'It Behaves Like A Capital City': Investors Keen To Put Money Into Manchester
Manchester stands out as a regional powerhouse in the UK, with the metrics of a capital city but with much keener pricing, according to some of the UK's largest real estate investors. Even with such dynamics, viability remains a challenge as developers struggle to make the numbers work, attendees were warned at Bisnow’s Manchester Real Estate Outlook 2026 on 28 April.
Yet liquidity, large lot sizes and a proactive city authority mean that as investors seek to diversify from London, Manchester is in poll position to attract core capital looking for stronger returns.
“The reason we like Manchester is because it sort of behaves like a European capital city," said Paul Smith, director, UK asset management, at Barings Real Estate. "You've got really strong office demand, an average of over a million square feet a year. There's no other regional city that can match that over a 10-year basis.”
The city has amazing universities and high graduate retention rates, with 50% of students staying in Manchester. That means Manchester offers a European-style city play but with a regional discount, Smith said.
"The core money is still focused on London, and, at the moment, Manchester does attract a bit of a discount. And that structural imbalance is something that is attractive to our type of capital,” he added.
After a dip in 2024, investment volumes hit £1.8B in 2025, according to Colliers, well above the 10-year average, which is estimated at nearer £1.2B.
Nest Senior Investment Manager of Real Estate Matthew Forward said that, as the UK's largest defined contribution pension scheme by membership with about £65B across all asset classes and around 5% in real estate, Nest is expecting to double its exposure to real estate over the next four years. It wants to spend more of that money in the city.
“One of the key differentiators for us is we like to play in much larger lot sizes," Forward said. "So, liquidity is a big thing for us. And I think one of the differentiators for Manchester — and there's a couple of other regional cities that would fit this bill — is that we can buy assets at £75M, £100M and possibly north of that and still be comfortable there's some liquidity there, and that's what is a big attraction for us.”
Forward also stressed that Manchester represents good value and said Nest thinks of real estate predominantly as a core and core-plus play.
“We have definitely come from a period where yields were much, much lower, but historically, real estate should have always been an income play, and the focus should always be on income resilience,” he added.
Meanwhile, Bruntwood Chief Executive Chris Oglesby pointed to the city’s success at keeping development going but also ensuring not to enable oversupply.
“From our perspective, as long as what we're seeing is that schemes are still achieving rents, the market will pay, this funding is effectively going in to, hopefully, balance out that slightly spiked yield," he said.
"No one's expecting yields coming in significantly. I don't think it's 4% again, or whatever, but seeing 50 to 75 basis points come off yields would be transformational in terms of development being possible,” he added.
Smith agreed and said viability is the biggest headwind of delivery of new offices. He said he believes new development could give way to more refurbishment of existing stock.
“I think building that next wave of new shiny buildings is going to be the biggest headwind that we face," he said. "That then points to looking at existing stock in a much cleverer way: the rise of retrofitting, increasing the operational and amenities of buildings that already exist.
"We're in that part of the cycle. If you've got good kit, and you do the right stuff to it, you can benefit from some real rental growth because the [development] tap has been turned off at the moment, and it's going to be a little bit of time before that sort of money starts to flow out of London and chase the opportunities in the regions,” Smith said.
