Why it’s a good time to invest in Birmingham’s property market

Why it’s a good time to invest in Birmingham’s property market

16th December 2017


Billions of pounds have been put into developing new areas of Birmingham, making the city a fantastic investment prospect

In the first six months of this year, house prices in Birmingham rose by 6.1pc – more than in any other UK city, according to Hometrack. And last year, the West Midlands city was named the sixth best in Europe for investment prospects (London did not even make the top 10) in the PwC and Urban Land Institute Emerging Trends in Real Estate report.

To see a place on the up, you only need to emerge from New Street station – “where Birmingham’s change in fortunes began, by creating this massive, impressive gateway to the city”, says Peter Smith, residential development associate at Knight Frank.

Investors see Birmingham as a safer bet than London and with much more room for profit growth

Large parts of Birmingham are undergoing massive regeneration, with billions of pounds already pumped into developing new areas such as the residential and retail zone of Smithfield, and a new cultural quarter in the east.

HS2, the high-speed rail line that will connect London Euston to Birmingham, Manchester and Leeds from 2026, is never far from people’s lips when explaining the current buzz surrounding the UK’s second city. A further £1bn investment will create several new neighbourhoods around the new Curzon Street HS2 station over the next 30 years.

Business is big

Investors should focus on the city centre, says Mr Smith. “The core, within the ring road and including the business district and shopping district, is booming – not purely on a price scale, although we are seeing 5pc increases year on year, but in terms of the number of companies moving to the city.

“Deutsche Bank and HSBC are among the organisations setting up head offices in Birmingham; and HM Revenue & Customs is elocating 4,000 staff to the city.”

Mr Smith says: “People moving here with their companies want to live in the core. We are seeing a high number of repeat investors from London and the South East wanting to get their hands on anything in this area. They see it as a safer bet than London and with much more room for profit growth.” One-bedroom flats typically cost £170,000 and two-bedroom £225,000, and city centre investors can expect 5.5pc to 6pc yields.

Two new city centre developments show the level of demand. Mr Smith says: “One near New Street station sold all 29 apartments in 10 days. The other in the business district sold so well after the ‘launch coming soon’ announcement that the launch event never even happened.” He is marketing flats from £145,000 in The Bank, ideally placed for HSBC’s new HQ and, with two towers of 27 and 31 storeys, Birmingham’s tallest residential building.

Luxury housebuilding

Developers are also clamouring to be part of the new-look Birmingham. Berkeley Homes has chosen it as the place to set up its first non-London/South East division in a decade. Galliard Homes has also branched outside the South East for the first time in its 25-year history and bought three central Birmingham sites for residential development, in the “Soho Loop”, on Broadway and in the Jewellery Quarter.

David Galman, sales director at Galliard Homes, says: “Previously we struggled to see how we could get enough on our resale values to warrant building something, but we can see value there now.”

It’s a very cool little place with lots of cool converted buildings, bars and a young crowd

The city’s student population may prove profitable for buy-to-let investors. “The university is one of the most popular at the moment and many graduates are choosing to stay in the city afterwards. They get a sensible salary and they can rent more reasonably than in London,” says Mr Galman, who is a particular fan of the Jewellery Quarter. “It’s a very cool little place with lots of cool converted buildings, bars and a young crowd. It’s like the Shoreditch of the Midlands.”

The knock-on effect of city centre regeneration is seeing the outskirts profit too, says Andy Thomas, director of Hunters Harborne. “Areas such as Edgbaston and Harborne offer excellent opportunities for landlords. Their proximity to the city centre, the university and vast green spaces makes them popular with a broader market, including students, city professionals and families.”

Source – http://www.telegraph.co.uk/property/landlord-guide/where-to-invest-in-birmingham-property/