Why invest in the Birmingham property market?.
Birmingham enjoys a strong reputation among property investors. The UK’s second city is a huge national success story, home to more than one million people, as well as thousands of multinational businesses and innovative start-ups.
It has emerged strongly from the covid-19 pandemic and is in a prime position to continue growing and lead the way in the future.
As the host of the 2022 Commonwealth Games, the city is about to receive an unprecedented level of attention and a huge economic boost. Not only will the Games bring an additional 4,526 jobs to Birmingham in 2022, but it’s estimated that an additional 950 jobs will be available annually thereafter according to figures from the University of Birmingham. Overall, the impact of the Games is set to be a £1.2bn annual uplift.
Aside from the Games, Birmingham is enjoying the benefits of other large-scale investment and regeneration projects. A number of commercial developments across the city are creating thousands of new jobs bringing substantial economic benefits to the people of Birmingham.
To give just a few examples, the 20-year Big City Plan, the Smithfield Masterplan, Paradise Birmingham and more are all underway and changing the face of the city. Together, they are set to add billions of pounds to Birmingham’s economy and create tens of thousands of new jobs. Furthermore, they will make Birmingham an even more attractive place to live by improving infrastructure, quality of life and the city’s sustainability credentials.
These, and other major investments like the HS2 high-speed rail line which will slash journey times to London, are putting the focus on Birmingham as one of the UK’s most popular investment destinations.
Birmingham is also a global centre for higher education. More than 60,000 students from around the world come to the city each year and contribute significantly to the city’s economy, as well as adding to the demand for city centre housing, both during their education and afterwards as graduate workers.
Its nine universities are headlined by the University of Birmingham which is one of the UK’s top institutions. Most recently, it was named the 19th best university in the country by the Complete University Guide league table for 2022, with 18 of its departments ranked in the top 10 for their areas of study.
In addition to the large number of students, the aforementioned infrastructure and commercial developments are also driving population growth. The latest published figures from the Birmingham Demographic brief show that the city’s population is scheduled to reach more than 1.2 million by 2038 – representing growth of 7.8%.
Development of residential property in Birmingham is not even close to keeping pace with this. The Deloitte Birmingham Crane Survey 2022 shows that just 4,720 units are currently under construction in Birmingham, and are to be delivered over a five-year span. This follows 2021 where the volume of units delivered fell by 26%.
In contrast, it is estimated that Birmingham needs at least 4,000 new units every year – creating a supply and demand imbalance that is reflected in house price growth projections.
JLL believes that Birmingham is the city which will see the highest level of house price growth in the next five years, with the average property value increasing by 27% by the end of 2026. The agency also projects rental growth of 14.8% in the same time period driven by the same lack of supply. This follows a year period where Birmingham house prices rose by 8.2% in the aftermath of the pandemic, according to Hometrack.
Not only does this put Birmingham ahead of other cities in the country, but it is also set to perform more strongly than the West Midlands region that surrounds it. The latest long-term property forecast from Knight Frank shows that the West Midlands as a whole is expected to see average property value growth of 14.2% by the end of 2026 – almost 13% lower than the city of Birmingham itself.
Birmingham is one of the UK’s biggest and best cities, and a whole range of factors are combining to put its property market at the top of the list for investors in 2022. If you are looking for the next UK property hotspot, Birmingham is the place to be.
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