Birmingham - Potential For A Property Boom

Birmingham - Potential For A Property Boom

Birmingham is the second largest city in the United Kingdom, after London. While the property market in London has extremely high entry prices and little growth when compared to other cities in the UK, Birmingham is primed for a housing boom in the next years. The current projection of property increase can be attributed to the Commonwealth Games hosted there between July 28th and August 8th. This was largely recognised as the largest event ever hosted in the West Midlands, as well as the largest sporting event conducted in the United Kingdom since the 2012 Olympics. Historically, when a city hosts the Commonwealth Games, its real estate market skyrockets. According to Land Registry data, when Glasgow hosted the Commonwealth Games in 2014, average house prices rose 27% in the five years that followed. The average house price fell by 8.9% in the five years preceding this event. This demonstrates the dramatic impact that a nationally popular event may have on the host city. The city of Birmingham also benefited from the event's redevelopment of its infrastructure and transportation system. This will benefit the city in the long run, particularly in the current job market. The remaining funds from the Commonwealth Games investment will be utilised for other refurbishment projects, including a new science and industry museum and a bid to host the European Athletics Championship in 2026. According to JLL, these developments might cause home prices in Birmingham to rise 27% by 2026. While this is simply an estimate, based on the history of cities involved with Commonwealth Games and revitalisation initiatives, it is highly likely due the recent development in the Birmingham housing market.

While this may be the primary driver in propelling Birmingham's property market to new heights, there are other variables that help benefit the status of the housing and rental markets. We will now look at other factors that may be influencing the rise of Birmingham's property market.

Regeneration Projects

Birmingham's 'Big City' plan is one of the most ambitious development projects in the UK, aiming to reshape the city over the next few years. This initiative aims to improve walking and cycling infrastructures while also creating a connected city. The new road plan, which will be built with the £700 million-plus reconstruction of the Perry Barr suburban neighbourhood in north Birmingham, will be the first stage. This project prioritises the area's transportation network, and significant adjustments have already been implemented to improve it since 2020. The Sprint bus rapid transit network is the first significant milestone for this regeneration initiative. Future plans include for the construction of new residences and community facilities.

Another aspect that Birmingham is prioritising in order to take the next steps toward a brighter and cleaner future is environmental sustainability. Birmingham's Clean Air Zone, which opened on June 14, 2021, is located in the heart of the city and is open 24 hours a day, 365 days a year. Any vehicle that enters this premises and does not meet emission standards will be charged a daily fee. According to City Rise, these rules have reduced nitrogen dioxide levels in the atmosphere by an average of 13%.

HS2 is one of Birmingham's most awaited developments. This is a high-speed rail network that will connect Birmingham City Centre to London, providing a great opportunity for new residents and workers. The goal is to make Birmingham the centre of UK transportation, connecting major Northern and Southern cities. According to Seven Capital, this plan also includes the construction of 34,000 new homes and the creation of 36,000 new jobs, which will significantly boost the economy. HS2's long-term goal is to reduce the commute time from London to Birmingham to 49 minutes.

These developments are visible for the rising property market as a result of Birmingham's concentration on growing its commercial sector as well as the construction of new residences. The short journey from London to Birmingham will create many career opportunities for individuals, as well as more people to fill vacancies for newly built houses and apartments, assisting the economy and housing market to rise in conjunction.

Rental Yields

The combination of new developments and local government investment to enhance Birmingham's commercial strength has created unprecedented demand for rental opportunities. These developments have naturally resulted in a rise in rental prices, yet Birmingham property prices remain relatively inexpensive when compared to competitors. The average house price in Birmingham, according to Zoopla, is £234,989. When compared to the UK average property price of £299,249, the low entry price is appealing to investors looking to buy properties to rent. This is reinforced further by Birmingham's rental yields. According to Seven Capital, the average rental yield is 6.56%, which is much greater than London's 2.90%. HomeLet reports that Birmingham's average monthly rent for properties is £846 PCM. This information demonstrates the potential rental opportunity in Birmingham for investors. With a lower than average housing price and a high average yield, investors in Birmingham are expected to benefit generously from property investments. This is bolstered further by ongoing developments that will raise housing and rental costs across the board.

Commercial Strength

Birmingham's economic sector is rapidly expanding, with a number of well-known multinational corporations establishing operations in the illustrious city. In September 2021, Goldman Sachs, one of the world's largest investment banking, security, and management firms, opened an office in Birmingham. Their goal was to tap into a large new talent pool and capitalise on Birmingham's technological sector. BT, HSBC, Deloitte, PWC, and KPMG are among the other significant corporations opening offices in Birmingham. Birmingham's earning economy is thriving, with the city having the fastest wage growth of any city in the United Kingdom. According to Knight Frank, the number of people earning £40-50k has increased by 80% in the last five years. Birmingham has more businesses than any other regional city, making it the most entrepreneurial city in the United Kingdom.

Birmingham's commercial prowess makes it a corporate powerhouse, drawing many corporations to relocate and create new opportunities. The domino effect of this has already been demonstrated, with these enterprises offering premium jobs, resulting in an increase in wages among the population. Investors should consider Birmingham's job demand and commercial growth as one of the primary catalysts powering the economic boom.

Lifestyle

Birmingham is known as one of the top shopping destinations in the UK, with a plethora of fantastic department shops, historic markets, and one-of-a-kind independent retailers. The Jewellery Quarter, one of the city's most prominent attractions, is one of the top sites in Europe for jewellery buying. It is one of the most unique places in the UK, with over 700 jewellery merchants and independent retailers. Birmingham is also known as one of the greenest cities in the UK, with over 8000 acres of parkland and green space. During the holiday season, Birmingham's Frankfurt Christmas Market is the largest in the UK, with approximately 200 stalls offering festivity-related items. Birmingham is home to the Symphony Hall, one of the world's best performance halls and home to the City of Birmingham Symphony Orchestra.

A city’s attractiveness to live is heavily influenced by its lifestyle. Birmingham hits those boxes with a diverse range of shopping and entertainment options. Many people want to reside in a city with a variety of activities, making it a popular destination for investors.

About Us

Novyy is a Community Investing Platform that enables individuals to invest in UK Buy-To-Let, Leading Real Estate Private Equity Funds, and Premium Homes across Europe with as little as £10,000. Novyy users enjoy seamless digital investing like never before, in opportunities that were earlier unavailable to most individuals. This piece should not be construed as tax advice. Please refer to your tax advisor before making any decisions on owning properties through Limited Companies.