Property Investment in Birmingham

Birmingham is one of Britain’s most popular buy-to-let property investment markets. To explain why, we have produced a downloadable guide that considers factors including:

  • Birmingham’s economy
  • Inward investment in Birmingham
  • Major developments in Birmingham
  • Business growth
  • Birmingham’s principal growth sectors
  • Birmingham’s tourism market
  • Birmingham and the Commonwealth Games
  • Birmingham’s sporting, social and cultural scene
  • Birmingham’s housing market
  • Buy-to-let investment in Birmingham
  • The student property market & PBSAs
  • Predictions for the buy-to-let market in Birmingham for 2020

Why Invest in Birmingham? 

Many pundits, journalists and other commentators have declared Birmingham to be the UK’s best performing property investment market. To support their arguments, they cite some of the city’s most notable strengths.

  • One of the UK’s fastest-growing populations outside London
  • A huge shortfall in housing supply
  • More foreign direct investment than anywhere outside London
  • Capital growth of nearly 20% since 2014
  • Over 12% growth predicted by 2022
  • Affordable property prices
  • Strong rental yields
  • An 80,000-strong university student population
  • Massive inward investment and urban regeneration
  • Poised to benefit from HS2
  • Thousands of new jobs being created
  • 11% employment growth since 2010
  • More regeneration planned in preparation for the 2020 Commonwealth Games

Many of the same factors that make the city appealing to property investors also make it attractive to large employers and foreign commercial investors. As a result, Birmingham has seen a large, steady influx of new money and job creation by such organisations as BT, HSBC, Barclays, PwC and others.

The region’s economic development teams have been keen to build on this success and, consequently, Birmingham is witnessing a number of important new regeneration projects and infrastructure investments, together with improvements to Birmingham Airport.

Birmingham Skyline

Inward Investment in Birmingham

Often regarded as England’s second city, Birmingham has long been home to some of the country’s biggest employers. In particular, it is the UK's second biggest commercial and financial centre after London. It hosts organisations such as PwC, Deutsche Bank, KPMG, HSBC and Allianz, and as such, it represents one of the largest clusters of business, professional and financial services companies anywhere in Europe.

To capitalise on this status, developers and public bodies have created a wealth of grade A office space in prestigious, newly regenerated districts. Examples include:

  • Paradise: a £700 million city centre development that will create 1.8 million sq. ft. of mixed-use office, retail and leisure space.
  • Arena Central: another city centre mixed-use development with a gross development value of £530 million.
  • Eastside Locks: a £450 million canalside regeneration scheme, delivering improvements to the public realm and creating a hotel, shops, bars and restaurants.
  • Birmingham Smithfield: a £1.5 billion scheme to regenerate large parts of Eastside and the city’s central shopping area.
  • House of Fraser redevelopment: a £110 million scheme to revitalise one of the city’s best-known buildings.
  • 103 Colmore Row tower: started in summer 2019, this will create Birmingham’s tallest office block.
  • Media Village: plans are now in progress (though not yet finalised) for a new £500 million film and media studio in the Digbeth area.

Our Birmingham Property Investment Guide provides more details but it’s clear that Birmingham’s fortunes are rising and that investors can look forward to seeing a city with more jobs, a buoyant economy and a rising population. In turn, these developments should mean strong rental demand, rising yields and good prospects for strong capital appreciation.

Business Growth in Birmingham

Birmingham has a strong economy worth an estimated £28 billion per annum, and it has been growing steadily. Recent figures from Birmingham City Council suggest that by the end of Q3 2019, it had expanded by 3.6%, equivalent to an extra £985 million.

Some of this is the result of growth amongst big-name employers and the success of the city’s financial and construction sector, but there has been steady organic growth amongst the city’s small and medium-sized enterprises. The urban business community has grown by just under 5% (approximately 2,000 firms) in the last 12 months, and further expansion is almost certain, given the extent of local investment. In all, Birmingham’s 20-year Big City Plan is targeting the creation of 50,000 new jobs and, to judge by current performance, it is well on its way to achieving it.

Some of Birmingham’s fastest-growing industries include:

  • Advanced engineering
  • Business, finance and professional services
  • Construction and architecture
  • Energy and low carbon
  • Food and drink
  • Life sciences
  • Tech and digital
  • Transport and logistics

2022 Commonwealth Games

In 2022, Birmingham will host the Commonwealth Games, which is expected to have an important positive impact on the city. In preparation for the Games, parts of Birmingham will receive additional investment to improve transport and public spaces, creating upwards of 4,500 new jobs each year. Once the Games themselves begin, Birmingham is expected to welcome roughly one million extra visitors, and the economic impact should be substantial. Estimates put the resulting increase in GVA at around £780 million, and as much as £1.5 billion over the longer term.

Birmingham's Housing Market

All of the factors listed above could have a positive effect on the city’s housing market and on its appeal to property investors. Many commentators therefore rank Birmingham more highly than any other British buy-to-let destination, pointing to recent data as evidence of a strong, all-round performer.

  • Capital appreciation: 3.8% year on year (Home.co.uk)
  • Rental yields: between 4.4% and 5.3% (PropertyData)

Student Property Investment in Birmingham

Five universities operate in and around Birmingham, creating a student population of around 80,000, and sustaining employment for thousands of teaching and managerial staff, together with employment in their local supply chains.

Universities:

  • Aston University
  • Birmingham City University
  • Newman University College
  • University of Birmingham
  • University College Birmingham

Yields on conventional student rentals and purpose-built student accommodation typically vary between 5% and 6.5%.

Birmingham Property Market Predictions for 2020

As a result of ongoing large-scale investment and arguably the fastest population growth of any British city, Birmingham is hotly tipped to remain one of the country’s most rewarding property investment destinations in 2020 and beyond.

Industry predictions:

  • UK average price growth during 2020: 2% (Rightmove)
  • Average price growth during 2020 (W. Midlands): 3% (Savills)
  • Average price growth by 2022 (Birmingham): 12.5% (Knight Frank)
  • Average price growth by 2025 (W. Midlands): 18.2% (Savills)
  • Birmingham population growth: 12% by 2032 (Seven Capital)
  • Projected shortfall in housing by 2030: 100,000 homes (Seven Capital)

For property investors, Birmingham is sending out all the right signals. Everything is moving in the right direction: its population, economy, jobs, housing supply and its historical performance in terms of price growth and yields. For all these reasons and more, Birmingham remains one to watch in 2020 and beyond.

For more information, please download our guide: Property Investment in Birmingham – A Guide.

Additional reading:

For more information, please download our guide to Property Investments in Birmingham: 

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