D’mitri Zaprzala, Head of Sales, looks at the growing attraction of regional property, and in particular the Birmingham market.
After a decade of growth, London no longer has a stranglehold on UK property investment and development. Property prices might be lower outside London, but in the UK’s capital they are stabilising or falling, which is encouraging many property professionals to look outside of their traditional markets.
Attention is now focused on the progress and potential of major regional cities in, and across, the South West, Midlands and North of England, as investors hunt for favourable yields and capital growth.
At a recent event we hosted, the conversation turned towards regional hotspots. Mat Oakley, Head of European Commercial Property Research at Savills, presented some startling facts. London is forecast to see the lowest percentage house price growth versus all regions over the next five years and for the first time is no longer the top performer of office-based employment growth (Savills, OE).
Many more businesses are seriously considering relocating from London, as the cost of living becomes increasingly prohibitive. Top four accountant firm PWC recently revealed that roughly 60% of the 1,200 graduates hired this year are joining offices outside the capital, a record.
As a specialist lender operating in the market for over a decade, providing residential, commercial and development loans, we are seeing these changes first hand and our loan book exposure is starting to reflect this. At our debate, the conversation turned to Birmingham, which many people can’t help but compare to Manchester, and the opportunities it was presenting.
As the second and third largest cities and industrial powerhouses, Birmingham and Manchester are often viewed side by side. The relative merits of the two cities, both hubs for culture, art, music, sport, media and education, are well known.
In terms of simple geography, while Manchester has long laid claim to the title of second city, it’s a fact that Birmingham is the UK’s second largest city, covering an area twice the size of Manchester.
And right now, Birmingham looks to be performing better than its regional counterpart, on both the residential and commercial front.
Last year Birmingham’s annual house price growth was 9.7% against London, which compares with 8.7% in Manchester (Savills). Figures released earlier this year by the Office of National Statistics (ONS) confirmed that the city is the number one destination for Londoners leaving the capital. In 2017, over 7,000 people relocated (ONS). Birmingham’s many attractions, its property values, and the HS2 high speed rail line development are all compelling.
Nick Sellman, Director of Urban Village, which focuses on both the London and Birmingham markets, was a panellist at our event: “Over the last four years, activity in Birmingham and satellite areas around the city has doubled. More and more London developers are recognising this opportunity and looking at the market.”
The West Midlands saw workforce jobs increase by 148,000 over the year to September 2017 (Knight Frank), the biggest rise in the UK by some margin. The number of active businesses is up by 13.5% on 2016 levels, three times the UK growth rate (Knight Frank).
But Birmingham still lags behind Manchester in some respects. The latter boasts the highest graduate retention rate outside of London, which is underpinning strong rental yields and capital growth in the rental sector (Savills). The recent PwC/Urban Land Institute ‘2018 Emerging Trends in Real Estate Europe’ report had Manchester pip Birmingham by one spot as the best English city for investment.
With Brexit on the horizon, there are arguments that the regions, with their dependency on the European Union, in term of grants and migrant labour, might suffer more than London. There are a lot of ifs and buts, but the East Midlands is better positioned than most, with lower than the mean exposure to regional distribution of EU funding and exports to EU markets (ONS, HMRC, OE).
The merits of both Birmingham and Manchester as investor and developer hotspots are not in doubt. We’re continuing to back clients and provide them with quick, flexible funding and we expect Birmingham, with its outperforming job market, infrastructure and amenity investment and attractive mix of inner city and accessible urban conurbations to be an increasing area of focus.
D’mitri Zaprzala, Head of Sales, looks at the growing attraction of regional property, and in particular the Birmingham market.
After a decade of growth, London no longer has a stranglehold on UK property investment and development. Property prices might be lower outside London, but in the UK’s capital they are stabilising or falling, which is encouraging many property professionals to look outside of their traditional markets.
Attention is now focused on the progress and potential of major regional cities in, and across, the South West, Midlands and North of England, as investors hunt for favourable yields and capital growth.
At a recent event we hosted, the conversation turned towards regional hotspots. Mat Oakley, Head of European Commercial Property Research at Savills, presented some startling facts. London is forecast to see the lowest percentage house price growth versus all regions over the next five years and for the first time is no longer the top performer of office-based employment growth (Savills, OE).
Many more businesses are seriously considering relocating from London, as the cost of living becomes increasingly prohibitive. Top four accountant firm PWC recently revealed that roughly 60% of the 1,200 graduates hired this year are joining offices outside the capital, a record.
As a specialist lender operating in the market for over a decade, providing residential, commercial and development loans, we are seeing these changes first hand and our loan book exposure is starting to reflect this. At our debate, the conversation turned to Birmingham, which many people can’t help but compare to Manchester, and the opportunities it was presenting.
As the second and third largest cities and industrial powerhouses, Birmingham and Manchester are often viewed side by side. The relative merits of the two cities, both hubs for culture, art, music, sport, media and education, are well known.
In terms of simple geography, while Manchester has long laid claim to the title of second city, it’s a fact that Birmingham is the UK’s second largest city, covering an area twice the size of Manchester.
And right now, Birmingham looks to be performing better than its regional counterpart, on both the residential and commercial front.
Last year Birmingham’s annual house price growth was 9.7% against London, which compares with 8.7% in Manchester (Savills). Figures released earlier this year by the Office of National Statistics (ONS) confirmed that the city is the number one destination for Londoners leaving the capital. In 2017, over 7,000 people relocated (ONS). Birmingham’s many attractions, its property values, and the HS2 high speed rail line development are all compelling.
Nick Sellman, Director of Urban Village, which focuses on both the London and Birmingham markets, was a panellist at our event: “Over the last four years, activity in Birmingham and satellite areas around the city has doubled. More and more London developers are recognising this opportunity and looking at the market.”
The West Midlands saw workforce jobs increase by 148,000 over the year to September 2017 (Knight Frank), the biggest rise in the UK by some margin. The number of active businesses is up by 13.5% on 2016 levels, three times the UK growth rate (Knight Frank).
But Birmingham still lags behind Manchester in some respects. The latter boasts the highest graduate retention rate outside of London, which is underpinning strong rental yields and capital growth in the rental sector (Savills). The recent PwC/Urban Land Institute ‘2018 Emerging Trends in Real Estate Europe’ report had Manchester pip Birmingham by one spot as the best English city for investment.
With Brexit on the horizon, there are arguments that the regions, with their dependency on the European Union, in term of grants and migrant labour, might suffer more than London. There are a lot of ifs and buts, but the East Midlands is better positioned than most, with lower than the mean exposure to regional distribution of EU funding and exports to EU markets (ONS, HMRC, OE).
The merits of both Birmingham and Manchester as investor and developer hotspots are not in doubt. We’re continuing to back clients and provide them with quick, flexible funding and we expect Birmingham, with its outperforming job market, infrastructure and amenity investment and attractive mix of inner city and accessible urban conurbations to be an increasing area of focus.
