Birmingham, known as the UK’s second city, has been undergoing mass regeneration over the last few years with new residential developments, restaurants and leisure areas springing up all over the city. Many investors who usually choose London have been turning to Birmingham where they see great value and long-term potential. This week I’ve decided to take an in-depth look at Birmingham’s investment potential and why it’s so attractive to investors, professionals, and househunters right now.
Birmingham’s 20-year masterplan, now 9 years in, seems to be a key factor. It puts an emphasis on jobs, regeneration and improvement of the city centre with a focus on diversifying its high street offering and encouraging independent stores while still welcoming international and luxury brands such as Harvey Nichols and Selfridges. Birmingham’s economy has grown an impressive 27.7% in the last five years and is now considered one of the best regions for foreign direct investment in the UK.
And gentrification has been a leading factor in more and more young professionals choosing to make Birmingham their home. According to the Office for National Statistics Birmingham has the youngest population of the UK core cities with over 70% of people who live in the city centre under-35. This is reportedly coming from two main sources:
Students & Graduates
With five universities, Birmingham hosts some of the best higher education facilities in the country with significant numbers of students choosing to stay and live in the city after graduating. Figures suggest that around 49% of students remain. This has been helped by the fact that, since 2017, 600 major companies have relocated from London including HSBC, Deutsche Bank, HMRC and PwC who have all relocated significant resources to the city.
Another major source of young people moving to the city is reportedly Londoners looking to buy in a city that’s significantly more affordable than the capital. Average house prices in Birmingham are around one third of the average house prices in London.
Overall, estimates suggest that the population of Birmingham will increase 7.2% by 2028, making the demand for new homes extraordinary. Over the next few years the six leading developers will deliver 10,000 new homes and sales figures suggest that there’s a queue of buyers lining up to purchase. Already since 2014 property prices have grown by 19.3% so it’s not unreasonable to suggest that property prices will continue to rise. Rental yields too are positive, sitting comfortably between 4.4% and 5.3%.
And this rising population of millennials hasn’t gone unnoticed by property developers who have seen the opportunity and have been fulfilling the demand for luxury flats with equally luxurious finishes and amenities. The Berkley Group’s Snow Hill Wharf, due for completion in 2021, has over 400 flats, Bosch appliances, a 24-hour concierge, private cinema, conference rooms, spas, saunas and a gym. Founder and chairman, Tony Pidgely, said of their entry into the Birmingham market that “London is at absolute capacity…Birmingham is a city that’s growing, with all the right credentials”.
Developers are also changing Birmingham’s skyline to create more supply in the city centre. In Broad Street Moda is building a 42-storey high £184m residential unit and the planned residential tower, One Eastside, will becoming the city’s tallest building at 51-storeys.
The city is also preparing to host the 2022 Commonwealth Games by improving its transport links. The city’s Metro system is being extended and whilst completion is still a while away, HS2 will cut the travel time from London to 49 minutes. And Birmingham New Street railway station, named in 2003 the ugliest building in Britain, has been given a £750m makeover and is now a vibrant, and beautiful, gateway to the city, boosting daily passenger capacity from 170,000 to 240,000.