Birmingham return on investment

Birmingham set to remain a top focus for property investors

The West Midlands city of Birmingham is going through a huge amount of regeneration at the moment, and with millions of pounds more in the pipeline, it’s set to remain an investment hotspot.

Birmingham has been tipped as a top property investment location for the coming years due to the high levels of development and regeneration taking place there, driven by both the council’s Our Future City plan and private investors honing in on the city.

Birmingham’s population has continued to increase as a greater amount of residential developments have sprung up in the centre, and this is forecast to rise to 1.24 million by 2030. Partly, this is down to an ongoing influx of young professionals opting to live in Birmingham rather than London.

Despite the upper leg of HS2 being scrapped, regeneration around Birmingham where the new interchanges will be built is already well underway in Digbeth as well as the Curzon Street area in the centre. These parts of the city are expected to see their prospects increase significantly in the coming years from an investment perspective.

Promising years ahead

Over the past year, heightened rental demand has driven rental prices up by 9.2%, while property prices are also expected to continue to perform more strongly in Birmingham than many other parts of the country.

Jonathan Daines, chief executive of online rental platform Lettingaproperty, believes that landlords looking to leverage local market trends and geographical opportunities should focus on cities like Birmingham to make the most of the regeneration taking place there.

“It will be important for landlords to keep abreast of property market trends over the coming year,” he said. “Those who focus on areas undergoing significant redevelopment or economic growth, such as Birmingham, may find they can achieve a higher return on investment (ROI) due to increasing demand.”

Other property investment tips suggested by Daines include diversifying property portfolios, such as considering investing in houses in multiple occupation (HMOs), which tend to provide higher yields than traditional buy-to-lets. Build-to-rent is another burgeoning sector in the UK housing market.

In Birmingham, the build-to-rent space has become increasingly prominent due to the high numbers of people who rent there. It is a more professional, high-end option, often offering additional amenities and services to tenants who are willing to pay higher rates, and often sign up for longer tenancies.

Where to invest in Birmingham

As mentioned above, places such as Digbeth and the city centre are particularly popular property investment locations at the moment, due to the significant transport improvements in the pipeline, which are set to boost capital gains prospects.

According to Joseph Mews, average rental yields in Digbeth are currently 6.6%, and this could be set to increase if tenant demand continues to rise. It also pinpoints Selly Oak, which has seen major investment in its life sciences site recently, as the highest-yielding area with yields of 9.6% on average.

In Birmingham city centre, landlords are currently achieving average rental yields of 6.2%, according to Joseph Mews, although this can vary significantly depending on property type and specific location. The majority of the city centre is made up of flats and attracts a high number of young professionals.

The Birmingham suburb of Edgbaston is another area where investors can achieve strong rental yields, with an average of 6%.

Birmingham has been a key focus area for BuyAssociation over recent years, and has been involved with a number of sold-out projects across various parts of the city. At the moment, the property investment company has some opportunities available in the up and coming Digbeth area: Fountain Lofts and Sapphire Court.

If you’re a property investor looking for your next investment opportunity in Birmingham, or across some of the UK’s other top-performing cities and towns, get in touch today to find out more about our current and future projects. 

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