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Home to the largest economy outside of London, Birmingham is one of the UK’s most important regional hubs.
With a thriving job market, mass regeneration across the city, and soon to be a prime beneficiary of High-Speed 2 (HS2), the UK’s second city has never been such an attractive place for tenants to live and work.
Underpinned by limited supply and increasing demand, Birmingham is seeing market-leading house price and rental growth.
Increasing by 10,000 people a year, Birmingham’s rapidly growing population is currently at 1.14 million. With the youngest population in Europe and a graduate retention rate of 41%, a quarter of the city’s population rent their properties.
A world-class hub for business due to its prime Midlands location and self-sustaining economy, Birmingham is now a popular alternative to the capital for blue-chip employers to set up headquarters. Global companies such as Goldman Sachs, Deloitte, and HSBC Bank, to name a few. This growing trend is attracting a talent pool of young professionals – a key demographic of the Build to Rent sector.
Despite this rapidly expanding population, Birmingham has a comparatively low supply of purpose-built rental homes. This supply and demand imbalance presents a prime opportunity for Build to Rent developers, investors, and their tenants.
As renters are expecting more from their homes than ever before and are willing to pay a premium, Build to Rent properties are the city centre home of choice for millions of tenants across the UK.
Across Britain, rents are rising at the fastest annual rate in 16 years according to Rightmove, now up 11.8% annually outside of London. The West Midlands has seen the average rental value rise to a record-breaking GBP 989 per month.
With rents and demand at an all-time high in Birmingham, the rental yields for 2022 are averaging 6.56% according to recent data from Zoopla. This is significantly higher than London’s rental yield of 2.9% and is expected to rise even further according to JLL’s report, which predicts that rental prices in Birmingham could increase by 12% over the next five years – the highest level of growth in the country.
House prices in the city are growing too, with Rightmove reporting a 14% increase in the average price of a sold property compared to the peak of 2019. Still at a comparatively low average price of GBP 231,400, Birmingham is an attractive option to investors looking for a lower entry point and higher yields.
With the implementation of the government’s GBP 107 billion railway network, HS2, property prices in Birmingham are expected to surge as a direct result. Almost halving the commute time to London on the train from 90 to just 49 minutes by 2029, Birmingham will be a commutable prospect for millions of Londoners looking for cheaper rent and a better quality of life.
As well as increasing Birmingham’s global reputation as a key business and tourist destination, the positive economic impact of HS2 has already benefitted the city, as HS2 Ltd have set up their construction headquarters in the Snow Hill area, creating an initial 1,500 jobs.
This is part of the Snow Hill Masterplan – a 20-year plan to enhance the area’s key assets, create more jobs and drive Birmingham’s growth and regeneration activity. Including a GBP 50 million overhaul of Snow Hill railway station, the creation of a fourth platform and wider regeneration could create a further 7,700 jobs, bringing more renters to the city.
Since 1970, the UK has hosted the Commonwealth Games four times, and in the year following each event, property values increased by an average of 14.9% across these host cities. Following Manchester’s 2002 Games, from the torch being lit at the opening ceremony to one year later, house prices rose by 24%.
Birmingham property prices are expected to rise by 27% by 2026 according to JLL, with the Commonwealth Games cited as a key driver.
As Birmingham’s reputation and job market thrives, rental demand is also increasing to record levels in the city centre. JLL predict rents to soar by 2.8% per year until 2026 – a convincing message for investors considering Birmingham.
While Birmingham has been a popular investment spot in recent years due to its Midlands location, population size and economy, there has never been a better time to invest in the UK’s second city.
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