A thriving economy, young population, and lack of supply, plus more
Birmingham is a firm favourite with property investors, and our research confirms it is one of the best places to invest in property UK. It benefits from fantastic and improving infrastructure (including High-Speed Rail on its way), demand for homes that is outstripping supply, and according to PwC and Demos is the fastest-improving city for quality of life in the UK. Here are six more reasons you should buy investment property in Birmingham.
1. Birmingham means business
Birmingham may just be the UK’s current business hotspot. It is attracting enormous inward investment, from the UK and abroad. In 2017, the city received more than £1 billion of inward business investment – almost half the total investment in the West Midlands region. And, of the inward investment into Birmingham, around a third is from overseas.
Increasing numbers of major organisations are choosing Birmingham as the location for their headquarters in the UK. These include major banks such as Lloyds, Deutsche Bank and HSBC.
It is not only big business that is blossoming in Birmingham. The number of businesses here has increased by more than 13% in the last year – that’s three times the average rate of business growth in the UK.
Birmingham is the star performer in the UK economy right now, and business growth and investment here is helping to grow the local population and create new jobs – and this is great news for property investors.
2. Birmingham’s diverse economy is future-proofed
There are many examples of local economies that have grown rapidly and pulled property prices up, only for the house of cards to come crashing down. All such horror stories have one thing in common: the local economies relied on a single industry. Towns and cities in the North that were decimated when the coal industry collapsed. Aberdeen, so badly damaged when the oil price collapsed a few years ago. In the United States, Detroit’s property prices plunged when the car industry drove into a brick wall in 2008/9.
Birmingham’s economic growth is not based on a single industry or economic sector. It is home to a huge financial and professional services sector, but is also home to a large innovation hub, green and renewable energies industry, food manufacturing sector digital and creative companies, and one of the largest advanced manufacturing bases in the UK. A quarter of the UK’s aerospace industry is located in the West Midlands, and it is well known for its automotive presence.
This huge diversity of industrial and economic sectors makes Birmingham one of the most sustainable local economies in the UK – and this should future-proof economic growth and potential for property investment in Birmingham.
3. Birmingham is a gold medal winner in the education race
Businesses need well-educated, highly qualified workers to grow. In Birmingham, new and growing businesses have a huge pool of talent to choose from, thanks to the five universities here: Aston University, Birmingham City University, University of Birmingham, Newman University, and University College Birmingham.
The big student population here – more than 110,000 – is a major factor in Birmingham’s status as the youngest city in Europe. Four in 10 of the city’s population are under 25 years old – the demographic that is most likely to rent, making the city a hotbed for buy-to-let investment potential.
4. Birmingham property is in demand and in short supply
Like most towns and cities in the UK, Birmingham’s supply of property is not enough to meet demand. Birmingham’s population is forecast to grow by more than 170,000 in the next 20 years. With this level of growth, it has been estimated that almost 4,500 new homes will need to be delivered every year to keep pace with demand in Birmingham. There are only around 4,000 new homes in the pipeline this year, and this gap between supply and demand looks set to remain for some time.
5. Birmingham is the UK’s top-performing city for property investment
According to the UK Hometrack Cities House Price Index, Birmingham’s average property price has increased by 7.5% year-on-year. Rental yields are strong, too, with an average of above 6%. Therefore, an investment in Birmingham property a year ago would likely have yielded a gross total return of around 13.5%.
6. Birmingham’s future is bright for property investors
A fast-growing, diverse economy with a young population is certainly attractive for property investors. The gap between supply and demand is helping to drive property prices up, and buy-to-let investors are benefitting from good rental yields.
Knight Frank and LaSalle believe that these fundamentals will help Birmingham property prices to rise further and rents to stay strong:
- Knight Frank forecasts that the average property price in Birmingham will increase by 18.4% between 2018 and 2022
- LaSalle believes property price growth will be 20.5% between 2018 and 2022
- Knight Frank and La Salle believe that rental prices will grow by 15.4% and 16.5% respectively during the same period
Should you invest in property in Birmingham?
Birmingham property is highly affordable, especially when compared to London. It benefits from a lower cost of entry, a higher average rental yield, a very strong and diverse economy, and businesses supported by access to a huge pool of young talent.
Birmingham is starting to look like London did several years ago. When High-Speed Rail starts its services, the capital will be less than an hour away. Birmingham really has everything going for it now. And this is great news for those looking for a place to invest in property.