Birmingham is retaining its crown as a top UK top property investment hotspot, and trendy Digbeth is proving one of the most exciting areas for 2022 and beyond.
Last month, research from Simply Business revealed that the West Midlands city of Birmingham had experienced the biggest increase in property investor interest in recent years compared with the rest of the UK. With regeneration, investment and economic growth making great strides there, investors are increasingly choosing this area over London.
But Birmingham is a large, and ever-growing, city, with multiple locations to choose from when investing in property. The upcoming Commonwealth Games is sparking major transport and infrastructure investment, which will make travelling from area to area even easier.
The arrival of HS2, of course, is another game-changer for Birmingham, placing it more than ever on the international radar. Once opened, it will connect the Midlands city directly to London and beyond in record time.
As such, while the city centre is still one of the favourite hotspots for investors, areas further afield are garnering more interest.
One of the most talked about neighbourhoods at the moment is Digbeth, in the city’s ‘creative quarter’. It was listed by the Times as one of the ‘Best Places to Live in the UK‘ in 2020, and the area has flourished since then.
Known for its social scene, with some of Birmingham’s best live music venues and events spaces, as well as a plethora of places to eat, drink and shop, it is a hive for students, young professionals and even families. All of these factors make it a prime rental location for landlords looking for strong tenant demand.
Among the most important developments coming to Digbeth that is attracting overseas investors in particular is the HS2 Curzon Street station site. This will be based within a stone’s throw of Digbeth, opening up international and national travel and further increasing the area’s appeal for a range of tenants.
Labelled as one of the “most environmentally friendly stations in the world”, it will also bring ample regeneration in the surrounding area. This includes four new public spaces, supporting travel, recreation and leisure.
According to the latest statistics from JLL, house prices have grown by 401% in Digbeth over the past 20 years, and now sit at around £203,600. This is forecast to grow by around 16.5% over the next four years. Landlords in the area can expect average rental yields of around 4.7%.
Tried and tested city centre
The area centred around Birmingham New Street station is home to hundreds of businesses, offices, shops and restaurants, as well as residential apartments. Many of these have sprung up in recent years in response to the huge level of demand that has been growing in the area.
The demand comes from owner-occupiers, investors and tenants alike, as Birmingham – the UK’s second city – is often the next port of call for thousands of people leaving London each year. The city centre offers an arguably similar vibe to London, but with a lower price tag and a more affordable lifestyle for tenants.
Like the whole area, it is also set to benefit from regeneration brought about by the Commonwealth Games this year and the ongoing HS2 development.
Many of the new buildings springing up in the city centre are designed specifically for today’s long-term tenants. They include amenities like rooftop gardens, communal areas and shared work spaces, which are increasingly sought after in the private rented sector.
Like Digbeth, yields are strong right in the centre of Birmingham, averaging 5.2% for investors. JLL’s figures show that property prices have risen there by around 47.88%, but remain affordable at around £223,378 – well below the UK average.
Honing in on an area
Property investors doing their research into Birmingham will find that much of the city holds a strong promise of healthy rental yields and positive capital growth prospects. Tenant demand is high, and one of the biggest deciding factors could come down to your target tenant type.
While Digbeth is the city’s up-and-coming trendy area attracting a broad range of residents, the city centre could appeal more to the young professional market.
Other popular locations for investment include the Jewellery Quarter, described as an urban village just on the outskirts of the centre; Edgbaston, an area for more affluent investors and tenants; and Erdington, offering a lower entry point and good yields for buyers.