Why invest in a new Studio Apartment in Birmingham?

Avg Studio Yields: 6.7%

Popular throughout the world, a studio apartment is a stylish and compact living space. Growing in popularity with both developers and renters, they provide affordability and flexibility in prime city-centre locations. As cities grow, studio apartments can provide a compact solution to residential undersupply.

Studio apartments allow investors the opportunity to invest in popular prime destinations at a lower cost and still deliver excellent rental yields because of the positioning and surrounding amenities.

birmingham skyline UK

Growing Tenant Demand

The Private Rented Sector is continuing to grow in 2019, forecast to make up 25% of the total housing market in the near future. The rise of ‘Generation Rent’ means more tenants are choosing to rent ‘permanently’, enjoying the flexibility provided by a rental property.

For investors, that means an affordable property in a prime location will always be in demand, reducing the potential for void periods and ensuring a steady stream of rental income. The key priorities of ‘Generation Rent’ is to maximise space in an affordable area that is encouraging the growth of amenities.

Studio apartments can meet the demand for two growing tenant demographics – young professionals that are looking for residences near city-centre job opportunities and tenants that are looking to downsize. For both demographics, an open-plan, single story layout at the heart of a city offers ease, comfort and accessibility, putting the tenant within walking distance of everything they need while remaining affordable.

St Martins Place lobby

Rental Yields

Studio apartments are particularly attractive because of high capital appreciation and rental yields. Andrew Donnelly, CEO at Whiterock Capital Partners, believes studio apartments can provide rental yields between 1% and 2% higher than one bedroom and two-bedroom apartments.

“Studios offer yields closer to 6%, whereas one-bedroom and two-bedroom apartments will generally provide a yield of around 5%.”

Rightmove research reinforces this, with the average studio in Birmingham achieving a rental yield of 5.8%, nearly 1% higher than the average yields delivered by one-bedroom and two-bedroom apartments.

Investors looking at studio apartments should utilise them in long-term strategies, rather than short-term capital gains. If investors want a strong rental return over time, a low-maintenance and affordable studio can increase the potential for positive returns. Depending on the price they can also be exempt from stamp duty.

Apartment Growth last 12 months: 1.12%
Avg Studio Price in Birmingham: £149,990

St Martin's Interior
Start quoteLiam has kept in touch since we invested offering help and support along the way, we are hoping to arrange a meeting in the near future to discuss other opportunities. I have and will continue to highly recommend SevenCapital to anyone who is considering a property investment. End quote

P Shah, United Kingdom

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