Property Investment in Birmingham
One of the most common questions we’re asked is: why invest in Birmingham property? It’s a broad question but there’s several standout reasons. Birmingham offers affordable properties, high potential for growth, strong yields compared to other UK investment hotspots and consistent tenant demand.
The UK’s second city ranks as one of the most popular in Europe in which to invest and is currently attracting £billions of investment into citywide retail, commercial and residential space, and infrastructure projects.
For investors, now is the ideal time to sow the seeds of a fruitful investment in Birmingham. The future is bright for the second city and below we break down some of the key reasons you might consider adding Birmingham investments to your portfolio.
London vs Birmingham Property Investment
While London was always the traditionally popular choice, Birmingham has eclipsed the capital over the last five years. With an economy of £28.1 billion and the largest professional hub outside of the capital – employing over 100,000 professionals – there’s a reason people are investing in Birmingham over London.
Since 2016, Birmingham has been recognised as the fastest growing UK city for property price growth, leading the way for regional cores across the country. If you’re looking for the best places to invest in 2021, you’d do well to choose Birmingham investment over London investment as forecasts are generally leaning in the second city’s favour.
Average rental yields in Birmingham are trending higher than most competitors due to its affordability – the average property value is nearly three times less in Birmingham than London and yet the standard of its amenities means rental values are rising, delivering better returns for investors.
Birmingham Commonwealth Games 2022
Taking place 27th July and 7th August 2022, the Birmingham Games will attract over one million spectators during the event, giving a massive boost to the local economy of Birmingham. It’s expected that the Games will create on average, 4,500 jobs a year until 2022 and then 950 after.
- Birmingham Games 2022 will attract over 1 million spectators
- Provide 12,500 volunteers with training and qualification opportunities
- Viewed by a global audience of up to 1.5bn
- £778m investment into the city and region
- £70m expansion of the Alexander Stadium
- £60m aquatics centre in Sandwell
105 Broad Street, Birmingham
Birmingham’s Hottest Property
Ready Made Investment Opportunity
- Prime Birmingham city centre location
- Projected 5% rental yields
- Residents services available & state of the art gym
- 24-Hour Concierge
- Unrivalled, premium location
Investing in Birmingham for Demand
Demand is the lifeblood of any property investment. This is why Birmingham Buy-to-Let property is such a popular asset with many investors. As the second largest city in the UK – with a population set to hit 1.24 million by 2030 – Birmingham continues to be a key location for young professionals, students, families and even those leaving the capital.
The second city is also one of the youngest cities in Europe – 60% of the population are under 35%. Attracted by the career opportunities and amenities available, young professionals are one of the most desirable tenants for Buy-to-Let properties. This demographic makes up the largest % of the UK rental market and many are choosing to rent long-term – ideal for Birmingham Buy-to-Let investors looking for consistent tenant demand.
Finally, Birmingham is much affordable than the capital, which is attracting many London leavers. Over 16,000 people moved from London to the West Midlands last year, highlighting the sustained demand a Birmingham investment can offer vs a London investment.
Investing in Birmingham Rental Yields
The Birmingham property market is one of the most affordable in the country relative to its size. The average property price in Birmingham is around £202,000 in 2020 – over three times less than the average property in London (£653,965) – meaning plenty of people looking to rent or buy Birmingham property.
This also means that Birmingham rental yields are exceptional, especially when we consider recent rental growth. Birmingham rents have grown by 28% since 2009 and are set to grow by 10% over the next four years. Birmingham’s average asking rent is £867 – which means Birmingham’s average rental yield is 5.1% when measured against the average property value.
This is much higher than the lower yields we’re seeing in the South. Data from LendInvest shows that (perhaps unsurprisingly) the city-centre is one of the highest-performing areas. B5, for example, regularly achieves yields between 5% and 6%, while some student areas such as B4 (near the Eastside and plenty of student accommodation) can reach highs of 11%!
Investing in Birmingham Capital Growth
Capital appreciation is often a clear objective for investors and investing in Birmingham for capital growth has the potential for incredible results. We’ve already mentioned that property in the city is affordable but that doesn’t mean it hasn’t experienced significant growth over the years.
Average property values in Birmingham have risen by 45% since 2009 and property growth between 2016 and 2020, a time when London started lagging behind, has been the highest in the entire UK.
Thanks to a vast amount of regeneration and continued demand from movers to the area, these price rises don’t look set to stop either. JLL predicts that Birmingham property prices will rise again by 17% between now and 2024 – good news for those investing in Birmingham already.
Birmingham Investment Guide 2021
Want to get the lowdown on Birmingham investment in 2021? Our guide is filled with the insights you need to make an informed decision.
