Manchester City owner to build up to 6,000 houses in £1bn deal

The Middle Eastern owner of Manchester City football club is to build up to 6,000 homes in the city, mostly to rent, in a £1bn deal with the council.

The 10-year agreement with the Abu Dhabi United Group, an investment fund, is one of the biggest of its kind and boosts government attempts to create a continental-style, long-term private rental sector.

Most Britons own their homes but as house prices rise there is a need for properties to rent. Institutional investors are looking to back rental developments, attracted by steady income.

The first phase of Manchester Life, as the joint venture is called, will see more than 830 privately rented homes built in the once rundown Ancoats and New Islington areas of east Manchester, near City’s Etihad Stadium.

Sir Richard Leese, Labour leader of the city council, said: “The planned transformation of the eastern edge of the city centre is the single biggest residential investment Manchester has seen for a generation.”

He predicted that there would be demand from young professionals moving to the city. The council will contribute land it owns where there is planning permission and ADUG will provide equity and debt finance of up to £1bn in several tranches. Other investors could also join the venture. ADUG will also apply for a loan from the Homes and Communities Agency’s £1bn build to rent fund.

Manchester Life will be the landlord, maintaining homes and collecting rents.

George Osborne, chancellor, said: “This investment is great news for Manchester. It will lead to thousands of new jobs and homes and will help secure the economic recovery across the city and beyond. It is a vote of confidence in northern England and our long-term economic plan.”

Osborne called this week for northern cities to band together, possibly through a high-speed rail link from Leeds to Manchester.

The city council has spent 15 years regenerating east Manchester, which was hit by industrial decline in the 1970s and ‘80s, including building infrastructure for the 2002 Commonwealth Games.

Manchester City owns the games stadium, is expanding it to 60,000 seats and is spending more than £100m on a training academy to rival that of Barcelona. The area’s velodrome is home to the British cycling team. A tram link has just opened but housebuilding has stalled since the government cut public funding.

Reuters