Will HS2 Debacle Have A Silver Lining for Investors In Birmingham?

A wealth management company suggests that the HS2 debacle may have a silver lining for Birmingham.

With news that the high speed element of the service would not extend north of Birmingham - an announcement made by Prime Minister Rishi Sunak at the Tory party conference - wealth management service Redmayne Smith says there may be a pay-off for Birmingham.

The service says that with HS2 set to make travelling from central London to Birmingham quicker, the city could turn into a commuter hotspot for people effective priced out of the capital - and it claims many investors are looking to Birmingham now as the number one place to invest in property.

Abi Hookway, managing director at Redmayne Smith, says there are three key reasons making Birmingham attractive to investors. 

Rental Growth - With HS2 contributing to a rising population and house prices increasing, aspiring homeowners are likely to delay the purchase of their first home and opt for a rental property instead, with recent data revealing that average rental values in Birmingham have risen by 17.9 per cent annually. Rental yields in the city are on average 5.5 per cent, meaning that there are plenty of opportunities for landlords to make good returns due to the heightened appetite of tenants.

Rising property prices - Property prices in the city are increasing, with Birmingham predicted to see the highest house price growth over the next five years of 4.9 per cent, per year, according to one investment report. The rising property prices offer great return of investment, as buyers can expect to make deposits on apartments back within an average of 15.6 months.

A strengthened economy - Hookway claims that although Birmingham City Council is facing bankruptcy due to overspending, this doesn’t mean that the property market in the city will be affected. Research from Irwin Mitchell’s UK Powerhouse report has revealed that the city is set to see its economy grow by £1 billion by the end of 2023, making it England’s fastest growing city outside the South and East of England. She predicts that as HS2 is slowly introduced, Birmingham will see robust employment growth delivering over 24,000 jobs due to its fast growing and flourishing tech and financial sectors, thus attracting and retaining vast numbers of skilled workers that have income to spend.

Hookway continues: “Birmingham is experiencing an unprecedented period of change as billions of pounds of investment transform the city’s economy, with HS2 playing a huge role. Since the HS2 link to London was confirmed … we’ve seen enquiries and interest in off-plan investment in the city increase by 200 per cent which is incredible and really highlights why investors should be focusing their attention of Birmingham. 

“Interest is being driven by a new wave of investors who are smartly looking to secure pension value and invest in their future, and I’d highly recommend investors to take note of the flourishing regeneration taking place in the city.

“Off-plan investment provides all of the benefit of property ownership without the headache of dealing with older properties and proves as a really attractive model. Personally, I’ve been dedicating lots of my own time and plans to the city and I’m expecting to see some exciting returns.”