AND Capital has partnered with Manchester-based developer Forshaw to launch a £185 million residential fund, marking one of the more significant institutional commitments to regional UK housing delivery this year. The vehicle will be deployed across a pipeline of build-to-rent and for-sale residential schemes, with Manchester and the wider North West expected to form the geographic core of the strategy. At a time when many institutional investors have retreated from speculative development finance, this deal is notable both for its scale and for what it signals about where smart capital believes the next cycle of value creation will occur.
The timing matters. UK house-building starts fell by roughly 12% in the year to mid-2024 according to Ministry of Housing figures, squeezed by higher construction finance costs, planning delays and elevated build costs that have risen close to 30% since 2020. Against that backdrop, a £185 million fund represents a meaningful vote of confidence in a market segment — regional residential development — that has struggled to attract the same institutional enthusiasm as logistics or purpose-built student accommodation over the past three years. It also reflects a broader repricing of UK real estate debt and equity, where investors are increasingly discriminating between prime, well-located regional assets and weaker secondary stock.
Manchester's position at the centre of this fund is unsurprising. The city has recorded average house price growth of around 4.2% over the past 12 months, comfortably outpacing London's more muted 1.8%, according to Land Registry data, while rental growth across Greater Manchester has run at closer to 6% annually as demand continues to outstrip a constrained supply pipeline. Forshaw's local track record and land assembly capability give AND Capital privileged access to sites in a market where planning consents remain difficult to secure — Manchester City Council approved fewer major residential schemes in 2023 than in any of the previous five years, tightening the competitive landscape for well-positioned developers.
The wider implications extend well beyond Manchester. Leeds, Liverpool and Newcastle have all seen similar dynamics of strong rental demand colliding with constrained new supply, and institutional funds of this type are increasingly using Manchester as a proof-of-concept before rotating capital into these adjacent regional cities. Birmingham, buoyed by HS2-adjacent regeneration and a growing financial services cluster, is another obvious candidate for follow-on institutional interest, even as HS2's own troubles have introduced some uncertainty into investment appraisals along that corridor. By contrast, London and the wider South East, including Surrey's commuter-belt markets, remain constrained by land values and planning complexity that make comparable fund structures harder to replicate at scale, reinforcing a north-south divergence in where institutional residential capital is now concentrating.
For buy-to-let landlords, the emergence of well-capitalised institutional players in regional markets is a double-edged development. On one hand, professionally managed BTR schemes tend to expand the overall rental stock rather than compete directly for existing homes, easing some supply pressure. On the other, institutional operators can absorb higher build and compliance costs more readily than individual landlords, potentially accelerating the market's shift toward larger, professionally managed portfolios and away from the smaller private landlord model that has dominated UK renting for decades. First-time buyers, meanwhile, stand to benefit modestly if the fund's for-sale component adds meaningfully to entry-level stock in Manchester, though the scale of 185 million pounds — likely to deliver somewhere in the region of 800 to 1,200 homes depending on tenure mix and land costs — will barely dent a national shortfall estimated at over 4 million homes.
Looking ahead to the next 6 to 12 months, expect this transaction to be read by the market as a bellwether rather than an outlier. With the Bank of England signalling a more gradual path for rate cuts through 2025, development finance costs will remain elevated but increasingly predictable, giving patient institutional capital the confidence to commit to multi-year regional pipelines rather than opportunistic single-site deals. Developers with strong regional land banks and delivery track records, particularly in Manchester, Leeds and Birmingham, are likely to find themselves the target of similar joint ventures as funds seek scale exposure to undersupplied rental and ownership markets. The direction of travel is clear: institutional capital is rotating decisively toward regional England, and developers who can demonstrate consented pipelines and local execution capability will command increasing pricing power in these partnerships.