Discover Birmingham market forecasts for 2021, as well as what life looks like after lockdown for the second city. From prime market performance to the ongoing impact of HS2 and the Midlands Metro Extension, this is your chance to stay ahead of the market and understand why you should invest in Birmingham property today.
Investing in Birmingham for Regeneration
In 2003, the Bullring redevelopment kickstarted a much wider plan of regeneration, officially named the ‘Big City Plan’ in 2010. With the Bullring now one of the busiest shopping centres in the UK, it’s only right that its surroundings are as prestigious. The Big City Plan aims to widen the city’s core by 25%, create over 50,000 new jobs and contribute 2.1 billion to the local economy each year.
Developments such as Paradise and Arena Central are creating exciting mixed-use spaces in the centre of the city, while the Grand Central redevelopment and HS2 project are transforming the cities transport links and bringing London ever closer than before. Finally, future developments such as the £1.5 billion Birmingham Smithfield will revolutionise the city, transforming a 42-acre area into 2,000 new homes, public spaces, leisure attractions and the new home of the Bullring Markets.
Regeneration is often cited as a driver of demand and it’s true for Birmingham property investment. Regeneration shows that further growth is on the horizon and often leads to rising property prices and asking rents. For investors considering a Birmingham property investment, having these developments on the horizon should be a welcome sight, alongside rising Birmingham house prices and incredible rental yields.
Investing in Birmingham for Business
Global businesses such as HSBC, Deutsche Bank and PwC have all relocated their headquarters to Birmingham, creating a world-class network of career opportunities for residents. In total, the number of active businesses in the city has risen by 13% over the last four years – three times the UK average.
This level of commercial activity has resulted in a high number of professionals flocking to the city, boosting Birmingham tenant demand far above its regional competitors. Birmingham now has the largest business, professional and financial hub outside of London, employing over 100,000, many of which are looking for quality accommodation near their workplace.
With the advent of HS2, this number will rise dramatically as those working in London looking for a more affordable home will choose Birmingham. At the same time, HS2 will help deliver 30,000 new jobs while rejuvenating the surrounding area.
Investing in Birmingham for Graduates
One of the most overlooked demographics when it comes to investment is graduates. Students are often more considered because they’re a known quantity but savvy investors will consider where these students go after their studies. The students of today are the young professionals of tomorrow and typically, a young professional tenant will mean longer rental periods and more secure income.
This means that areas with good graduate retention are key locations. Birmingham’s graduate retention has transformed over the last decade and the city now has one of the strongest graduate pools in the country. With over 100,000 students attending five universities throughout the city and an average retention rate of 41% – there’s a vast amount of potential young professionals seeking accommodation.
At the same time, Birmingham is the third best city in the UK for attracting graduates with no prior links to the city, demonstrating the appeal it holds with the demographic thanks to new amenities and opportunities.
Best Buy-to-Let Investments in Birmingham
If you’re looking to buy property in Birmingham, there’s plenty of locations available to you that can all provide a high-performing investment.
Whether you’re looking for access to transport links, high-performing yields, good schools nearby or plenty of amenities, Birmingham has plenty of investment hotspots offering all of the above.
You can find a full breakdown of the best Buy-to-Let investment hotspots in Birmingham here but below we offer a snapshot of some of the best Birmingham areas for rental yields, capital growth and demand.
Birmingham City Centre
Rental Yields: 4.7 – 5.1%
Average Property Price: £200,300
As you’d expect, Birmingham city centre is one of the best locations for property investment. Birmingham’s expected rental yields are between 4% and 5% and over the last decade, prices in Birmingham city centre have risen by 37%.
With the popularity of city centre living still going strong, demand for property in Birmingham is growing alongside it. Whether it’s older people downsizing or young professionals moving to the city, residents enjoy being at the heart of the action. This is why city-centre apartments can be a potentially lucrative alternative for those looking to buy Birmingham property.
Rental Yields: 4.7%
Average Property Price: £189,400
Digbeth is one of the most exciting markets in Birmingham – an emerging location bursting with character and an exceptional past performance. Over the last 20 years, Digbeth property prices have risen by 401%, one of the fastest in the city. Currently achieving rental yields of 4.7%, Digbeth has quickly become one of Birmingham’s most in-demand postcodes.
With developments such as HS2, Birmingham Smithfield and the Midlands Metro expansion now on the way, Digbeth has a bright future. These projects are set to support incredible growth, providing new jobs for the area, increasing footfall and cementing Digbeth as a new destination for the city.
Rental Yields: 4%
Average Property Price: £212,300
Just five minutes walk from the city-centre, the Jewellery Quarter has taken on a life of its own. Offering a relaxed, almost ‘village feel’ that would be impossible to find in any other UK city, the JQ, as it’s affectionately known, is still home to the artisanal retailers that gave it its name but now features trendy bars, restaurants and music venues.
