Property investors are flocking to Birmingham, and here’s why
It seems a long time ago when London was the hot attraction in the UK property market. There’s a new hotspot now, and that hotspot is Birmingham. The Urban Land Institute named Birmingham as the UK’s number one location for property investment in its Emerging Trends in Real Estate: Europe 2017 report.
In this article, you’ll learn why Birmingham could be the best place to invest in 2018.
Birmingham: the city with investment momentum
Birmingham is a city on the move. It has everything that an investor could wish for. Its local economy is among the strongest in the UK. The city and surrounding areas are benefitting from huge investment in infrastructure and regeneration. And property prices are much lower than in London, while rental yields are much higher.
Of course, London will always be an attractive location for businesses and residents. It’s a great place to invest for long-term property investment opportunities. But the cost to enter the market and the lower yields available there have prompted investors to look elsewhere. Birmingham is ripe for investment. Off-plan property in the West Midlands is around half the price (or less) than its London equivalent.
A booming economy needs huge numbers of new homes
Birmingham City Council has recognised that its plans to attract business into the region means a rapidly expanding population. It has forecast that the city will need around 90,000 new homes by 2030, as large companies expand and relocate to the UK’s second city, attracted by lower costs and a highly educated workforce.
Birmingham is also a young city. Around 40% of the population is under 25 years old. Many have studied in one of the city’s universities.
Birmingham: an economic explosion
Analysts have forecast that Birmingham’s economy will expand by more than 1.5% every year through to 2021. The driver of Birmingham’s economy will be the financial and business services sectors. As companies like HSBC and Deutsche Bank relocate their UK headquarters from London to Birmingham, these sectors are expected to grow by approaching 2.5% and add more than 5,000 jobs to the local economy.
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Infrastructure development should promote inward and outward commute
The economic growth in Birmingham will attract new workers into the city and is also likely to increase inward commuter flow from surrounding locations such as Sutton Coldfield. But there is also likely to be an increase in the population who commute to work in London.
In the city, more than a million square feet of new office space has been built during the last few years, and this will undoubtedly provide the space for the expansion in the key financial services sector. Investment in infrastructure in Birmingham includes:
- The £600 million redevelopments of New Street station and Grand Central
- £500 million invested in Smithfield Market
- £500 million ploughed into Paradise Circus and Arena Central
The Big City Plan aims to increase transport connections into the city. Roads will be upgraded, and the metro will be extended. Importantly, HS2 will crack open travel opportunities. When HS2 services begin, Manchester and Leeds will be commutable cities. So, will London, which will be less than 40 minutes away by train. In travel time, that’s shorter than Chelmsford in Essex to London. Don’t be surprised to see more young professionals choosing to live in Birmingham for lifestyle options, and cheaper property while working in London.
Birmingham: a city where investors should benefit from high yields and capital growth
Property prices in Birmingham have increased by around 5% to 7% in each of the last five years. Average selling prices are up from £141,606 at the beginning of 2013 to £180,661 in October 2017 (home.co.uk). That’s a rise of 28%.
With an average rental price of £950 per month, the average rental yield of 6.3% compares very favourably with the UK average yield of around 5%.
With economic expansion and regeneration gathering pace in the region, there’s no reason why property prices shouldn’t continue to rise here. And with a young and growing population requiring somewhere to live, rental prices are likely to rise, too.
What property should you buy in Birmingham?
If you’re considering investing in property in Birmingham, you should look for properties that cater to the fastest-growing sector of the renting community there: young professionals who want to be near transport hubs for an easy commute into work, and where there are plenty of leisure and recreation facilities available. New build one and two-bedroom apartments, with a high-level specification in such locations, should provide the potential for high rental yield and capital growth while ensuring that maintenance costs are low to zero.
We believe that buyers of residential investment property in Birmingham could benefit from current limited supply, a booming local economy, a growing population, and massive investment in infrastructure and regeneration. To discover our up-to-date property investment opportunities in Birmingham, get in touch with Gladfish today on +44 207 923 6100.