International Investors in Northwest Real Estate: Why "Sheds Are Sexy"

JMW's Thomas Pearson Reveals £2.7 Billion Build-to-Rent Pipeline and Why US Capital Represents 2025's Surprising New Entrant

Thomas Pearson, Head of Real Estate Commercial at JMW, delivered the Manchester Conference's pre-tea session with characteristic energy, opening with audience participation that revealed a striking investment preference divergence. Given £2 million to invest across three Northwest sectors—residential/build-to-rent, offices, or industrial/logistics—the room overwhelmingly chose industrial. "Sheds are sexy," Pearson confirmed, aligning with broader market sentiment.

Yet the session's deeper revelation concerned who's actually deploying capital into Northwest real estate, and why 2025 marks a pivotal moment for overseas investment.

The Crown Dependencies Gateway

Pearson emphasized Crown Dependencies—Isle of Man, Jersey, Guernsey—as increasingly significant conduits for international capital entering UK real estate markets. "Almost like a stepping stone," he explained. "We see investment from China, UAE, and the US looking at those jurisdictions rather than going straight into the English jurisdiction itself."

The attractions prove multifaceted: no capital gains tax, no inheritance tax, relatively low income tax rates, Isle of Man's alignment with UK VAT regime, and crucially, legal systems based on English law providing comfort for further UK investment.

With political instability dominating global headlines—Ukraine, Middle East conflicts, various flashpoints—UK real estate positions itself as "safe and steady." Pearson argued: "UK real estate as a market is widely regarded as one of the safest asset classes available at the moment, with security, long-term capital growth and strong rental returns much better than those achieved in mainland Europe."

Why Now? The Opportunity Window

Higher interest rates and tougher financing conditions have sidelined some institutional investors from commercial real estate over recent years. This creates opportunity: "Cash-rich ultra-high net worth investors might be able to take advantage of recent price correction and purchase assets to add to their portfolio."

Private investors' agility proves decisive. "Private investors may be able to move more nimbly than their institutional counterparts, allowing them a window of opportunity to explore purchasing UK real estate and possibly getting deals off-market."

The timing consideration extends beyond capital deployment—it addresses generational wealth transfer and trophy asset acquisition for family offices seeking assets "that might well remain in the family for generations."

Residential: The Surprise Underdog

Despite only four audience hands supporting residential investment, Pearson presented compelling data. CBRE figures showed £2.7 billion under offer for build-to-rent transactions in Q2 2025—the highest pipeline recorded to date. By year-end, £4.3 billion is expected, representing 11% growth over 2024.

Recent transactions demonstrate international appetite. Chester's first build-to-rent conversion—189 units in the former Lloyds Bank offices—sold to a Middle Eastern investor. "The demand for rental accommodation has risen significantly," Pearson noted, pointing toward a potential generational shift.

Manchester's statistics prove remarkable: residential prices up 25.7% over five years, rental growth of 45.9%—the strongest amongst six major UK regional cities. Over 50% of graduates remain in Manchester post-university, with additional migration from Leeds, Sheffield, and Liverpool "They need to live somewhere."

Planning figures underscore momentum: Northwest residential planning applications jumped 184% from 4,339 in 2024 to 12,326 in 2025. Pearson revealed advising "a family office who's taken the decision consciously to sell up their current portfolio and are looking to acquire into the UK built-to-rent market, particularly with a focus within Liverpool and Manchester."

Offices: Reports of Death Greatly Exaggerated

"Is the office dead? Has COVID done for it? I hope not, because we just announced last week that we signed up to a new 42,000 square foot office," Pearson quipped. His firm's expansion—with a Jersey entity landlord—exemplifies continued overseas confidence in Northwest office markets.

Prime examples abound. Parthena Reys, a Guernsey family office with continental European holdings, acquired the former One Hardman Boulevard from NatWest for circa £70 million 18 months ago, currently fitting out "an acre of office space." A French office purchased Sunlight House for £42 million, proceeding with refurbishment.

"This isn't a plug," Pearson emphasized, "but it just makes you stop and think of the market and who's playing and where the investments and opportunities are."

Retail Resilience and Leisure Growth

While high streets struggle, strategic retail proves viable. The Martin Property Group, an Irish investment company, acquired the former Browns of Chester Debenhams a few years ago, word on the street they are transforming it into the first Harrods outside London.

Leisure assets attract significant capital. Therme Manchester at Peel Waters, adjacent to the Trafford Centre, represents a £450 million wellness resort development launched last week.

Industrial: The Consensus Choice

The audience's preference aligned with market dynamics. E-commerce-driven warehousing and last-mile logistics facilities dominate overseas investor focus. Yesterday's headline transaction: Pontegadea, the family office of Zara owner billionaire Amancio Ortega, reportedly paid £81 million for an Amazon fulfilment centre.

CBRE's European investor intention survey confirmed industrial/logistics as the preferred investment sector, validating the room's instincts.

The Yield Arithmetic

Pearson outlined comparative returns justifying Northwest investment over Southern alternatives:

Residential: 5-7% gross yields in Manchester/Liverpool

Prime offices: 4.5-6% in Manchester/Liverpool

Out-of-town retail: 7-9%

Prime industrial/logistics: 4-5%

"Yields are generally higher than the South, making the region attractive to overseas investors seeking higher returns."

The 2025 Wildcard: American Capital

Pearson identified a surprising development: "What has intrigued me in 2025 is an uptake and a look from the US as well. That's a new entrant into the market." American capital focuses predominantly on office and industrial sectors, with some residential fund deployment.

Middle Eastern investment remains "a core bed," often flowing through Crown Dependencies, complicating source-of-wealth tracking but maintaining steady presence.

The November Unknown

Concluding, Pearson acknowledged the looming uncertainty: "Next month's budget might throw all of that up in the air." Stamp Duty Land Tax changes remain "mooted and used by politicians as a beating stick."

Yet his optimism persists: "The region's growing population, continued investment in infrastructure, and strong demand in the asset classes we've talked about make it a very appealing destination for international real estate capital."

As delegates headed for tea, the message resonated clearly: while uncertainty clouds short-term planning, Northwest real estate's fundamental attractions—yield arbitrage, population

growth, infrastructure investment, and crucially, political stability—position it compellingly for international capital seeking both returns and security.