Property prices in the Jewellery Quarter have risen by 28% over the last three years, while rental prices have continued to increase, providing yields of around 4%. Offering everything from luxury townhouses to loft-style apartments, the JQ is one of the most desirable postcodes in the city.
Rental Yields: 6.5% (based on Aston University tenants)
Average Property Price: £211,000
The east of the city-centre, known as Birmingham’s ‘Knowledge Hub’, is a thriving community of businesses and professionals based in the technology, learning and innovation sectors. Eastside has a unique heritage as one of the major industrial quarters within the city, which has been transformed throughout the years and now hosts Birmingham Science Park, Millenium Point and Aston University.
Further regeneration is set to take place across Eastside – creating a new and exciting landscape anchored by the HS2 hub station, Birmingham Curzon Street. This once-in-a-generation project will create cutting-edge connections with the capital and boost investment into the area by an estimated £1.5 billion.
Rental Yields: 4.8%
Average Property Price: £362,574
Just outside of Birmingham city-centre, Harborne continues to be one of the most desirable postcodes in Birmingham. Popular with families and young professionals, Harborne offers a relaxed village vibe with the excitement of the ‘second-city’ just ten minutes away. Harborne has seen some of the best property growth over the last ten years with 39% since 2009.
Combining some of the top performing schools in the West Midlands, incredible access to the city-core and a fantastic retail and leisure sector, Harborne remains a key investment destination and one of the most affluent neighbourhoods in the city.
- Birmingham City Centre
- Jewellery Quarter
Best Place to Invest Winner: Digbeth
Ranked according to growth potential, current and future demand, affordability and price growth, we rated Digbeth the best place to invest in Birmingham 2020.
Andy Foote, director at SevenCapital says:
‘Digbeth tops our list for 2020 Birmingham property investment due to its future potential over current statistics. Whilst the more established central ‘hotspots’ such as the Jewellery Quarter, Edgbaston and Harborne benefit from higher average house prices and marginally higher growth over the past 10 years, there is significantly more space for future growth and regeneration in Digbeth, which is exactly what is planned for the area.
‘Digbeth is within walking distance of HS2’s Curzon Street Station, the existing Moor Street and New Street stations, the main city shopping area and of course is the heart of the city’s emerging Creative Quarter. That’s not forgetting its already been dubbed the ‘coolest place to live in the UK’ by The Times and is subject to more than £2billion of planned development projects over the coming years, including the Birmingham Smithfield masterplan and long-awaited Connaught Square development.
Birmingham’s New Developments
There’s a lot happening on the Birmingham skyline and new developments are appearing every month.
What follows is a selection of the most exciting new developments in Birmingham – from HS2 and Birmingham Smithfield in the Eastside district to Arena Central and Paradise in the city centre.
Regeneration is a vital signpost for investors and should be researched carefully during any property investment due dilligence. You can find a full breakdown of upcoming developments in Birmingham here.
High Speed 2 (HS2)
One of Europe’s largest infrastructure projects, the first phase of HS2 is set to land around 2026. This ambitious project will see travel times between Birmingham and London slashed to under an hour. Aside from offering better access between the two cities for workers, HS2 is set to deliver around 30,000 new jobs via the construction and operation of the line.
Indirectly, HS2 will have a huge impact on the Eastside – where hub station Curzon Street will be based – driving increased footfall and boosting the property prices of the surrounding area. Transport links are always good for demand and savvy investors would do well to consider developments near any HS2 development.
The former home of Birmingham’s wholesale markets, Birmingham Smithfield is a 14-hectare site near the city’s Eastside district set to be a new destination for the second city when it opens. The £1.5 billion development will completely transform the site into a vibrant mix of retail, leisure and residential units.
With more than 100,000 sq.m of floor space, 1,000 new homes, 3,000 new jobs, a £470 million impact on the local economy and supporting the revival of the River Rea, Birmingham Smithfield has the potential to be the largest development for Birmingham since the Bullring in 2003.
As Birmingham’s most significant development in a generation, this £700 million project, which is well underway, will introduce 1.8 million sq ft of new grade A office space, retail, leisure and a circa 250-bedroom hotel into one of the most central parts of the city centre.
Crucially it will also open up the gateway between the city centre and Birmingham’s Westside area of the city, which is home to Brindleyplace and Deutsche Bank, the Library of Birmingham, Birmingham Symphony Hall and ICC and the new Arena Central development.
One of the UK’s ‘big four’ financial services firms, PwC, has already agreed a pre-let for the entire eight-storey building at One Chamberlain Square – the first building set to complete as part of the project in 2019. The wider project is set to complete in 2026.
