An investment success story
Birmingham, heart of the West Midlands, is the powerhouse of the industrial north of England – and represents an excellent area for property investment with a long-term view.
Often overshadowed on investors’ radar by Manchester, Birmingham is nearer the start of its growth curve. Whereas, Manchester has shown investment maturity (and is reaching the end of its ‘curve’), numerous factors are driving Birmingham forward.
The Birmingham economy is underpinned by strong demographic fundamentals.
We’ve already looked in depth here at its excellent transport connections, with HS2 making it a commuter zone of London at 49 minutes away. Infrastructure such as high-speed broadband and the national road and rail network makes this an attractive destination for business.
Indeed, business is responding: HSBC, BBC and Google are relocating offices to Birmingham and this is contributing to the creation of the largest city economy outside of London, and economic output will grow by around 2.5% between 2015-30. The city’s renaissance is being fuelled by the arrival of big banks, professional services firms and the planned building of the HS2 rail link to London alongside the success of Jaguar Land Rover and other manufacturers.
Demographics are strong, with 47% of residents aged 30 or younger and a population of 1.1 million inhabitants.
In addition, Birmingham has five universities which means that the student rental market is vibrant and alive.
Rising House Prices in the North
House prices across England and Wales have reached a record high, with average prices in May peaking at £303,200. New data shows that over the past 12 months, the value of the average home has risen by 4.8 per cent.
According to an index by estate agents Your Move and Reeds Rains, whilst there has been a “sharp” slowdown in house sales in London and the south east, this has been offset by strong performance in the north – with a clear north/south divide emerging.
The West Midlands has now cemented its position as the UK’s property hotspot, leading annual house price growth for the third month running. The report mirrors similar studies that show house prices in the north are rising quicker than in the south.
So what would have happened if you’d invested in Birmingham recently?
It’s been very good news for clients of APW who did just that.
Let’s look at the example of St George, Carver Street, Birmingham.
Completed mid 2016, APW sold St George’s at £205 per square foot. This price included the 15% discount we offer to overseas investors.
Valuations for this property were over £300 per square foot, which means a 46% increase in property value over two years.
In other words, units at St George’s bought for £120,000 are now worth £175,200.
The reason for this? The sale price was very good value and the market moved upwards whilst the development was under construction.
Ahead of the growth curve
Given its fundamentals and past performance – and more importantly its future potential – we really see Birmingham as an excellent place for investors to get in ahead of the curve in order to reap benefits in the future.