Manchester council partners with Abu Dhabi fund for £1bn housing plan

The jv, called Manchester Life Development Company, will provide 830 new homes in East Manchester as part of a first phase.

Manchester is the first housing project driven by ADUG - an investment company privately owned by Sheikh Mansour bin Zayed Al Nahyan and which also owns Manchester City Football Club - while the state’s sovereign wealth fund, the Abu Dhabi Investment Authority (ADIA) has invested in Thames Valley HA’s PRS subsidiary Fizzy Living.

The council intends to use a Build to Rent loan, with ADUG as guarantor. An expression of interest is subject to HCA due diligence. ADUG will then invest tranches of equity.

ADUG representatives and Manchester council’s leader and chief executive will sit on the board of Manchester Life, which will produce an annual strategic plan setting out the direction of the company, investment priorities and resourcing plans.

The initiative is expected to attract investment of up to £1bn over the next 10 years, with provision for further multiple investors. It will expand the residential market on the eastern fringe of the city, providing a platform for the delivery of more than 6,000 new homes.

Simultaneously, the council has set up a partnership with the Homes and Communities Agency, known as Manchester Place, which will aim to entice investment, assemble land and look for landowners to bring forward plots at identified ‘investment action areas’.  This could also mean using compulsory purchase powers.

The first of these areas is Ancoats and New Islington.

The partnership forms part of the wider City Deal plans, rolled out across the country.

Manchester Place will be overseen by a project board chaired by the council chief executive, Sir Howard Bernstein, and regional director of the HCA.

Following the completion and approval of the phase one development plans, construction work is expected to begin in 2015.

The council said the predominantly privately rented homes ‘will strengthen Manchester’s economic growth trajectory by providing much needed residential units, helping the city achieve its Residential Growth Strategy to build tens of thousands of new homes by 2027’.

The plans for the local area follow the Metrolink extension, the advent of new healthcare facilities, a free primary school due to open in New Islington in September 2015 and the remodelling of Central Retail Park on Great Ancoats Street.

The economic impact of phase one is expected to create significant employment opportunities and demand for retail, leisure and commercial developments.

Sir Richard Leese, leader of Manchester City Council, said: ‘This announcement adds another commercial dimension to the already significant investment made by Manchester City Council and ADUG in East Manchester, and in doing so progresses the regeneration story which began in the 1990’s and was accelerated by the 2002 Commonwealth Games and ADUG’s recent development of the Etihad Campus.’

Speaking on behalf of the ADUG board director, Marty Edelman said: ‘Given Abu Dhabi United Group’s existing long term commitment to Manchester and the council’s economic growth plan, it was a logical decision to look at ways to create a commercial partnership with the city to deliver its wider residential strategy.

‘We are effectively investing in the opportunities and positive circumstances created by our joint investments to date. We are extremely proud of the resulting Manchester Life joint initiative that will complete the transformation of the Ancoats and New Islington areas.’