Property investment: Why Birmingham should be on your radar

March 30, 2017 11:20
Birmingham is now Britain's biggest business hotspot outside London and has become a center for new technology, financial services and architectural showpieces. Photo: Independent Birmingham

With the British pound plunging to record lows against most currencies, many are finding more and more excuses to slip into their winter coats for a holiday in the United Kingdom.

Investors likewise are making the most out of this instability to buy into UK assets.

The fundamentals of the UK economy remain strong. Demand for housing still far outstrips supply and property values continue to rise steadily across most of the country.

Infrastructure projects such as the HS2 high-speed rail and road/airport expansions by the gov-ernment are also luring investors.

The main stumbling block for individuals attempting to invest in UK property is often the cash outlay required.

The price of an average investment property in London is high enough to be a barrier to entry to many without a spare half a million pounds to invest. Moving further north, however, prices are far lower.

Lending to foreigners is also constricted by the banks located in the UK and Asia, ranging from no lending at all to only lending on properties in the central (hence expensive) part of London.

Borrowing is now a risk in the property game and hence investors are swaying towards lower value assets located in the north which they can pay for in cash.

There are certainly no shortage of indicators that Manchester, Liverpool and Birmingham are all on the list as next hot spot for property investors hunting for the next area of growth outside London. For us the most exciting of these is Birmingham.

Birmingham has one of the youngest, most highly qualified and most diverse workforces in the UK.

The total number of new highly skilled jobs created between 2013 and 2025 is projected to increase by 13.5 percent.

The demographic landscape of the city is changing. This will have positive implications for the housing market as these jobs will command higher salaries and thus, support an increase in rental demand.

In the longer term, this will also improve the prospect of home ownership, translating into resale profits.

Further growth will be supported by public initiatives such as the Big City Plan, a 20-year program of urban regeneration which will create an estimated 50,000 new jobs, and Birmingham Smithfield, a 14-hectare, 500 million pound (US$622.4 million) new retail and leisure hub that will further transform the city.

When completed by 2026, phase 1 of the HS2 project will reduce travel time to London to just 49 minutes.

According to Knight Frank, Birmingham is now Britain's biggest business hotspot outside London and has become a center for new technology, financial services and architectural showpieces.

Many are now advocating Birmingham as UK's prime tech hub. In the first six months of 2016 alone, 9,151 new companies were created making it Britain's number one regional city for startups.

Corporates, too, are seeing the city as an exciting opportunity with its rich pool of talent. Chinese manufacturer Changan, American firm Jacobs Engineering, and global technology giants Lombard Risk and Advanced all made significant investments in Birmingham last year.

We are seeing strong demand for homes, offices and also hotels - where occupancy peaked at a record 99 percent in 2016 and averaged 75 percent.

With strong infrastructural developments and a brewing tech market, Birmingham is definitely poised to grow and develop.

A young, growing and affluent demographics along with strong entrepreneurship and innovation is a great recipe for long-term growth.

The only possible downside for investors is that most banks have not yet started lending outside of London for foreigners, presenting an obstacle for active investment.

That said, prices are well within 200,000 pounds for a one bedroom, one bathroom unit.

With Brexit uncertainty, we are confident that Birmingham presents a golden investment opportunity.

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