The post-pandemic real estate boom has seen many investors looking for their next investment opportunity. Most people start by getting a feel for the budget and investment goals. The third question then arises: where to invest?
Although the pandemic has changed the way we live, the key factor in real estate investing remains the same – “location, location, location”.
More people than ever are working from home or are embracing a mix of home and office work as the “new normal”. Many predicted that this would lead to a trend of large-scale de-urbanization among tenants, due to the price of the city center and the less importance of commuting.
The reality was quite the opposite. The return of tenants to the office for at least part of their work week has triggered strong rental growth in the UK’s largest urban centers. In fact, recent data from Rightmove’s quarterly Rental Trends Tracker reveals that some city centers have not only rebounded from the declines caused by the pandemic, but have also achieved double-digit growth and exceeded the national average.
One city in particular is recognized worldwide for its strong investment potential. The second largest city in the United Kingdom by size and population, Birmingham.
5 reasons Birmingham is a premier investment opportunity for 2022:
- 1. High demand
Growing by 10,000 people a year, Birmingham’s rapidly growing population currently stands at 1.14 million. With the youngest population in Europe and a graduate retention rate of 41%, a quarter of the city’s population rents their accommodation.
A world-class business center due to its prime location in the Midlands and its self-sustaining economy, Birmingham is now a popular alternative to the capital for major employers looking to set up their headquarters. Global companies such as Goldman Sachs, Deloitte and HSBC Bank, to name a few. This growing trend is attracting a pool of young professionals – a key demographic in the Build to Rent industry.
- 2. Imbalance of supply and demand
Despite this rapidly expanding population, Birmingham has a relatively low supply of purpose-built rental housing. This imbalance of supply and demand presents a prime opportunity for Build to Rent developers, investors and their tenants.
As tenants expect more from their homes than ever before and are willing to pay a premium, Build to Rent properties are the town center home of choice for millions of tenants across the UK.
- 3. Rents increase
Across Britain, rents are rising at the fastest rate on record by Rightmove, now up 8.6% per year outside London. In September 2021, increased demand in Birmingham allowed rents to rise 10% from pre-pandemic levels.
With rents and demand at an all time high in Birmingham, rental yields for 2022 are on average 6.56% according to recent data from Zoopla. This figure is above the UK average and is expected to rise further according to the JLL report, which forecasts rental prices in Birmingham could rise 12% over the next five years – the highest level of growth in the country.
- 4. Real estate prices go up
Housing prices in the city are also increasing, with Rightmove reporting an increase in the average price of a property sold of 12% from last year and 17% from 2018.
With the implementation of the government’s £ 107 billion high-speed rail network, High-Speed 2 (HS2), property prices in Birmingham are expected to rise as a direct result. Almost halving the journey time to London by train from 90 to just 49 minutes by 2029, Birmingham will be a prospect for millions of Londoners looking for cheaper and better rent from life.
- 5. New jobs in the city
In addition to increasing Birmingham’s global reputation as a key business and tourist destination, the positive economic impact of HS2 has already benefited the city, as HS2 Ltd has established its construction headquarters in the Snow Hill area, creating thus 1,500 first jobs.
It’s part of the Snow Hill Master Plan – a 20-year plan to improve the region’s key assets, create more jobs, and spur Birmingham’s growth and regenerative activity. Including a £ 50million overhaul of Snow Hill station, the creation of a fourth platform and wider regeneration could create an additional 7,700 jobs, bringing more tenants to the city.
Although Birmingham has been a popular investment spot in recent years due to its location in the Midlands, the size of its population and its economy, there has never been a better time to invest in the second city. from the United Kingdom. Having become globally recognized for its strong development potential and its incredibly promising forecasts for 2022 and beyond, the future looks bright for Birmingham. All that’s missing is you!
Learn more about investing in Birmingham in our guide.