Birmingham Property Market Update
Birmingham is often referred to as the UK’s second capital city after London, although the Midlands giant is fending off a strong challenge from Manchester.
Birmingham’s first line of defence is its title as the top UK city for investment prospects, as detailed in Emerging Trends in Real Estate® Europe 2017: New market realities report, a report published by PwC. The accountancy firm’s regional chairman in the Midlands said the city’s pole position – ahead of both Manchester and London - was due, in part, to “big improvements in the city's infrastructure, including the continuing development of HS2, the extended tram lines, and the halo effect created by the redevelopment of New Street Station and the opening of Grand Central.”
There’s further good news as Birmingham’s bold property market – both commercial and residential - is edging the city ahead of Manchester and nipping at London’s heals. Regeneration schemes such as Paradise - described as ‘the most important city centre development in the UK outside of London and one of the biggest development schemes Birmingham has seen for a generation’ is keeping the city fresh and reinvented for the moving masses.
Let’s start with lettings. Birmingham is blazing a trail when it comes to student property returns for buy-to-let investors. Yield analysis by Urban.co.uk looked at university locations across the UK and found the top average rental yield of 11.66% was found in the areas surrounding both Birmingham City and Aston universities, trumping yields of less than 3% in London. Student buy-to-let is big business in Birmingham, with BirminghamLive.co.uk reporting that 1 in every 51 houses is a student property – translating to 8,575 homes – up 19% since May 2016, when there were 7,202 student properties.
Moving from student digs to brand new homes, and the rate of Birmingham’s house building is reflective of landlords’ desire to capitalize on healthy returns - with strong interest from Hong Kong and mainland Chinese investors - and of movers’ intentions to settle in the city. A number of new build developments are being lauded by investors – many on an off plan basis with yields in the region of 6% – including Smithfield Place and Smithfield Square in the Digbeth district; Park View in Eastside and OneBHM on the outskirts of the Jewellery Quarter.
Birmingham’s sales market is just as hot, with values rising in contrast to the South of England. Figures from Land Registry show the average residential property in Birmingham increased in value by 6.9% in May 2018 compared to the same month last year.
The city also featured heavily in analysis by a new company called PropCast. It creates UK-wide heat maps that show where properties sell fastest. The compilation of its first 10 ‘hottest markets’ features Birmingham in spots 5, 6 and 7 – specifically the B34, B28 and B44 postcodes, respectively – indicating overwhelming buyer demand and a sellers’ market.