Why Invest in Birmingham Buy-to-Let Property in 2022?

Birmingham continues to be the most exciting regional property market in the country. Home to exciting new global businesses, regeneration projects and a vast population, it’s a city filled with tenant demand. As investors turn their attention to Birmingham property, we ask: why invest in Birmingham buy-to-let property in 2022?

Birmingham Buy-to-Let Property

As property investment continues to grow in popularity, why invest in Birmingham buy-to-let property in 2022?

The short answer is that it’s an affordable city with exceptional growth potential and high-yielding investment opportunities.

Birmingham remains one of the top investment destinations in Europe and Birmingham buy-to-let property continues to be a flexible, high-performing asset.

Over the last 20 years, around £10 billion has been injected into the infrastructure, creating new mixed-use and public spaces as well as a world-class infrastructure.

Property continues to be one of the most popular assets with investors and Birmingham represents a prime market – a sector that will soon be boosted by the 2022 Commonwealth Games, a thriving business district and continued regeneration taking the landscape to new heights.

Why Invest in Birmingham Buy-to-Let in 2022: Demand

Demand is vital for building a successful property investment and this is why Birmingham buy-to-let property is such a popular asset with investors. With a population of 1.4 million, Birmingham continues to be a key location for young professionals, graduates and key workers that are seeking exceptional employment opportunities.

Birmingham’s population is also one of the youngest in Europe, with 60% under the age of 35 and many working in high-paid roles. This represents a large percentage of the local rental market and demonstrates why the yield performance of Birmingham buy-to-let property is so high (it regularly achieves above 6%).

It’s expected that demand for Birmingham will continue to grow as people continue to leave the capital. With a much more affordable property market and HS2 on the horizon, London leavers are seeing Birmingham as a great alternative to the capital for living while still being able to work within London. Over 18,000 people moved to the West Midlands from London last year, demonstrating the sustainable demand a Birmingham investment could offer.

Why Invest in Birmingham Buy-to-Let in 2022: Rental Yields

With Birmingham being one of the most affordable property markets in the country – at least relative to its population and size – it’s delivering above-average yields for investors. The average property price in Birmingham is currently £209,176, three times less than the average in London.

When we also consider that Birmingham rents have grown by 28% since 2009 and are still forecasting 14% growth over the next four years, it’s easy to see why the average rental yield for a Birmingham buy-to-let property is averaging around 6.56%.

This represents a much higher yield than we’re seeing in the South, which is averaging around 2% overall. Unsurprisingly, city-centre postcodes in Birmingham are performing the highest, with areas such as Brindleyplace, the Jewellery Quarter and Eastside leading the way. For investors that are searching for consistently high-yielding property, it becomes more clear why you’d invest in Birmingham in 2022.

Why Invest in Birmingham Buy-to-Let in 2022: Commonwealth Games

Taking place over the summer in 2022, the Birmingham Commonwealth Games will be a huge boost for the city’s profile and further investment. The Games has delivered, on average, 4,500 jobs a year until now and it’s expected it’ll deliver 950 each year after.

The legacy of the Games will be felt long after the event has ended and is arguably more important for the city in the long-term. Between infrastructure improvements and new spaces for the public, Birmingham buy-to-let property will benefit from a global audience of nearly 1.5 billion seeing the city in all of its glory.

Key stats:

  • The Birmingham Games will provide 12,500 volunteers with training and qualification opportunities
  • It’s expected to deliver £778 million in investment into the region
  • A £70m expansion of the Alexander Stadium and £60m Aquatics Centre in Sandwell
  • Legacy projects will deliver new public spaces and mixed-use development for the city
  • A global audience of 1.5 billion will introduce the city to new demographics
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Want to know more about the Birmingham property market for 2022? Download the Birmingham Investment Guide today and discover everything you need to know about Birmingham property investment in the new year. In this guide you’ll find:

  • Current market performance
  • Forecasts for the Birmingham property market in 2022
  • Key trends impacting the market
  • Best places to invest in Birmingham in 2022
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Why Invest in Birmingham Buy-to-Let in 2022: Capital Growth

Capital growth is always a major objective for property investors and buying a Birmingham buy-to-let property in the city-centre has plenty of potential. Impressively, despite seeing growth of almost 58% over the last ten years, it remains one of the most affordable cities in the country.

