Why now is the right time to invest in Birmingham, the UK’s second City
The UK’s second city ranks as one of the most popular in Europe in which to invest – higher than London – and is currently attracting £billions of investments into citywide retail, commercial and residential space, and infrastructure projects.
Global businesses such as HSBC, Deutsche Bank and PwC are choosing to relocate their headquarter offices to the city and the city has demonstrated its global appeal by winning the bid to host the 2022 Commonwealth Games.
Using a strategy of targeting key areas for investment, Birmingham has developed the largest professional services hub outside of London, demanding the attention of both domestic and foreign investors that are looking to expand and take advantage of a much wider client base. As such, demand for city centre living is high and house prices in Birmingham are increasing faster than any other English city.
As an investor, this is an ideal time to invest in the UK’s second city and below are some of the reasons why:
Strong investment and regeneration
Birmingham is currently seeing more inward investment than any other UK region, and as a result, the city is growing fast. Birmingham grew by over 100,000 between 2006 and 2016. By 2039, the population is predicted to rise again by 171,000, leaving a total population of 1.3 million. With the demand for quality city centre living remaining high, residential undersupply is a very real threat which creates a more competitive market for any property that is available.
Since 2017, Birmingham has been “rising” in every sense of the word. Total investment in the city reached £1.1 billion per annum. To put this figure into perspective, consider that the total investment for the West Midlands is currently £2.4 billion, which means that over 45% of this fortune was contributed by Birmingham alone. 30% of the £1.1 billion came from overseas investors, proving that Birmingham’s appeal reaches beyond English shores. Major global corporations have recognized its potential and a selection of these have elected Birmingham as their headquarters for the UK over the past few years, Lloyds Bank, Deutsche Bank and HSBC to name a few. And this is likely to accelerate and attract more businesses as the number of active businesses in the city is up 13.5%, that’s three times UK’s national average growth rate and is as it is geared to become the fastest growing economy of any city region.
Room for Growth
According to Rightmove, the UK leading property media, Birmingham blended average residential property prices equated £225,383 as of September 2018. These remain significantly more affordable compared to London (about 60% cheaper): prices for new developments in central London currently range between £1,000 and £2,000 psf, while properties in central Birmingham now command £390 to £450 psf. The difference is especially significant when considering that, as a business hub, Birmingham is fast becoming comparable to the capital. In other words, it has all the opportunities and infrastructure without the corresponding price levels. However, the price difference with cities like Manchester is now closing and Jones Lang LaSalle expect house prices to reach the £500 psf mark by 2020. The savvy property investors will therefore need to make their decision fast to benefit from this fast growth.
Big City – Big Plans
One of the largest recent office transactions was the £265 million purchase of part of Brindleyplace by HSBC Alternative Investments as it completed the relocation of its headquarters from London to its Birmingham new home at Arena Central. And while the bank’s expensive move may be the most headline-grabbing one, it most certainly wasn’t the only company that has chosen to reduce operations in London in favour of Birmingham last year. HSBC’s move followed hot on the heels of Deutsche Bank, which relocated 500 employees from the capital city to Birmingham. With wage levels rising faster than anywhere else in the UK, Birmingham’s authorities have the ambition of creating 500,000 more jobs by 2030.
Supply & Demand
Most of the largest cities in the UK are currently facing a shortage in housing, and Birmingham is no different. This spells plenty of investment opportunities for developers and investors. According to the latest national population projections, the population of Birmingham is expected to rise by 171,000 to hit 1.3 million in 2039, meaning at least 4,461 new homes need to be built every year to meet the demand. Please click here to see what properties Fraser & Co are selling in Birmingham.
Europe’s largest infrastructure project, worth £56 billion, is set to land in the centre of the UK’s second city in 2026. Not only will this ambitious project – the largest in Europe – see travel times between Birmingham and the Capital slashed to under one hour, increasing accessibility to jobs for City commuters, but it also brings with it a £1 billion regeneration project to the Eastside area of Birmingham where the station is planned.
Commonwealth Games 2022
Birmingham’s global appeal doesn’t stop at infrastructure, real estate and residential investment. In December 2017, the city was announced as the new host for the 2022 Commonwealth Games, following Government backing for its bid in September.
The largest sporting event for the UK since the 2012 Olympics in London, the 2022 Commonwealth Games is set to shine a huge global spotlight on the city and generate an estimated £750 million boost to its economy.
Birmingham is currently home to five major universities: Aston University, Birmingham City University, University of Birmingham, Newman University and University College Birmingham, all of which are well-regarded institutions that occupy top spots in international rankings. Considering Birmingham’s population of just slightly over one million, this number of tertiary institutions is undoubtedly disproportionately large compared to other major cities. As one of the youngest cities in Europe, with 40% of its population under 25 years of age, the city hosts 110,000 students including 32,000 research students. With such a significant student population and impetus for growth in the education sector, it is not difficult to imagine that the buy-to-let market in Birmingham is a lucrative one. Developers, from the UK and overseas, have already identified its potential, and many have staked their claims on prime spots in the city center with projects building strong interest among local, national and international property investors.
One such developer is Hong Kong-based company Top Capital Group with its three residential developments in Birmingham, The Axium, Arden Gate and Nautical Club. The former two developments sit on prime real estate within the core city center and walking distance from New Street Station, the rail station that have convenient connections to the Eastside area and its universities. These projects feature high specifications one- and two-bedroom apartments suitable for professionals working in the city centre as well as student tenants looking for quality city centre living.
Fraser & Co’s development, Timber Yard, Birmingham
An all private development offering brand new luxury apartments into the heart of Birmingham, the new growth capital in the UK, with unrivalled connectivity, culture, economy and investment potentials.
The communal areas of Timber Yard include a 24 hour concierge with communal foyer, fully equipped gymnasium, residential club and lounge, and under croft parking. There is also secure cycle storage, landscape communal gardens and carpeted lift lobbies, stairs and common corridor. The courtyard is private for residents only.