Liverpool, invest in Liverpool? (Part 1)

There are many famous English cities that the world knows, probably because they produced very famous football clubs and pop stars. Liverpool would be one of them, so is Manchester.  From the reader survey feedback, there were requests to look at investment opportunities outside London.  Thank you for asking.  I shall try to oblige.

Understand the Macro-Economic Situation
But as investors, we must make sure we understand the broad macro-economic situation before we put our money in. Without checking the Internet, do you know how many people live in Liverpool?

Do you know how far Liverpool is from London and how well served Liverpool is by international airports? These are some fundamental questions we need to ask. The great thing with the Internet is that all the answers are out there. You just have to spend the time to look. For this post, I look at Liverpool macro-picture first and in subsequent posts, I'll look at specific investment opportunities in Liverpool like X1.

Liverpool, UK

Liverpool - Population 460,000
The total population of Liverpool city is about 460,000, compared to the 8+ million in London.

According to the Liverpool Economic Briefing 2014 (published by Liverpool City Council - www.liverpool.gov.uk), Liverpool City has just 232,300 employees plus working owners). Total employment in Liverpool has not changed much since 2009, in fact it has declined slightly.

Useful Charts
Here are some charts from the Liverpool City Council that are useful, also because they have data across all the major cities outside London.

Going by absolute numbers, there are many more working people in Birmingham and Leeds. The next chart below shows you the change in employee jobs in Liverpool from 1998 to 2012. Other than the 8% growth in 2001, the picture is one of stagnation.

Recall my earlier post on employees in the City of London. 400,000 and growing! What about Canary Wharf? Almost 130,000 and also growing. See my earlier post for the details. 

Full Time Earnings in the UK
The next chart gives a sense of full time earnings in the UK. These are averages. Bear in mind when investing in the UK that average earnings are not very high. Think hard about who can afford those very expensive apartments that are now being sold to Overseas investors.

Airport Links
Liverpool's airport is attractively named the Liverpool John Lennon Airport. Unfortunately, the airport is nowhere as popular as the Beatles once were. It was one of the fastest growing airports in Europe till 2007 when is served 5.5Mil passengers. Since then, it has been on a decline, with only 4.2 million passengers passing through the airport in 2013.

Which is your favorite song by the Beatles?

Liverpool John Lennon Airport compared to Heathrow & Gatwick
By comparison, Heathrow served 72Mil passengers in 2013 while Gatwick served 35Mil that year.

With such economic data, does it paint a good picture for real estate investment?

Well, my first impression is no. If things are not happening, economic activity is not being generated, then there is very little to hope for if you buy real estate, at the aggregate level.  Then again, it also depends on the price and location within Liverpool.  Clearly, real estate in Liverpool is a lot less expensive than London, but cheap doesn't always mean good.

So, stay tuned as we explore some investment options in Liverpool.

In this post, I look at X1 Developments.

Happy Investing!