said it will increase its investment in residential across Europe, following a recent injection of EUR550 million which saw it buy a 22.8% stake in Finnish and Russian housing specialist SATO.

And alongside a recent investment in the UK private rented sector, with backing provided to Fizzy Living, Abu Dhabi investors are also backing the German residential market. The Abu Dhabi Invesment Authority recently bought a 13.4% stake in listed German housing company Deutsche Annington.