Birmingham is becoming the next area to be targeted by overseas investors because of bargain prices and also because the price of property in London is spiralling out of control.
When it comes to property investment, Birmingham has shot up 14 places in the rankings of the top European cities as seen in a report that has been released by the Urban Land Institute and PwC.
As prices increase in the capital, investors are now starting to move away and look at alternative places to invest and this has resulted in London moving down five places. Those investors from North America and Asia who have sovereign wealth funds and pension funds are now moving into markets that have less competition. The likes of Madrid, Amsterdam, Athens and Lisbon are all experiencing a growth in interest as confidence increases and investors are willing to risk investing in these global real estate markets.
In the UK, cities such as Birmingham are now appealing to investors as they find that property prices in London are growing at an incredible rate. There is lots of competition with high prices and low yields which no longer makes it a credible investment and this is resulting in investors spreading their wings and looking elsewhere.
Birmingham is also climbing the table when it comes to attracting business men and women as there have been over 19,000 businesses created in the city over the last year, falling behind London only. The city will receive a real boost in 2026 when the HS2 arrives and by 2037 the expected gains sit around £3.1 billion.
However, London is still very much in the driving seat when it comes to the economy as it still outperforms every other UK Region. London has continued to grow quicker than any other region and its productivity was 33% higher on average than the rest of the UK last year.
Throughout the rest of the UK the economy grew by 13.4% on average and in comparison, London’s economy grew by 20%. Per head, London has the highest gross disposable income which is around £21,446 whilst the average for the rest of the UK is £16,791.
Regardless of the suspicions and fears in the economy, the property investment market is still resilient and there is hope that more money and debt will move into this market throughout this year, however, they foresee that a shortage of property could be problematic.
The real estate market is full of capital that comes from all over the world and this could give investors a slight problem during 2015. This is down to the fact the prices are going to continue to rise as a result of a shortage of property.
Investors will still look to invest regardless of the economic uncertainties throughout Europe, but they will look at the markets in secondary cities and at properties that they may not have thought of before and this gives them a great prospect of tapping into a market that could provide great yields but it will come with a challenge.
Despite a drop in the ranking, London is still regarded as the place that many investors look at first but the office sector and retail in the West End were slammed for being priced way too high. According to property experts The Overseas Investor, offices saw yields of 4.25% at the end of 2014 and this figures stood at 4.75% at the end of 2013.