Birmingham Properties – The Star of West Midlands

Birmingham beckons with investment opportunities; it is also the UK’s second largest and often overlooked metropolis that’s booming with property options.

Nov 08, 2018 | By Joe Lim

Birmingham takes centre stage as an investment centre outside of the capital. The UK’s second largest and often overlooked metropolis, Birmingham is at the heart of Britain’s West Midlands. Dating back to medieval times, Birmingham has been an important city not only Britain but the world.

An aerial view of Greenwich Peninsula

A dominant player during the industrial revolution, inventions such as the steam engine, were developed in the city. After World War II, Birmingham has gone through stages of redevelopment which have played an important role in the shaping of the city and what we know of it today. Outside of London, Birmingham has more start-ups (over 12,000), than any other city in the UK and is considered to have Europe’s youngest population with 40 per cent of residents under 25 years of age. Sitting in the UK’s fastest growing region, construction in Birmingham is booming at levels not seen since 2008. A population of just over 1 million and only 208 kilometres away from London, means that Birmingham can pack a big punch when it comes to regional power plays. With Brexit on everyone’s mind, most of the talk internationally is with regards to the London economy and property market. However, Birmingham is coming into its own and isn’t necessarily being affected like the capital.

Birmingham is currently in the fortunate circumstance of having higher demand levels than the available inventory of homes. Currently, over 4,000 homes are needed annually, however, the number actually being built is less than half according to Centre for Cities. This level is not going to come anywhere near close to meeting the growing population who need of three- and four-bedroom homes. Property prices are continually rising in the city. Over the last five years, there has been a growth of 30 per cent with 8.6 per cent growth over the last year alone, according to Savills. However, the average house price is still only 7.2 times the average salary. If you consider that London house prices are 16.6 times the average salary, Birmingham begins to look like a real bargain.

Clockwise from top left: Ardengate: living and dining areas; artist impressions of a bedroom.

Even with the impending EU dilemma, Savills still expect residential properties in the West Midlands to have a five-year compounded growth of 14.8 per cent, thus beating out their 7.1 per cent growth for London over the same period. While through 2021, Savills expect investors in Birmingham looking to rent out their residential properties to attain growth in the rental market of 17 per cent. This varies a little bit from Knight Frank’s figures, which are also still positive, showing compounded capital appreciation in Birmingham of 18.4 per cent and rental income growth of 15.4 per cent. Knight Frank also states that the rental market not only had an uptick from students needing somewhere to live while attending a local university, students were also staying to work after graduating. This enables Birmingham to rank third in the UK for students staying on after finishing their studies. This also means high-demand for one-bedroom units for younger tenants and two-bedrooms with parking for young families. According to Jones Lang LaSalle, property prices are predicted to reach GBP 500 (USD 652) psf by 2020, however, Florian Loloum, Sales & Marketing Director of Top Capital Group currently puts prime city centre prices at GBP 390 – 400 (USD 509 – 521) psf. He also sees short-term growth in the central, west-central, and southcentral areas. Not to mention for investors looking further ahead, the east-central area is also an option.

Ardengate – Master bedroom

The HS2 high-speed rail line continues to pick up steam as two stations are due to be completed in Birmingham by 2026. The line will eventually connect Birmingham not only to the south but also provide high-speed rail to northern cities by 2033. James Puddle, Managing Director of One Global Property Services in Singapore says, “This is substantially contributing to the growth of Birmingham as an “investment hot spot””. The new line will shorten the connection time to London and eventually to other parts of the UK as the line expands. It also means that Birmingham International Airport will be the only airport in the UK with a dedicated high-speed rail connection. This will only add to the growth in traffic numbers to destinations such as Europe, Asia, and the US, which has also seen Birmingham’s tourism steadily rise. Last year 41.8 million visitors made their way to the city while spending a whopping GBP 7.1 billion (USD 9.2 billion).

Timber Yard

Investors looking for a new-build apartment can consider Timber Yard. Situated near the Chinese Quarter, the Galliard Homes development is awash with the luxurious and modern design elements one would expect from the developer. With units priced from GBP 184,995 (USD 241,000) and due to complete in Q1 of 2021, Timber Yard features individual apartments ranging in size from studio to three-bedroom units. There are even two-bedroom duplexes available with 1,031 sq ft of living space. While not necessarily boutique, the 379 units are spread out over two buildings and provide residents with a gym, club lounge, private parking, and a concierge. Each spacious apartment comes with a 210-year leasehold, which is considerably higher than the standard 99-year lease our Singaporean readers will be used to. Residents will also be just a short walk from New Street station, Moor Street, the HS2 interchange, and public transport.

Aerial view of Timber Yard

For investors looking for a property due to complete a little sooner, there’s Arden Gate. Developed by Top Capital Group, the 225-unit residential apartment features one- and two-bedroom units ranging in size from 473 – 785 sq ft. With completion expected in 2019, residents will be located right in the heart of the city, only a few minutes’ walk from an abundance of entertainment and transportation options. Not to mention the numerous offices of companies that call Birmingham home, including the latest HSBC building. Prices start from GBP 192,950 (USD 253,151) for one-bedroom apartments and two-bedroom apartments from GBP 267,950 (USD 351,545).

When investing in the UK, there are many cities outside of London that individuals should look at. Many of these offer excellent opportunities that wouldn’t always be readily available in the capital. Investors would still be wise to pay attention to developing news on the ever-changing situation with the European Union. It still has the potential to affect areas outside of London in different ways. However, as of what we know now, Birmingham is on track to offer sustained and stable investment growth in the residential property sector over the next decade. Now could be a good time to get your foot in the door on an investment in this West Midlands city.

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