Located in the heart of the West Midlands and beaten in size only by London, Birmingham has solidified itself as a hotspot for UK property investors in the last few years. Boasting a thriving economy, impressive infrastructure developments and a diverse property market with consistent rental yields, there are plenty of reasons why now is the time to invest in buy-to-let property in this buzzing city.
Property appreciation
Birmingham’s house prices rose by an average of 14.9% following 2022’s Commonwealth Games, and if projections are accurate, the local housing market is set to see prices soar by 19.2% between 2023 and 2027 compared to the UK average of 8.9% over the same period.
With a projected capital appreciation of approximately £51,000 by 2026 and an increase in average property value of £270,340, the potential for capital appreciation in Birmingham’s property market makes it an attractive location for long-term property investment.
Affordable property prices
The average property price per square foot in inner London at the end of 2023 was £724, while Birmingham’s average property price per square foot was £283,82, below the UK average of £339,43.
As Birmingham’s property prices continue their upward trend, investors stand to profit from the city’s promising trajectory.
Infrastructure development
The recent Commonwealth Games provided a vital injection of funding and development into Birmingham, and the 20-year Birmingham Big City Plan is set to continue the area’s incredible growth and change. The next few years will see major improvements and growth in transport facilities, modern office spaces, retail outlets, leisure facilities and residential apartment buildings.
A thriving business scene
The professional demographic in Birmingham contributes to a strong and consistent demand for quality housing. There is a strong mix of British and international firms choosing to open or expand offices in the city, including Goldman Sachs, National Express, Sainsbury’s, Lloyds Bank, Accenture, Deutsche Bank, HSBC, the BBC and Jaguar to name a few.
In addition to having the fastest growing economy in the Midlands, the number of employees in Birmingham is projected to reach 613,800 at the end of 2024. The strong job market and business opportunities drive up housing demand, cementing its appeal for buy-to-let investments.
Foreign Investment
Enjoying significant investments from India, the US and Germany, Birmingham has become the UK’s premier destination for foreign direct investment, generating more than 12,000 jobs in the past decade and ranking as the seventh most attractive UK city for foreign investors.
Expansion of travel and connectivity
Another major development on track for the city is the HS2, a high-speed railway system linking London and the Midlands which will transport passengers from the capital to Birmingham in just 49 minutes. While another Northern stretch between Birmginham and Manshester has been scrapped, Phase One is expected to open between 2029 and 2033 and will run the 215 km from London to Birmingham.
Birmingham Airport’s expansion is also set to enhance the city’s economy and connect it to more people than ever before. The airport expansion includes a terminal extension and is expected to be completed in 2024, creating around 3,500 new jobs in the process.
Strong rental demand
With a student population of around 80,000 and a projected increase of 3.9% in the young population over the next decade, property investors can expect to benefit from strong rental yields. According to JLL projections, rental prices in Birmingham could increase by 12% over the next 5 years, making it the fastest level of growth in the country.
The affordability of Birmingham property combined with strong tenant demand driven by a young population, the city’s five renowned universities and a growing professional demographic results in high rental yields for investors.
Green spaces and active lifestyle
Birmingham’s beautiful green spaces and outdoor activities offer an attractive lifestyle for both residents and visitors. The city boasts a wealth of parks and recreational areas, such as the Botanical Gardens, Kings Heath Park and Sutton Park amongst others.
These green spaces and outdoor activities enhance the overall quality of life in the area, offering activities like climbing walls, ziplining, kayaking and archery, along with spaces for neighbours, friends and family to socialise.
As an investor, expanding and diversifying your property portfolio with buy-to-let properties in developing and thriving areas is a smart way to ensure steady returns. That said, thorough research and market experience are essential to help identify prime locations, understand local market dynamics and assess potential risks. Tailor my Property offers a network of property, market and financial professionals who can assist with specific property and investment goals in Birmingham and the greater UK market.