Why Invest in Birmingham properties?
1. Economic growth and diversification
The city has established itself as one of the fastest-growing cities in the UK in terms of property prices after Central London. It boasts a diverse economy with major sectors in finance, education, technology, and healthcare. Major companies like PwC, Deutsche Bank, and HSBC have relocated their significant operations to the city, enhancing job opportunities and the economic stability of Birmingham. This has attracted the young and skilled workforce, driving demand for buy-to-let properties in the City.
2. Property price rise
Birmingham’s property market is expected to see a steep price rise of 19.9% by 2027, as per JLL Residential Forecasts 2024-2028. This growth will increase the value of all the existing properties, providing lucrative capital appreciation opportunities for property investors and homeowners. Higher property values will stimulate future investments in the city, resulting in property market growth.
3. Growing rental market
As property prices rise, home ownership becomes less accessible, leading to a rise in rental market demand. This trend benefits investors by potentially increasing rental yields and reducing vacancy rates. Increased demand for rental accommodations from students, young professionals, and families will continue strengthening this market segment, making it an attractive opportunity for property investors. According to JLL Residential Forecast 2024-28, Birmingham will see a nearly 22.2% rise in rents. Investing in high-quality rental properties in prime locations can ensure consistent rental income with rising demands.
4. Undersupply of high-quality residential property
There has been a huge gap between Birmingham’s rapidly expanding population and the supply of high-quality residential property, leading to a great opportunity for property investment developers and investors. According to Cushman & Wakefield’s Quarter 2 2024 Build to Rent report, at least 4 million extra homes must be delivered by 2024 to meet the increasing housing demand in the UK, and Birmingham is no exception. The demand for build-to-rent property will continue to rise as more postgraduates leave their student accommodations and look for rental properties.
5. Impact of foreign investment
Foreign investment has significantly boosted Birmingham’s economic growth and property market. With huge investments from countries like India, the US, and Germany, Birmingham has become one of the top UK destinations for foreign direct investment, creating nearly thousands of jobs in the last decade. Sectors such as engineering, automotive, and pharmaceuticals have also grown rapidly. Incentives like rate relief and digital infrastructure will continue to attract investors, making Birmingham a prime location for property investment.
6. Birmingham property investment market
Property price change forecast 2024-2028 by JLL Residential Forecast Spring Report: 19.9%
Annual rental growth forecasted over 2024-2028 by JLL Residential Forecast Spring Report: 22.2% (one of the highest levels of growth in the UK)
Requirement of new homes in less than two decades in Birmingham: 127,600 (Source: Birmingham Live)
The provisional average price paid by first-time home buyers in Birmingham as of May 2024: £198,000
Employment rate in Birmingham influencing property market: 65.9% (ages 16-64) (Source: Office of National Statistics)
Types of property investment opportunities in Birmingham?
Birmingham offers a wide range of property investment opportunities for investors seeking to capitalize on the city’s growth and regeneration.
1. Rent to serviced accommodation (RENT2SA)
Rent-to-service accommodations are the properties leased by investors from property owners. Investors use them as short-term rentals instead of traditional lets. Investors pay a part of their profits as monthly rents to the owners. To yield higher rental income, choose accommodation in prime locations near major attractions and in business districts like Digbeth and City Centre.
2. Buy to service accommodation (BUY2SA)
Buy-to-service accommodation (BUY2SA) properties are similar to RENT2SA, but investors need to purchase the property to rent them out as short-term accommodations (e.g., Airbnb rentals). The entire profit made on renting the properties remains with the investors. This strategy allows property investors to benefit from the growing tourism and business travel market in the city, which often provides higher returns than traditional rental properties.
3. BRRRR property investment
The BRRRR (Buy, Refurbish, Rent, Refinance, Repeat) property investment is an advanced approach that involves investors buying properties that require refurbishment, renovate them to increase value, rent them out to make higher income, refinance to pull out the equity, and repeat the process. Birmingham’s regeneration and infrastructure projects provide numerous opportunities for property investors to find such properties with strong capital growth potential.
Birmingham city development and growth projects
Birmingham regeneration projects are one of the major reasons for the city’s increasing property prices. Since 2010-11, Birmingham has received nearly £1.5bn of public sector money and investment, which has created several new hotspots in the region and transformed coveted places to live.
Some of its key initiatives include the £1.2 billion Paradise redevelopment, expansion of the Birmingham Smithfield Market, and ongoing improvements in Digbeth and Eastside. These projects are improving the City Centre region by creating new modern commercial and residential properties and attracting new businesses, residents, and tourists.
The new HS2 high-speed rail project will reduce travel time to different cities across the UK, reducing travel time by 1 hour to London from Birmingham. This is expected to dramatically increase property demand and values in the city.
The new Curzon Street station in Birmingham, due to open in 2026 with seven new platforms, will provide high-speed rail travel to important cities across the UK. It will act as a public space and gateway into the city center. This project will also include a residential development, with plans to build nearly 4,000 new homes in the region.
Another major regeneration initiative in Birmingham is the Big City Plan. This 20-year master plan aims to transform the city into a global city center, generating 50,000+ new jobs and an annual contribution of £2.1 billion to the local economy.
Other Birmingham city development and growth projects include the regeneration of the New Street station, the building of Snowhill, the creation of the Beorma Quarter, and the Custard Factory.