Why invest in Birmingham property?

Birmingham, as the UK’s second-largest business hub outside London, drives the regional economy. But it’s also the city of choice for a thriving student community, a beacon for regional investment, and – increasingly – a humming hotspot for investors in UK property. Let’s take a look at the reasons why...

Birmingham’s property market

Housing market

After growth of 14% since March 2020, The average house price in Birmingham is now £257,000. This is far more affordable than elsewhere in England & Wales, where the average house price is £296,000. That said, further growth is expected – Savills have predicted an increase of 10% over the next five years, making Birmingham a strong option for investors looking for capital growth. 

One significant factor driving price growth is the combination of low supply and high demand. Birmingham needs 4,000 homes per annum to meet demand over the next ten years.

Buy-to-let market

The rental market in Birmingham remains one of the UK’s strongest. With a thriving student population and a growing number of young professionals in skilled jobs, Birmingham delivers higher-than-average yields for investors and the prospect of sharp growth in the future. 

Although house prices are lower than the national average, rental yields are incredibly resilient. Birmingham yields averaged 6.56% in 2022, compared to the UK average of 3.63%. Rents also look set to increase further over the next five years, as the young population continues to grow. In fact, global commercial real estate firm Jones Lang LaSalle (JLL) expects tenants’ payments to increase by 12%.

In Birmingham City Centre, rent yields for studio, 1-bed and 2-bed flats have grown by 5.7%, 5.6% and 4.9% respectively in the past year. Ultimately, the Birmingham rental market is highly investable in comparison to other parts of the UK. This trend is likely to continue into the future, with property investors expecting to enjoy even higher yields and ROI.

Birmingham’s demographics

Population

2020 estimates suggest that Birmingham is home to 2,000,000 residents, a number that’s steadily increased since 2002. But, perhaps most interestingly for investors, its population boasts an average age of just 37.8 – reflective of its largely young, upwardly-mobile demographic. This compares to the national average of 40.1 years. This creates a favourable landscape for buy-to-let investors, with a younger demographic more likely to rent than buy. 

Salaries & employment

Beyond the young, skilled population, certain areas in Birmingham offer very lucrative salary opportunities. The average salary ranges between £30.3k in Tamworth and £39.5k in Solihull (compared to the UK average of £38.1k). But, despite examples of high salaries, Birmingham’s unemployment rate remains high. At 8%, it’s almost double the national average of 4.1%. 

Expected regional investment

As leaders in development for advanced manufacturing, gaming and virtual reality, energy storage, and life sciences, Birmingham and the West Midlands boast the UK’s largest regional economy. At £105bn, it’s the same size as Hungary’s.

Accordingly, Birmingham has enjoyed the most direct foreign investment (FDI) throughout the UK for four consecutive years. The city’s reputation for its skilled workforce looks set to draw further investment, both domestic and foreign.

Birmingham has a long history of attracting the world’s largest Business, Professional & Financial Services companies – PwC, Deloitte, KPMG and EY all have regional offices in the city. HSBC has placed its UK headquarters in One Centenary Square. Goldman Sachs chose Birmingham as the primary base for its technology operations, supporting its businesses and initiatives across the whole of the United Kingdom and Europe. At £105bn, the West Midlands has the largest regional economy in the UK, equalling that of Hungary.  A hard-working, dynamic and thriving local workforce, combined with much cheaper office space when compared with London, make Birmingham an incredibly attractive choice for large corporations when choosing their regional office locations.

Birmingham’s Paradise Redevelopment encapsulates the city’s continued growth and investment. In total, the £700m project entails ten new buildings and three new public squares. One of the buildings has been leased exclusively to PwC, and the development looks set to entice further international investment.

Dedicated to achieving a low carbon future, Birmingham is also spearheading the fight against climate change. The University of Birmingham, in collaboration with Energy Capital and Energy Systems Catapult, are pioneering Energy Innovation Zones (EIZs). These attempt to provide controlled zones, where innovators can access the facilities and space to trial new services, technologies or business models, with the aim of generating faster decarbonisation, while also driving economic growth.

Birmingham – an exciting buy-to-let opportunity

Birmingham’s reasonable prices, strong regional economy, and increasing foreign investment make it a promising option for buy-to-let investors. Want to see high-yield opportunities in Birmingham before anyone else? We can help with that. Just book your free, no-obligation consultation with us now to explore your options.