Birmingham’s Office Market Continues its Boom
The City’s Fundamentals Shows Birmingham Continues to be an Investment Hotspot
Identified by industry experts as an investment hotspot at the beginning of 2016, Birmingham’s property market is booming, led by increasing demand for office investment in one of the UK’s most important central business districts (CBDs).
There are numerous reasons Birmingham offers such attractive returns at the moment including infrastructure investments such as the new railway station and airport and HS2. More new office space is also becoming available in the next year or so, including Snow Hill and Paradise Circus which are expected to further boost investor interest in the city.
Property professionals believe the fundamentals in Birmingham will continue to be positive for the foreseeable future, despite any potential disruption from Brexit. As a result, Birmingham has been under direct scrutiny from international institutional investors seeking to extend portfolios into yield-bearing markets.
Justin Brown, managing director and portfolio manager of the BlackRock UK property fund, underlined the fact that Birmingham is one example of a number of investment alternatives to London when he said “over the last 18 months to two years the flow of international capital into London has led investors to look at many regional markets”.
Brown acknowledges that Birmingham’s proximity to London is an attraction but adds that other centres are also on Blackrock’s shopping list.
For BlackRock and others, analysis is not just about geography but sector. In recent times Brown says that BlackRock has been keen on “student accommodation, industrial estates countrywide and some offices”.
Many believe that the city’s fundamentals should see it remain a good place for investors for at least a couple of years and perhaps longer.
“The mayor of Birmingham would say forever, but markets adjust,” says Strutt & Parker’s Martin.
“The scale of Birmingham is in its favour though, so I think it’s going to remain a good place to invest for some time yet” PwC’s Whitehouse adds: “There is quality space coming into the pipeline for at least 12-18 months, which will help so I think there is the very real prospect of rental growth. Yields will plateau, but I think the rental growth will be attractive to investors”.
Andrew Angeli, CBRE Global Investors head of UK research, broadly agrees with this analysis, arguing that office space availability in Birmingham is currently 10%-15% lower than in Manchester. But he adds the obvious warning for potential investors who hang around too long and see prices rising.