Arena central sits close to the Paradise development and a stone’s throw from Birmingham’s popular Mailbox district. Another landmark development for Birmingham, this will be the site of the new HSBC UK headquarters and in 2017 earned the city’s biggest pre-let in a decade from the Government – an entire 240,000 sq ft building to house a number of its services, including the Midlands regional hub for HMRC.
Midlands Metro Expansion
The Midlands Metro Expansion – while less talked about – is a vital part of the infrastructure of Birmingham and the wider West Midlands. Providing transport links for many professionals to get in and out of Birmingham, it’s increasing the accessibility of a city that is already one of the most well-connected in the UK.
The expansion is also having the added benefit of driving property prices. According to Nationwide, living within 750 metres of a station can add 6% to the value of a property – which could see average prices in Birmingham rise by nearly £14,000.
This puts postcodes such as B5, B15 and the many other areas near the metro line firmly at the top of the list for expected growth and potential tenant demand, something to consider for investors interested in Birmingham property investments.
- High Speed 2 (HS2)
- Birmingham Smithfield
- Arena Central
- Midlands Metro Expansion
Birmingham Investment FAQs
Why Choose Birmingham over London Property?
While London was once the top investment location in the UK, the landscape looks very different today. Since 2016, Birmingham property prices have been the fastest growing in the UK. While many different regional cities have seen high growth – Manchester and Liverpool being two examples – none have matched the growth, affordability and connectivity that Birmingham can provide.
With London only just starting to show recovery, yields in the capital are still much lower than Birmingham rental yields (3.6% vs 5.1%). Similarly, while developments such as HS2 will help both cities, it’s likely to have a much larger impact on Birmingham, which will effectively become an affordable ‘commuter town’ for London workers overnight.
There’s no doubt that London offers potential for investors focused on a strategy of capital appreciation but for those seeking long-term returns, Birmingham property investment has a much lower initial cost and are set to deliver more consistent, long-term growth through rental yields.
Why Choose Birmingham over North-West Property?
Diversification is one of the most important factors for an investor and there’s no reason why you shouldn’t have a range of UK property investments. That said, if you’re just starting out or you only have scope for one UK property investment, we believe Birmingham offers the best balance of affordability, yield and growth.
Manchester and Liverpool are both popular investment locales but provide different results. Manchester is a more expensive market than Birmingham and thus has lower yields (4.7% vs 5.1%), although over the last five years it has seen slightly better growth (22% vs 19%).
Liverpool, on the other hand, has a lower average property price than Birmingham and offers slightly better yields (5.8% vs 5.1%) but has seen much less growth over the last five years (12% vs 19%).
This highlights that Birmingham property investment can offer the best of both worlds – a balance of above-average yields and capital appreciation. Plus, if we consider other metrics such as entrepreneurship, commercial opportunities, regeneration and new developments, Birmingham typically comes out on top in every category.
Does Birmingham Have a Good Rental Market?
For investors focused on long-term rental yields, a strong rental market is clearly a major positive. To establish a strong rental market you need several things: affordable property, demand and above-average asking rents.
The Birmingham rental market can offer all of these things. Aside from being one of the most affordable markets in the UK, it also has a rapidly rising population. It’s expected that the population will hit 1.24 million by 2030, while rents are expected to rise again by 14% over the next four years.
Finally, with these levels of demand constantly rising, Birmingham is also facing an undersupply of properties. As any investor knows, high demand and low supply typically means one thing – rising prices. With such a competitive market, this can create lucrative opportunities for those interested in Birmingham property investment.
2021 Birmingham Property Market Forecast
Despite muted activity throughout Q2 2020 due to lockdown restrictions, Birmingham has a bright future heading into 2021 and beyond.
Birmingham property prices remain some of the most affordable in the country and yet growth predictions still place it ahead of many competitors.
Knight Frank expects Birmingham property prices to grow by 13% over the next five years, while rental growth is expected to rise by 10% over the same timeframe.
New developments such as HS2 and Midlands Metro are breaking new ground, creating unprecedented links between both London and the wider West Midlands, which is allowing many more professionals in the region to commute into Birmingham, further increasing demand.
It’s important to remember that the average property in Birmingham rose in value by £57,000 over the last 10 years. The market is robust and has a history of resilience – a major factor that has contributed to Savills sticking with their prediction of property prices rising by 15% by 2024.
Finally, the Commonwealth Games 2022 is on the horizon and will be a huge boost for the city. In the past, the event has delivered thousands of jobs and hundreds of millions of pounds for other host cities. It’s expected that alongside the economic benefits, the Commonwealth Games will put Birmingham firmly in the spotlight, at a time when there has never been more transformational developments occurring across the city.