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Why Invest in Birmingham

By April 2, 2020 No Comments

Birmingham aerial view

Welcome to the Sourced Birmingham blog. Let me explain why I think that Birmingham is such a wonderful place to invest.

Birmingham is one of the fastest growing economies in the UK with GDP growing year on year. Stalwarts such as Jaguar Land Rover have been mainstays of the economy; the relocation business headquarters such as HSBC and Deutsche Bank to Birmingham along with the growth of SME’s in the region has played a major role in job creation and regional growth.

The Birmingham Big City plan has played a part in the massive infrastructure growth with over £8 Billion being spent on several regeneration and redevelopment plans in the city.  The incoming HS2 line will make the daily commute to London and Manchester a practical solution along with opening doors to those that wish to commute into Birmingham from further afield.

Access to several top tier higher education institutions means a large number of students and newly graduated working professionals are contributing to the population growth in the area. Boasting the youngest population of any European city, 40% of Birmingham residents are under the age of 25. This is only set to grow with the increased accessibility both to and from the region.

Now, all this talk of the growth in Birmingham brings us to the question, what does this mean for property in the area and what have the market trends over the past few years shown us.

Let us first take a look back, between 2013 and 2017 there was property growth of a minimum of 5% per year. Furthermore, average house prices grew by over 25% during the same period (2017 average house price circa £180,000). This strong growth is one of the reasons the Urban Land Institute nominated Birmingham as the premier location for property investment in the UK.

Turning our view towards the future, Birmingham finds itself in what can be described as a ‘property sweet spot’. The reason we have chosen this analogy is two-fold, property prices are still much lower than those in London while the rental yields in most cases are higher. This combination creates a situation where investors have a lower entry point into the property market and gain a yield above the national average. Both local and international investors can benefit from the uplift to be seen in 2018.

We would like to end this blog post by highlighting one area that we as a company have focused on during a few of our recent transactions- The HMO model. HMO stands for a House Of Multiple Occupation also referred to in the industry as a multi-let. Any property that is occupied by three or more people who are not family is known as an HMO (with shared facilities).

The strong student community we highlighted above, along with the growing working professional population is leading the charge for an increased demand for more flexible accommodation options. This has brought HMO’s to the forefront? as they offer the privacy that is desired while providing the essentials of home in a shared facility.

From an investor standpoint, the HMO model provides the opportunity to earn a much higher yield than a single family let. Renting the rooms out as individual units will unlock value and produce a much higher cash flow and return on investment.

The diversification spreads an investor’s risk. In a five bedroom HMO, the investor has five tenants paying rent and if one was to fall behind he would still receive rent on the other four rooms – this is converse to letting to a single family where arrears of rent mean a stop on the income.

The demand for accommodation in Birmingham is so high that the government has predicted a need for 90,000 homes over the next 12 years to meet this demand.

With over 20 years of experience in the property market the Sourced Birmingham team understand the rules and regulations of the HMO market and the property landscape which allows us to guide you through the investment process. Our Sourced to Order service allows us to tailor projects to meet the vast array of our investor’s needs. We aim to quickly identify projects that offer real value for money for our investors.

If you are looking for high yielding, discounted, property or development opportunities in Birmingham then we are here to help you. We are dedicated to achieving the best rate of return and customer satisfaction for all of our clients in one of the fastest growing cities in Europe.

 

Chris Kirkwood

Chris Kirkwood

Development Director, Sourced.