Join CityClub Today to Receive:
New Silicon Valley - An Overview
As one of the UK’s largest cities, Birmingham is planning to become home to an innovation district. Birmingham, Manchester, and Glasgow were identified as the three ‘innovation accelerators’ in the governments Levelling Up White Paper. This is because they were identified as areas that have a strong infrastructure ready to accommodate high-growth industries.
This is following a statement by Chancellor Jeremy Hunt for the UK to become the ‘world’s next Silicon Valley’. Silicon Valley is an area of Northern California which serves as the global centre of high technology and innovation home to companies such as HP, Apple, and Google. The UK striving for innovation will produce thousands of new jobs and help grow the local and national economies.
In November, plans were backed by Birmingham City Council leader Councillor Ian Ward. The plans stated that Birmingham should take advantage of the growing tech industry by investing in a brand-new innovation centre. A report by the Centre for Cities, in partnership with HSBC, urged the government to deliver plans with an estimated £14.5bn investment in Birmingham, Manchester, and Glasgow.
An Increase in Rental Demand?
Technology businesses usually employ large numbers of employees. This is due to the rate at which the industry is growing, for example, HP employ over 180,000 people. Of course, a large percentage of their staff work internationally but over 58,000 employees work at HPs headquarters. These numbers are huge and while they cannot be directly translated to the size of a business that would be situated in Birmingham, it is a strong indicator of the scale of which the tech industry employs.
For landlords, huge numbers of technical professionals relocating to the city will lead to increased rental demand. The workers relocating for technology jobs are likely to be the highest criteria of tenants available. This is because the average salary for a tech worker in the UK is £62,500 per annum according to CW jobs compared to the national average of £38,000 per annum. Having good tenants is important as it avoids late payments, reduces vacancy times and typically your property is left in good condition.
What Does This Mean for Property Prices?
The growth in the local economy and average salary in Birmingham will see a boost in property prices. This is due to increased competition in the area and the UK housing shortage, creating a supply-demand imbalance. A rise in residents in Birmingham will likely be followed by an expansion in local infrastructure too, such as leisure activities and amenities. Local infrastructure improves the quality of life for residents, creates a high retention rate and makes the local area more desirable to buyers.
On average Birmingham property prices are £206,000 according to Zoopla’s latest market report. This is a huge 8.9% growth year on year as a result of the Big City Plan. This is a very attractive prospect for investors as it is far less expensive than areas such as London, where the average property costs £527,000. London has seen price rise by 4.4% over the past year, less than half of Birmingham. If Birmingham is able to attract more technology businesses to the area, we could see property prices close the gap between the two cities.
CityRise is always looking at potential investment hotspots and one of the key criteria is growth in the area. Birmingham is already a fantastic location to invest but with further investment and growth, it could become an even stronger investment hotspot. For investors looking for capital growth, Birmingham is already seeing some of the largest property price booms in the UK, with 8.9% year on year. This rise could continue into the coming years, especially with significant investment in the area.
Furthermore, investors looking for high yields and a strong return on investments will find Birmingham is one of the highest-yielding locations available in the UK. This will only be fuelled further by an increase in residents. If plans for the new innovation hub are approved, the number of residents will climb rapidly, and investors will see healthy capital gains as a result. Once plans are in motion investors will be racing to secure property in Birmingham and the earliest investors will see the highest rewards from their investment.
Best Tourist Cities in the UK
Buyers do not need to be limited to investment hotspots for their buy-to-let properties. They do not need to limit themselves to just Assured...
Why are Businesses Moving North?
Due to the rising cost of living in London and the growing desirability of the North, businesses are moving North to benefit from fantastic capital...
The HS2 Project: Construction Progress
The HS2 project is Britain’s new zero-carbon high-speed railway. Since the start of construction in 2017, how is it developing? With the original...
The Future of Birmingham House Prices
Compared to the first quarter of 2022, UK property sales were down in the first three months of this year. Despite a 58% year-on-year decrease in...