By As the year draws to a close, the post-pandemic property boom has seen many investors looking for their 2022 investment opportunity.
Once an idea of budget and goals have been established, the next question arises – where to invest?
More people than ever are working from home or embracing a mix of home and office working as the ‘new normal’ since the start of the pandemic.
Many predicted that this would lead to a widescale de-urbanisation trend among renters, due to the city-centre price tag and less importance on commuting to work.
The reality, however, has been quite the opposite.
Location remains as important as ever for both investors and tenants.
In fact, tenants returning to the office at least part-time has triggered strong rental growth in the UK’s largest urban centres.
In fact, recent data from Rightmove’s quarterly Rental Trends Tracker reports that some city centres have not only bounced back from the declines caused by the pandemic, but have hit double-digit growth and overtaken the national average.
One city in particular is gaining global recognition for its strong investment potential.
The UK’s second city by size and population, Birmingham.
5 Reasons Why Birmingham is an Investment Hotspot for 2022
1. Strong Demand
A thriving, metropolitan city with a growing global presence, Birmingham’s expanding population is currently at 1.14 million, rising by 10,000 people a year.
With the youngest population in Europe and a graduate retention rate of 41%, rental demand is at an all-time high in Birmingham – a city where a quarter of households rent their properties.
A world-class hub for business due to its prime Midlands location and self-sustaining economy, Birmingham is now a popular alternative to the capital for blue-chip employers such as Goldman Sachs and HSBC Bank to open headquarters.
This growing trend is attracting a talent pool of young professionals – a key demographic of the Build to Rent sector.
2. Supply and Demand Imbalance
Despite this rapidly expanding population, Birmingham has a comparatively low supply of purpose-built rental homes.
This supply and demand imbalance presents a prime opportunity for Build to Rent developers, investors, and their tenants.
As people generally are expecting more from their homes than ever before – a trend accelerated by Covid-19 – many are willing to pay a premium for their desired living experience.
Build to Rent properties are the city centre home of choice for millions of tenants across the UK, with a third of millennials now expected to rent their entire lives.
3. Rents are Rising
Across Britain, rents are rising at the fastest rate ever recorded by Rightmove, now up 8.6% annually outside of London.
By September 2021, the increased demand in Birmingham helped rents to grow to 10% higher than pre-pandemic levels.
With rents and demand at an all-time high in Birmingham, the rental yields for 2022 are averaging 6.56% according to recent data from Zoopla.
This is higher than the UK average and is expected to rise even further according to JLL’s report, which predicts that rental prices in Birmingham could increase by 12% over the next five years – the highest level of growth in the country.
4. Property Prices are Increasing
House prices in the city are growing, too, with Rightmove reporting an increase in the average price of a sold property of 12% compared to last year, and 17% up on 2018.
With the implementation of the government’s GBP 107 billion high-speed railway network, High-Speed 2 (HS2), property prices in Birmingham are expected to surge as a direct result.
Almost halving the commute time to London on the train from 90 to just 49 minutes by 2029, Birmingham will be a prospect for millions of Londoners looking to maintain their jobs but benefit from cheaper rent and a better quality of life.
For people living in Zone 3 or 4 areas of London, an hour commute is ‘the norm’.
So, an offering of considerably larger living areas, an on-site gym and luxury co-working space – all for a lower rent – is appealing to Londoners now more than ever.
5. New Jobs in the City
As well as increasing Birmingham’s global reputation as a key business and tourist destination, the positive economic impact of HS2 has already benefitted the city, as HS2 Ltd have set up their construction headquarters in the Snow Hill area, creating an initial 1,500 jobs.
This is part of the Snow Hill Masterplan – a 20-year plan to enhance the area’s key assets, create more jobs and drive Birmingham’s growth and regeneration activity.
Including a GBP 50 million overhaul of Snow Hill railway station, the creation of a fourth platform and wider regeneration could create a further 7,700 jobs, bringing more renters to the city.
While Birmingham has been a popular investment spot in recent years due to its Midlands location, population size and economy, there has never been a better time to invest in the UK’s second city.
Gaining recognition globally for its strong development potential and incredibly promising forecast for 2022 and beyond, the future is looking bright for Birmingham.
Download Select Property Group’s ‘Investors guide to Birmingham’ to find out more about the city of Birmingham – and what makes it one of the most in-demand investment locations.
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