Why Should You Invest in a 2-Bed Apartment in Birmingham?

 

While each property type comes with its benefits and drawbacks, trends in tenant demand often maximise the potential of your Buy-to-Let property. After the temporary city exodus we saw throughout 2020, city living is making a strong return.

But why identify investment opportunities in Birmingham? While many leading UK cities are having a resurgence in rental enquiries, Birmingham has seen an annual increase of 56%.

In the past 12 months alone, there has been a 312% increase in renters moving away from single-let properties in search of bigger homes with co-living opportunities. Couples once dominated the tenant pool for 2-bed apartments, but changes in tenant priorities have broadened the scope of these bigger investment properties in Birmingham.

At the same time, 2-bed apartments are typically more flexible, giving investors plenty of scope for attracting different tenant demographics.  

Case Study

A design led scheme of 313 beautifully appointed apartments, forming the first ever residential square in the heart of Birmingham’s Creative Quarter. Now sold out.

Fabrick Square, Birmingham

Completed Q3 2017

Original price

1 Bed £110k

Today's value

£150k

Avg rental yields achieved

7.7%

Avg capital appreciation

36%
Fabrick Square

Fabrick Square can be found in the heart of Digbeth, a creative zone which is undergoing a major transformation. The original building has been converted from a curtain factory built around 1900 into four unique buildings – three of which are new builds – consisting of 313 beautifully designed apartments. Sympathetic to the original building, the new sections of the development have character and integrity. With clean contemporary lines and stylish fittings, all the interiors are modern and fitted to the highest standards. Completed in Q3 2017, Fabrick Square achieved 36% capital growth and a 7.7% average rental yield.

Tenant Demand for Birmingham Investment

 

Since 2016, Birmingham has been in an upward trajectory. Fuelled by HS2 and the 2022 Commonwealth Games, the city is attracting incredible global businesses and a wave of young professionals looking to rent within the city.

With investment banking giant, Goldman Sachs, set to join the likes of HSBC, Deloitte and EY, the subsequent demand for property is seeing many investment opportunities in Birmingham showcase their incredible potential. 

Similarly, as HS2 continues to progress, demand for city centre apartments will continue to climb. By cutting an already low travel time, Birmingham will quickly become a popular destination for transient tenants working in the capital but seeking the affordability of Birmingham. 

Rental Yields

 

Rental yields are a key metric for prospective investors to consider, which vary significantly between apartment sizes. While one-bed properties, on average, sit on a 4.1% rental yield, 2-bed properties offer more competitive rates of return, reaching an average of 4.8%. 

That said, with some Buy-to-Let hotspots in Birmingham surpassing 5% rental yields, 2-bed apartments in the second city offer a potentially lucrative investment asset. The continuation of the city’s regeneration will make Birmingham property investments more competitive in the years to come, with up to 12% rental growth by 2024.

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