Birmingham verses Manchester: A guide for investors choosing their next location

There is a battle royal between Birmingham and Manchester for the title of the U.K.’s second city for property investment. Events over the last few years have pushed these two to the fore and they are now the most popular regional property markets in the UK. It is no secret that some London property investors are switching to areas such as Birmingham and Manchester where they see greater value and more long-term potential. So, what factors do you need to consider when considering a property investment in Birmingham or Manchester?

Large businesses relocating

It is fair to say that both Birmingham and Manchester have benefited from the relocation of large businesses from London. In Manchester there is MediaCity and the high profile relocation of the BBC headquarters from the capital. The likes of ITV and Kellogg’s followed suit and the e-commerce giant Amazon will be opening its first Manchester property later this year. On the flipside, Birmingham is also attracting its fair share of new businesses with PwC, BBC3 and HMRC all relocating significant resources to the area.

Large Businesses Relocating

As the ongoing relocation of government departments such as HMRC continues, it is expected that Birmingham and Manchester will benefit even more in the short to medium term. It is not just the relocation of the businesses which is adding to the local economy but also the supply chains and housing requirements which follow.

Property prices

Even though London property prices have seen a slight decline in recent times, the average property in London is still worth just over £618,000. This compares to an average of £202,721 for Birmingham and £203,203 for Manchester. At this moment in time Manchester leads the way on rental yields at 5.55% with Birmingham currently running at 4.61%. This is a reflection of the ongoing regeneration of Birmingham with Manchester further down the line and therefore more developed. This factor may also be one of the reasons why Manchester was voted the best place to live in the UK in the 2018 Economist’s Global Livability Index.

When the HS2 project is delivered we will see both areas benefiting from reduced journey times to London and the fact this will attract more commuters. Do not underestimate this significant attraction!

Younger generation

Birmingham and Manchester both boast some of the best education facilities in the UK with a significant number of students remaining after graduating. Recent figures show that Manchester has a 51% retention rate for graduates with Birmingham just behind on 49%. These impressive figures also tie in well with the number of new businesses and government bodies which have relocated to both Birmingham and Manchester in recent times. There needs to be businesses to accommodate graduates and graduates to fulfil business requirements.

Did you know that Birmingham boasts one of the youngest populations in Europe? Recent figures show that 45% of Birmingham’s population are under the age of 30 which again ties in with the graduate situation and blossoming local business community. Manchester is not too far behind with 40% of the population aged 35 or under. So, we can safely say that these are blossoming cities which are attracting an ever-growing younger audience.

Official estimates suggest that the population of Birmingham will increase by 7.2% (81,400 people) between 2018 and 2028 with Manchester expected to see growth of around 56,000 by 2034. The population of Manchester increased by 149% between 2002 and 2015 and there was an 84% increase in the number of jobs between 1998 and 2015. Many of those moving to Birmingham and Manchester are relocating from London with property prices significantly more affordable.

So what is it to be, Birmingham or Manchester?

There are huge ongoing developments in the two cities, from the trendy Digbeth area of Birmingham to Salford Quays with both city centres also undergoing significant regeneration. There is strong demand for luxury flats across both cities with a 24-hour concierge and in-house gym facilities now commonplace. The growing number of students moving to Birmingham and Manchester has also opened up significant opportunities in the area of student accommodation. So, both cities have a growing student community, extremely high graduate retention rate and a mix of both young and experienced professionals – a property investors dream!

bVackfriars exterior

One such example is Local Blackfriars, a new buy to let opportunity in central Manchester comprising 380 apartments starting from £160,000. It is already completed so there is no development risk, and just a 10% deposit is required.

Local Blackfriars interior

Local Blackfriars in Manchester is a gated community and the former Grade II listed public house by the same name – The Blackfriars – acts as a gateway entrance. The development has been designed in such a way to blend in with the former public house.

Local Blackfriars is just a two-minute walk from Manchester’s shopping district which includes Selfridges and Harvey Nichols, the fashionable Northern Quarter and the bars in Spinningfields and Deansgate.

Local Blackfriars is a fantastic buy to let investment opportunity for those looking to get into the Manchester property market.
There are major attractions for both cities although Manchester is further down the regeneration/redevelopment route than Birmingham. The average cost of property in both cities is broadly similar although at this stage, with more properties coming online in Birmingham, Manchester does currently offer a higher rental yield.

Download One Touch Property’s investor guide which weighs up the property investment fundamentals of Birmingham and Manchester today.

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