Is Birmingham Property Still a Good Place to Invest?

Similar to the city’s economy, Buy-to-Let property in Birmingham city centre has been growing rapidly over the last ten years. As well as showing great resilience in response to Coronavirus in 2020, long-term figures clearly indicate year-on-year growth in the average property price, which have increased 52% since 2009.

Despite Birmingham outpacing the majority of the UK for growth, the city remains an affordable option for property investors. When considering Birmingham’s average property price of £206,000, compared to the UK average which is currently surpassing £300,000, the opportunity to invest in a high yielding Birmingham Buy-to-Let has never been higher.

The affordability of property in the second city, combined with its current rental yield of 5.5%, is making Buy-to-Let property investment around Birmingham more appealing to investors. Not only is the city’s rental yield exceeding the national average, but it is notably higher than the capital’s 2.83%. With prices less than half of London’s average, and a dominating rental yield, Buy-to-Let property in Birmingham is leading the way for investors seeking a clear opportunity in UK property investment.

However, can property investment opportunities in Birmingham sustain this growth for years to come? Since the start of the Big City Plan in 2003, boosted by the winning of the 2022 Commonwealth Games bid, the city has been undergoing endless regeneration schemes. Amounting to millions of pounds worth of redevelopment, Birmingham’s future landscape has led to promising residential forecasts. Not only could property prices increase 19.5% by 2025, but rental growth also has the potential to grow 12%. 

The Birmingham area boasts over 400 schools, 15 universities and three university colleges within an hour of the city centre, demonstrating exceptional academic links across the region. As an expanding city with access to a wealth of universities, the city’s graduate retention rate is climbing. In a survey of UK universities, Birmingham ranked favourably for its graduate retention rate, reaching 46% and surpassing Manchester’s 43%. 

While the city is renowned for retaining graduates, Birmingham also ranks as the third best city in the UK for attracting graduates with no prior links to the city, signifying the employment opportunities across the region.

These graduates transform into the city’s young professionals, which is shaping the type of occupations in Birmingham. From 2014-2020, white-collar occupations were consistently rated as the most common jobs, making up 19% of those available in Birmingham. Although Coronavirus presented the city’s workforce with many challenges, 23% of the jobs throughout 2020 were professional occupations – the highest figure we have seen to date.

For investors considering Buy-to-Let property in Birmingham city centre, this is a clear signpost of tenant demand. As graduates become young professionals and new potential tenants, this increased tenant demand and continued undersupply in Birmingham Buy-to-Let property will drive rental prices to new heights. 

Birmingham comprises numerous cultural quarters, from the city core, to Digbeth, and the Jewellery Quarter. With each area offering a different selection of amenities and attractions, the city as a whole provides a plethora of opportunities for leisure and cultural activities. While the city core houses both the business district and the renowned Bullring Shopping Centre, Digbeth is known for offering a selection of cuisines and the Jewellery Quarter boasts several of Birmingham’s landmark buildings. 

However, as the region continues to grow, regeneration schemes plan to transform Birmingham into a 24 hour city, with a thriving hub of shopping, leisure spaces and business. Supporting the existing cultural quarters, Birmingham will continue to provide a high quality, distinctive and vibrant environment.

These amenities are directly supporting the new residents moving to the city – particularly those from London. With over 16,000 people moving to the West Midlands annually since 2018, Birmingham City Council is creating the spaces that directly meet tenant needs – a clear benefit for those seeking Buy-to-Let apartments in Birmingham. 

As the UK’s second city, Birmingham has established itself as a tourist hotspot. In 2018 alone, the city recorded 42.8 million visitors – an increase of over one million from the previous year. In addition to strengthening the city’s cultural diversity, this increased tourism positioned Birmingham amongst the likes of Cornwall and London as the UK’s tourist hotspots. 

The city’s potential is driving Birmingham’s commercial market and simultaneously increasing it’s position as an employment hub. More finance giants are choosing Birmingham, with Barclays, EY and KPMG being just a few of the companies that have relocated to the West Midlands. 

Not only does the city’s business district support over 24,000 professional jobs, but it is also enticing more international business to the city. In 2019, 52% of international visitors to Birmingham were travelling on business, compared to just 24% of the UK as a whole. With these leading businesses emphasising the potential of Birmingham to the remainder of the UK, additional companies are becoming more inclined to choose the city.

Recognising the continued growth of this employment base, more investment is being poured into commercial property and office space. Paradise has been Birmingham’s most recent venture – a mixed-use development that is now housing PwC’s largest regional office. With a capacity of 2,000 employees, PwC’s decision to expand to Birmingham has continued to build upon the city’s business district.

The turbulence of 2020 did not deter businesses from moving to the second city, with reports estimating that transactions for office space over 10,000 sq. ft totalled over 418,000 sq. ft – 80% of the market’s total take-up for the year.

While the Midlands economy once lagged behind the likes of London and Manchester, the continued investment into the city’s future is positioning Birmingham as a ‘growth engine’ for the UK. As investment will seep into every crevice of the city, employment opportunities are expected to increase tenfold. 

Birmingham’s economy has been in an upward trajectory for several years, with the city’s employment rate standing at 72% in 2020 – equivalent to 526,700 economically active workers. Not only has this initial growth paved the way for what is yet to come, but with Manchester reporting under 300,000 economically active workers in the same period, Birmingham’s position as the top regional city for professionals has been cemented. 

As the global pandemic persisted throughout 2020, and impacted almost every inch of society, workforces around the UK dwindled, with London reporting a decrease of 60,000 jobs between September and December 2020. However, in the same period, the West Midlands reported an increase in its workforce, which amounted to 26,000 jobs. 

Entering 2021 with an employment rate of 73.9%, the prospects for both the city’s short- and long-term future are increasingly bright. The Midlands Engine intends to transform the Birmingham skyline within the next 15 years, investing nearly £34 billion into multiple projects and generating an estimated 300,000 jobs for the local community.

This is helping to attract new business into Birmingham, which in turn is boosting the demand driving prices across Birmingham Buy-to-Let properties.

By this point, you’ll probably have a concrete understanding of how the potential of Birmingham Buy-to-Let properties has grown over the years, but if you’re still left uncertain about the future of the city, then look no further.

The city is in the midst of its biggest regeneration projects to date. As the next phase of redevelopment kicked off with HS2 – the high speed rail network condensing journeys to London to just 49 minutes – has spiralled into extensive redevelopments anticipated for the 2022 Commonwealth Games. 

As part of the responsibilities that come with hosting the Commonwealth Games, Birmingham is undergoing over £500 million worth of regeneration, spanning Perry Barr and beyond. Not only will this eventually deliver 5,000 more homes and attract up to 1 million visitors, but hosting the Games has the potential to entice £778 million worth of inward investment in Birmingham – further strengthening Buy-to-Let investment property in Birmingham. 

While the Games alone is set to generate 4,526 jobs a year until 2022 and 950 annually thereafter, by showcasing Birmingham’s potential on the world stage, it is likely that the city will expand more than ever before. This capital growth and transport links, combined with the inevitable demand for property, makes Buy-to-Let property in Birmingham city centre a prime investment.