With 16% of that growth occurring between 2016 and 2020, Birmingham buy-to-let property remains one of the fastest-growing regional markets.

Thanks to a large-scale program of regeneration, as well as continued demand from movers and workers, further price increases are expected. JLL predicts that Birmingham property will rise in value by 24.5% by 2026 – excellent news for those asking ‘why invest in Birmingham buy-to-let property in 2022’.

Why Invest in Birmingham Buy-to-Let in 2022: Graduates

An often overlooked demographic within the rental market is graduates. While students are often targeted by investors with HMO properties, graduates remain one of the top indicators of success for a single-let property strategy.

This is because graduates are part of the wider ‘young professional’ market that is incredibly attracted to city-centre properties near both the workplace and local amenities. Savvy investors will also understand that graduates are the ‘young professionals’ of tomorrow and will typically opt for much longer tenancies while having a much more secure income stream than students.

This is why we consider cities with good graduate retention as key locations. With over 100,000 students attending one of the five universities in the city, Birmingham’s retention rate of 41% highlights a vast amount of potential demand for buy-to-let property in Birmingham. The second city is also third best in the UK for attracting graduates with no prior links to the city, demonstrating the appeal it holds with the demographic.

Why Invest in Birmingham Buy-to-Let in 2022: Business

You can’t answer the question ‘why invest in Birmingham buy-to-let property in 2022’ without considering the global businesses that dominate the professional space. As Birmingham has built itself into the Midlands powerhouse it is today, it has attracted the likes of HSBC, Deutsche Bank, PwC and Goldman Sachs, all of whom have headquarters in the city.

As household names, these businesses bring waves of new demand from professionals who are also seeking high-quality residential accommodation alongside career opportunities. Birmingham has a ‘professional sector’ of over 100,000 people, highlighting the potential tenant base that is ready-made in the city.

In terms of new business, Birmingham also had the largest proportion of new business starts in the UK over the last two years – a number that will rise alongside the opening of HS2 and any new businesses that make their way to the city-centre.

Why Invest in Birmingham Buy-to-Let in 2022: Regeneration

With the opening of the Bullring in 2003, Birmingham created what is now known as the ‘Big City Plan’ – a 20-year project that aimed to widen the city-core by 25%, create over 50,000 new jobs and contribute £2.1 billion to the local economy annually.

Since then, mixed-use developments such as Paradise and Arena Central have transformed the city-centre, while projects such as Grand Central, High Speed 2 and Midlands Metro have revolutionised the local infrastructure.

This has helped create the amenities that tenants are looking for, cementing Birmingham as one of the most popular, accessible cities on the market today. With further growth on the horizon with the likes of Birmingham Smithfied and Lockside Wharf, regeneration will continue to boost demand and with it, property prices.

Why Invest in Birmingham Buy-to-Let in 2022: London vs Birmingham

London has always been the traditionally popular choice for investment. Directly following the financial crisis in 2010, London saw incredible growth that pushed its market to new heights entirely. Since 2016 however, Birmingham has eclipsed London in terms of rental returns and price growth, putting the second city firmly at the top of the UK market.

Average yields in Birmingham are trending much higher than competitors because of the lifestyle it can provide and the affordability of the local market. The average property value in Birmingham is a third of that in London and yet its yields are nearly three times better, an incredible indicator of potential success for a Birmingham buy-to-let property.

While London will no doubt see further growth over the next few years, Birmingham remains a clear alternative for investors that are looking to start building returns immediately.

Want to Know More About Birmingham?

The latest Birmingham Investment Guide has everything you need to know about buy-to-let property in the second city. Fill in the form to the right to download your guide.