Birmingham 2016 – the UK’s leading investment hotspot
Birmingham is a thriving city in the West Midlands, which is often referred to as England’s second city, as only London beats it in terms of population. In recent years, many investors have sought Birmingham out as a residential buy-to-let investment destination. The city has captured investors’ imaginations for a multitude of reasons.
Birmingham is a city on the up. Between the 2001 Census and the 2011 Census, Birmingham’s population grew by 9%. The city now has more than 1.1 million residents, with young people flocking to the city in pursuit of its economic opportunities, cultural attractions and recreation and leisure facilities.
According to the October 2015 Birmingham Economic Update, the city’s employment figures are looking excellent. Total employment grew by 2.1% from 2013 to 2014, with the private sector driving the growth. The report confirms that Birmingham was the number one creator of private sector jobs among the core cities, accounting for 19.7% of the total. Overall, private sector employment in Birmingham rose by 5.7% over the year.
Birmingham is currently around a quarter of the way into its ambitious City Centre Masterplan, which forms the second phase of the Big City Plan. Running from 2010 to 2030 and covering five areas of development estimated to be worth £10 billion, the City Centre Masterplan aims to expand the size of the city core by 25%.
The plan incorporates some 5,000 new homes and 50,000 new jobs. A number of impressive elements of it have already been completed, including the new Library of Birmingham and the first new city park since Victorian times (Eastside City Park).
The City Centre Masterplan also aims to improve Birmingham’s transport infrastructure. This included the £600 million redevelopment of New Street Station, which opened in September 2015. The redevelopment was much-needed – Birmingham New Street’s annual rail passenger usage more than doubled from 16.2 million in 2004/05 to 35.3 million on 2014/15, based on figures from the Office of Rail and Road Statistics.
Birmingham’s transport infrastructure is set to receive a further massive boost, thanks to the high speed rail network planned to run between the city and London, known as HS2. According to independent research undertaken in 2013, the implementation of HS2 could lead to 26,000 new jobs in Birmingham/Solihull, an average gross value added increase of £680 per worker and a £4 billion increase in annual economic output.
Birmingham’s economic success and future potential has caught the attention of investors from around the world. The Greater Birmingham and Solihull local enterprise partnership (LEP) attracted more foreign direct investment than any other local enterprise partnership zone in the country during 2014/15, for the second year in a row. More than 6,000 jobs are credited with being created and safeguarded as a result of the investment, according to data from UK Trade and Investment. The area’s strong talent pool, affordable space and transport links were all cited by incoming firms as reasons for their belief in Birmingham.
Of course, all those talented workers need somewhere to live, which is creating strong demand for housing in Birmingham. Like much of the UK, the city is in the midst of a housing crisis. The city has space to build some 51,100 homes, but needs 89,000 in order to house its growing population. The shortfall of nearly 38,000 homes means that any new accommodation in the city is snapped up fast.
Increasingly, new homes in Birmingham are being purchased by investors (both from within the UK and overseas) as buy-to-let properties. Across the UK, home ownership levels are falling sharply. Between the 2012/13 and 2013/14 English Housing Surveys, published by the Department for Communities and Local Government, home ownership fell from 65% to 63%, the lowest level in nearly three decades.
At the same time as more people are renting, rents themselves are on the up. The HomeLet index revealed a rise of 8.5% across the UK in late 2015, which is excellent news for the growing number of investors turning to buy-to-let accommodation and looking for health yields in cities such as Birmingham.
England’s second city certainly has a winning combination when it comes to attracting investment. Its youthful and entrepreneurial workforce is creating a truly dynamic environment for businesses within Birmingham and the mixture of foreign direct investment and regeneration funding from within the UK is elevating the entire city to the next level. For investors with a keen nose for future success, Birmingham is definitely the place to be.