Apartments in Leeds’ newest residential scheme have been released for sale by the developers, hoping that investors will buy them in bulk off-plan. Will they?

20/20 Skinner Lane sounds like a trendy address – one designed to catch investors’ eyes. But could 20/20 vision prove short-sighted this year, maybe for both landlords and tenants?

The scheme (pictured) will, on completion, have 142 one and two-bed apartments, 75 ‘micropads’ and 24 studios in Leeds’ new Northern Quarter. It is on six floors, with ‘contemporary’ office space on the ground floor.

The first phase started construction last November and is due for completion next November. By the start of this year, 5% of apartments had been reserved, which does not suggest huge confidence, although the agents say otherwise. Certainly, market analysts will be watching with interest to see what happens next.

Issues include the wisdom of off-plan purchasing when house price inflation has quietened; the Leeds market, which some believe is now over-egged; and the national over-supply of two-bedroom apartments.

Apartments now comprise 55% of all new homes being built in the UK. The figure is up from 36% two years ago.

Scottish developer CALA Homes, which says that the market for apartments has reached saturation point in cities across the country, cut its own production of apartments by 9% last year.

David Stewart, managing director of In Residence, says that the city centre model is becoming over-supplied, with more and more new landlords chasing tenants.

“Add to this the news that leading mortgage lenders will no longer lend on newbuild flats, and the market looks very different to the optimism that was signalled by the builders’ cranes six months ago,” he says.

“The market is looking to be very saturated with numerous builds yet to reach completion. This will mean more, very similar properties in direct competition for the same tenants.” He believes rents in new apartment blocks will fall and says investors would be better off looking at older properties outside city centres.

However, it is undeniable that over the past two years, Leeds Northern Quarter has caught the attention of developers. Bryant Homes’ 262-unit Aspect 14 scheme was completed in spring 2005, with many units sold to investors. City Wall also pre-sold virtually all 171 apartments in its Concord Street scheme.

These developments followed a host of smaller residential conversion schemes undertaken since 2000 – for example Merchants’ House at 60 North Street and Mackintosh House at 80 North Street, both of which were sold mainly to investors.

Not surprisingly, therefore, Allsop, the selling agents of 20/20, have been instructed by developers Morris Properties to market the apartments to investors buying in bulk. Offers are sought for all or part of the development, at £285 per square foot.

Does it add up? Rebeccah Wilkinson of Allsop says: “Rents for apartments in the Northern Quarter are around £525 pcm for one-bedroom units and £625 to £650 pcm for two-bedroom units. This compares to typical city centre prices of £595 to £625 pcm for a one-bedroom apartment, and £750 to £850 pcm for two-bedroom apartments.

“The Northern Quarter offers tenants a more affordable product which is nevertheless close to the city centre. 20/20 Skinner Lane presents investors with a great opportunity for future capital and rental growth.”

Morris Properties aim at investors and are currently developing in Leeds, Bradford, Huddersfield, Halifax, Manchester and Sheffield. Schemes have a total development value in excess of £100 million.

The company say they only develop in areas identified to have high capital growth with higher yields – claims which will be put to the test this year. They also offer a ‘whole investment’ package which includes advising on mortgages, conveyancing and gearing.

Leeds agents Allsop: 0113 236 6677