A few years ago, blocks of new-build flats in the city centres of some northern cities, particularly Leeds, had became synonymous with a property market that was being redrawn as disposable and meretricious. As glitzy and glassy as they were poky and pricey, these "apartments" were sold on the sexy premise of city-centre living – replete with shiny buzzwords like "urban", "contemporary" and "apartment" – and must have seemed like a financial no-brainer to a generation of investors, often ordinary people tinkering with their savings. Sums were done, off-plan deals signed. In Leeds, some 10,000 flats were built, a further 10,000 planned. We all know what happened next.
A classic tale of a mirage that evaporated on scrutiny, if you will. Nevertheless, a cautious optimism has returned to Leeds city centre, building on the boom's ashes, and it comes as some surprise to find that the vast majority of these properties are now let. "What's happened since the crash is that the available stock has been taken up by young households," says Dr Rachael Unsworth of the University of Leeds' school of geography. "They're not buying, partly because of the finance situation, partly because it might still be a deteriorating asset."
But renting they are, and Unsworth, who wants to build on Leeds city centre as an exemplar of urban life, doesn't think this is a bad thing. It's part of a post-downturn readjustment, and it has created a vacuum into which she and a consortium of like-minded people called the Leeds Sustainable Development Group – including architects, agents and urban planners – are moving, vacated by what she describes as the "chaos of the first, developer-led phase". With other launches in Leeds, including the building of two new shopping centres, a music venue and Conran-affiliated group D&D London bringing its first restaurant outside the capital to the Trinity Leeds shopping centre – opening in spring 2013 – there's a rekindled sense of possibility.
"In the last decade, Leeds was inundated with planning applications, and it lost its way," says Unsworth. "It was developers trying to make money and wasn't as green as it might be. We should concentrate on making the next phase much smarter and more sustainable." To that end, Unsworth wants to create more family housing, rather than the one- and two-bed flats erected by the developers, and look to the long-term prognosis of the city centre, taking in factors such as energy usage, future resource prices and transport infrastructure. It's a view influenced by the "new urbanism" of American city planner Andres Duany, as seen in planned communities from Freiburg in Germany to Scandinavia but not, so far, in Britain.
Unsworth appreciates that the lively rental market has meant that Leeds city centre hasn't become "some Marie Celeste-like space. But we hope for a more holistic use of the area". And there's a big lifestyle choice at play. As it stands, there's an established British route from centre to suburb as age and family life progresses, but Unsworth hopes to revive the city centres and reverse that trend, with the two-bed flats marketed at young people and empty-nesters being augmented with family and larger group housing.
Jonathan Morgan of Morgan's estate agents, while not a partner of the Sustainable group, is a seasoned Leeds observer, and cites location as a factor. "We had a huge boom that lasted from 2001 to the middle of 2007," he says. "Leeds was besieged by buy-to-let speculators and flats were being sold off-plan." Then the tide went out, leaving some exposed, particularly those in more peripheral locations: the LS9, 10 and 11 areas rather than the prime LS1 and 2 postcodes. "Leeds is small compared to other northern cities and location-sensitive," he says. Even so, the fact that there are 750,000 people in the Leeds metropolitan area, gives the city a stable hinterland, and with flats at 99 per cent occupancy, Morgan thinks the portents are good.
Sure, this part of the north has risen before. Many will be able to remember the expectations that followed the opening of the Leeds Amouries museum and the first Harvey Nichols outside London, in 1996. But the mood contrasts greatly with 2008, when the situation was considered so parlous that Vince Cable, then in opposition, suggested social landlords be given the chance to buy unwanted residential property at a discount and put it onto the social letting stock. Flats lay empty as rental levels fell, with two bedroom flats dropping from £1,100 to £700 per month.
Part of the problem was a lack of infrastructure, which some believe is now remedied. "The buy-to-let flats were built, but inhabitants couldn't get a doctor and there were no shops," says David Pank, director at Auction House in Leeds. "There was an oversupply compared with local provision. But local shops have appeared to fill the hole, and everyone's much happier." Indeed, among Unsworth's ideas for the city centre area is a school: one of the ways that this environment can capture the family market and widen the demographic far beyond the 25-35 year olds targeted by the early developers, who were too often dependent on propping up a fantasy market of restaurant-going couples – so often shown in glossy publicity material.
Developers and agents would concur, it seems. A 2010 survey called Beyond the Boom, a joint effort from six agents, identified high levels of occupancy at 92 per cent and stabilised sales, but low levels of construction, with 30 schemes with planning permission stalled and unlikely to proceed. "Newly worked proposals need to feature varied home types, including some family houses, in order to meet demand," it concluded.
Rachael Unsworth remains sceptical about the idea of an upturn of prices: but that's not the point. "It's about ensuring the long-term vitality of these places," she says. "If you're far-sighted, you're not going to fall into the same traps as before."
Manchester's rental boom
Like Leeds, Manchester was also known for having an oversupply of two-bedroom flats, but appears to have experienced the same rental boost. "We've had the down," says Harry Dhaliwal of Belvoir Lettings in Manchester, adding that the city was "never as bad as Leeds". Dhaliwal says that there are still repossessions but that occupancy rates are high – indicating that the buy-to-let premise may not have been as flawed as the post-bust Jeremiahs had it. In 2004-2006 it was clearly over-supplied, says Dhaliwal, adding that there was a "fool's gold" factor to the feeding frenzy. "The number of new schemes was in excess of demand."
But the fact that Manchester has the second biggest student population in the world – estimated in the region of 90,000 and growing – means that rental demands are present. Drivers Jonas Deloite's Crane Survey of 2011 – a survey of developer activity – says: "The property market in Manchester is showing signs of recovery and confidence in the performance of the market is appearing... Development activity has increased from a year ago." Also, and despite bad publicity and high-profile refuseniks – Sian Williams, pictured, and Chris Hollins are among the BBC personnel who have apparently refused to relocate – Dhaliwal is also optimistic about the BBC's move to Salford Quays. "I think demand will increase significantly," he says. "The Cheshire suburbs will also be a beneficiary."
So a degree of uptalking is back. "The best opportunities often arise in the least popular markets," says James Mannix, head of Knight Frank's residential investments division. "There remains a large amount of unsold development stock in regional cities, such as Manchester, Birmingham and Bristol, which the market is avoiding due to perceptions of oversupply and the stigma attached to large blocks of flats built at the peak of the market." Mannix thinks these represent good opportunities, provided buyers are selective and take a long view. "We're seeing deals at levels lower than it would have cost to construct the properties in the first place."Reuse content