Despite the government’s decision to scrap the northern leg of HS2, plans for the high-speed rail link in Birmingham are continuing apace, bringing fresh investment opportunities to the city.
Prime Minister Rishi Sunak’s recent announcement that the UK’s first high-speed railway line, HS2, will now go no further north than Birmingham, has unsurprisingly sparked intense controversy and debate across the country. The line was originally intended to go as far as Manchester, speeding up travel between there and London.
However, the line will still go ahead as planned between London and Birmingham, and significant progress has already been made towards its construction. There will be an HS2 station at Curzon Street in the heart of the city, as well as an Interchange station in Solihull.
The link will not only improve travel times to London, but will allow both business and leisure travellers to more easily get to the rest of Europe using the capital’s existing travel options, including its major airports and Eurotunnel service.
From an investment perspective, development and regeneration in the city is already well underway, and many of those who have made property purchases in recent years have already seen their values rise and rental yields grow – and are expected to continue to do so as HS2’s arrival draws closer.
HS2 sparking growth in the city
Property investors seeking rental growth, a strong potential for house price rises and a strengthening economy should be looking to Birmingham as one of the country’s most promising investment locations, according to Abi Hookway, managing director of Redmayne Smith.
According to a JLL report published in the summer, rental values in Birmingham have increased by 17.9% annually. This was recorded as part of the company’s Big Six report, where the city’s rental growth fell just behind Edinburgh’s 18% annual rent rise, and Manchester’s 19.6%.
Two-bedroom flats in particular have seen their rental values increase at the highest rate, according to the report, with 18.2% growth over the 12 months to June 2023. This is likely to be down to the high levels of tenant demand coming to the city, as employment prospects have also been on the rise.
When HS2 opens in Birmingham, which is currently estimated to happen between 2029 and 2033, it could open up the option for even greater numbers of people – including private rented sector tenants – to move to the area, where homes and lifestyles are more affordable than in the capital.
For landlords, this rise in rents has pushed up rental yields, with the average landlord now getting 5.5% on their investment properties, but this can be even higher in certain locations and property types.
Strong prices and jobs
HS2 itself has already created employment opportunities, and growth within many of Birmingham’s already thriving sectors is set to improve this even further. An additional 24,000 jobs are expected to come to the city, particularly within the tech and financial sectors.
According to Irwin Mitchell’s UK Powerhouse Report, Birmingham’s economy is set to grow by £1bn by the end of this year, meaning it will be England’s fastest growing city away from the south and east of the country.
Looking at house prices, property investors can expect to see average annual growth of 4.9% per year over the next five years, according to JLL’s report. This means buyers can make their deposits back on their investments within an average of 15.6 months, says Hookway.
Commenting of the promise of HS2 in Birmingham, Hookway added: “Birmingham is experiencing an unprecedented period of change as billions of pounds of investment transform the city’s economy, with HS2 playing a huge role.
“Since the HS2 link to London was confirmed, here at Redmayne Smith we’ve seen enquiries and interest in off-plan investment in the city increase by 200% which is incredible and really highlights why investors should be focusing their attention of Birmingham.
“Interest is being driven by a new wave of investors who are smartly looking to secure pension value and invest in their future, and I’d highly recommend investors to take note of the flourishing regeneration taking place in the city.
“Off-plan investment provides all of the benefit of property ownership without the headache of dealing with older properties and proves as a really attractive model. Personally, I’ve been dedicating lots of my own time and plans to the city and I’m expecting to see some exciting returns!”
BuyAssociation has a number of exciting property investment opportunities available in Birmingham at the moment, as well as in other thriving locations across the UK. Get in touch today for more information.