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Birmingham’s rising potential appeals to foreign property investors who find London overpriced
- Roi Advisory
- Mar 18, 2020
- 3 min read
Birmingham’s upcoming transport connectivity, relocation of large employers and one of the youngest populations in Europe is a major draw for overseas buyers
Birmingham, the second-largest city in England, is increasingly attracting overseas property investors, as they find London overpriced.
Among them is Hongkonger Jabbie Yip, who bought three homes in Birmingham, about 162km northwest of the British capital.
“These are long-term investments,” said Yip, 45, who also owns two flats in Hong Kong. “London, even if prices have declined by 10 per cent since Brexit, is still two and a half times more expensive than Birmingham.” The businessman bought a two-bedroom flat in the West Midlands city in 2016 for £210,000 (US$252,444) and a three-bedroom unit for £310,000. Last year, he bought a one-bedroom serviced apartment for £180,000, which he rents out for £800 a month.
Price is not Yip’s sole consideration. The regeneration taking place in the city is also a major draw as he sees companies setting up in the city, which is expected to further increase housing demand in a place where supply has hardly kept pace.
With four universities in the city, Birmingham is home to about 80,000 students. “There are huge numbers of students and professionals in the city,” said Yip whose son is also studying in the UK. “There are a lot of companies moving to Birmingham from London, so there’s going to be demand,” he said.
HSBC moved its UK headquarters from London to Arena Central in Birmingham in 2018, while accounting firm PwC is taking an entire building in the £700 million Paradise development that will eventually house up to 2,000 of its staff.
John Treacy, the Hong Kong-based international sales director at developer SevenCapital, said the £1.5 billion regeneration of Birmingham Smithfield, a 42-acre former wholesale market, will lead to a lot of demand because of its residential and leisure components.
Birmingham is also set to host the 2022 Commonwealth Games, while a high speed rail, to be completed in 2026, will cut travel times to the city from London to under an hour from about an hour and a half currently.
“Birmingham has an abundance of potential and three crucial ingredients: future transport links, relocation of large employers, and one of the youngest populations in Europe. The city has already undergone a significant transformation over the last 10 years, not just through a £750 million revamp of and around its main rail station – the busiest in the UK outside London,” said Treacy.
He noted that being the second most populous city after London, with an estimated 1.2 million people, Birmingham has a serious housing supply and demand imbalance. By 2023, the population is forecast to increase by another 50,000. By 2031, the housing gap could be at least 37,900 units.
“Despite a pipeline of 17,000 new homes over the coming years, the city is still set to fall short by a long way and demand will continue to increase,” Treacy said. This gap has boosted home prices in the city last year by 5.5 per cent, higher than the national average of 3.5 per cent.
Felix Cheung, head of sales at international residential at JLL in Hong Kong, said developers were buying more development land in Birmingham in the last two years than in London as they were “more affordable”. However, Cheung said London was still stronger in capital preservation and in the top three cities in terms of liquidity in the resale market.
“Developers generally are smaller outside London so buyers need to be more careful in choosing a quality and financially strong developer. Development scale is also smaller, which means transaction volume is lower, and thus [may not be] comparable for reference when [investors] want to resell,” he said.
Source : SCMP, August 13, 2019
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