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London Property Market 28 April 2016

Birmingham Residential Report 2016

Birmingham is the UK's second largest city and the regional capital of the West Midlands. Over recent decades it has undergone a significant physical transformation with large areas of the city being regenerated. This has enabled Birmingham to develop into a modern, internationally recognised location for commerce with a thriving business, retail and leisure offer. Recent forecasts suggest both the population and the local economy will expand at healthy rates over the next five years at least. Improving employment rates and rising salaries have also improved aspirations with regard to housing.

The expansion of the city is fuelling demand for housing, in particular for rented accommodation. Census data shows that the ratio of households renting privately in Birmingham rose from 12% in 2001 to 18% in 2011. This ratio is likely to increase given growing affordability issues in the sales market. Moreover, a recent study by investment manager Hermes concluded that major regional centres such as Birmingham can expect to enjoy a period of sustained rental uplift going forward as the growth drivers of the past decade are set to continue. Future growth will be supported by public initiatives such as the Big City Plan, a 20-year programme of urban regeneration which will create an estimated 50,000 new jobs.

It is not just Birmingham's future economic and infrastructure prospects which are attractive. The combination of good yields and strong tenant demand make the city a popular location for residential investors. Moreover, supply is expected to lag demand for some time to come which should trigger further capital and rental value growth. This is likely to be stronger within the A4540 Ring Road where a number of new development schemes are due to come onto the market over the next couple of years which will provide attractive investment opportunities. With strong capital growth and yield prospects, Birmingham is now attracting significant interest from both domestic and overseas investors looking to diversify their holdings into regional centres.