Birmingham, the UK's "second city" has a lot to offer for businesses, investors and individuals alike. Here's revealing some reasons why it's at the top of the list of targets for property investors right now and a number of key areas worth looking into.

Source: Buy Association Report, 31 Mar 2020

The area in the centre of the UK has become known as the "Midlands Engine" in recent years. This is thanks to new investment and initiatives taking place there, backed by businesses, local authorities and Local Enterprise Partnerships (LEPs). It is also one of the most exciting parts of the country to invest thanks to its booming property market and economy.

Birmingham is arguably at the heart of this. With an estimated 1.4 million residents, its population soared by 163% between 2002 and 2015, according to Centre For Cities data.

Below, we look at some reasons why it's at the top of the list of targets for property investors right now.

1. UK's second largest business hub

Birmingham is home to a growing number of national and international businesses. Outside London, it is now the UK's second largest business hub. Recently, British Telecom (BT) opened a new office in the city; a 17-storey building which will house 4,000 employees. This forms part of the company's plans to bring improvements and consolidation to its working locations across the country.

Birmingham also became the base for 2,000 HSBC members of staff last year, while the particular area where BT's new office is based is already home to HS2 Ltd, KPMG and Barclays.

Adding to the expanding talent pool in the city, PricewaterhouseCoopers, one of the "big four" accounting firms in the UK, has just moved 2,000 members of staff into new offices at One Chamberlain Square. The firm plans to expand its employee count in the area to 2,300 by the end of this year, adding to the 10,000 staff who already work outside London.

Kevin Ellis, chairman and senior partner at PwC UK, says the firm plans to add a further 1,000 roles in Birmingham by 2021, and the Birmingham office move marks the largest property investment for the firm outside London to date.

2. Record high residential transactions

Earlier this month (March 2020), Knight Frank research showed Birmingham had had a record year for residential land and investment transactions in 2019. The report showed that £289m had been transacted by the company's Residential Land and Capital Markets teams over the year. This marks the highest amount ever recorded by Knight Frank.

More activity from developers and housebuilders was notable over the past 12 months. The firm registered an additional 4,187 dwellings that were built in 2018-2019. This is a 33% rise from the previous year, the highest increase in 15 years.

"We're seeing increasing levels of interest from overseas investors as well as domestic buyers. This positive sentiment is creating an increased appetite from developers to not only acquire good quality land, but an urgency to launch their existing schemes to market to meet demand."

3. Build-to-rent sector booming

Transactions in Birmingham's private rented sector (PRS) totalled £326.7m last year. Over the next decade, CBRE predicts more than 10,000 additional renting households will live in the city. This is why Birmingham is a major target for build-to-rent investment.

Birmingham has the largest concentration of build-to-rent accommodation outside London. The city's huge population of private tenants is now being served by purpose-built rental homes with added facilities, services and amenities that don't always come with traditional buy-to-let.

Stuart Eustace of CBRE said: "CBRE's analysis identifies three main factors influencing greater demand for rental accommodation, including locations with higher percentage of population aged 25 to 34, high numbers of students, and the relative size of the economy.

4. Young population

Birmingham is one of the youngest cities in Europe with nearly 40% of residents under the age of 25. As well as students, the city attracts huge numbers of new graduates looking for work and young professionals.

As this demographic is still the most likely age group to rent rather than own, rental demand is high. This ties in with a major rise in the number of businesses that are now based in Birmingham. More moves are expected in the future as the talent pool in the city continues to enhance.

For young people, Birmingham has a lot to offer. It is a metropolitan city, with world-class transport links and infrastructure, as well as cultural and social highlights. It is a top choice for huge numbers of young people looking for an alternative to London, which is more affordable and can offer a better quality of life.

5. Central location for travel across the UK

The city is ideally located for travel across the UK and beyond, making it a prime investment location. It is served by major motorways, a busy international airport and one of the most used railway stations in the country at New Street.

Recent investments have further improved the city's transport options, including a £600m transformation of New Street station. There's also a new £12m city centre interchange on Moor Street Queensway. Midland Metro Line 1 Extension received £129m of investment recently, too.

Birmingham is at the heart of the planned High Speed 2 (HS2). Once built, this will reduce journey times to London to just 45 minutes. The current timeframe for the first phase is 2028-2031. After this, phase two will significantly shorten the time it takes to travel further north to Edinburgh, Glasgow, Newcastle, Leeds and Manchester. The estimated completion date is 2035-2040.

Where to invest

If you're thinking of buying property in Birmingham, there are a number of key areas to think about. This may depend on whether you will live in the property yourself, or rent it out.

1. Central Birmingham – The heart of the city has been the target of some major investment and renovation projects in recent years. Transport has vastly improved, as have the cultural and commercial sectors. Many young professionals in particular will favour living right in the centre of the city.
2. Jewellery Quarter – The jewellery quarter can achieve competitive yields for investors, as it is another area in very high demand. It is a unique, trendy destination within walking distance of the city centre, and house prices there are currently on the rise.
3. Perry Barr – The Commonwealth Games are coming to Birmingham in 2022. In preparation, Perry Barr is already seeing huge investment. It will be home to one of the biggest sporting venues for the games, as well as the athlete's village. As the regeneration progresses, property demand and prices will likely rise.
4. South Birmingham – There are a number of suburbs to the south of the city that are attracting attention. This includes the likes of Edgbaston, Selly Oak, Harborne and Moseley. They tend to be more popular among professionals who want to live outside the hustle and bustle. Further to this, some students also choose to live in these areas.