The rise of the Midlands – why now is the time to invest in property

By Siobhan Lodder, partner and head of real estate at KPMG in the Midlands

Whilst nerves over interest rates, a volatile geopolitical environment and sluggish wage growth have caused a property slowdown across the country, the Midlands has seemingly bucked the trend, emerging as Britain’s property hotspot.

You only need to look at the compelling ONS figures which showed that average prices in the West Midlands rose 4.4 per cent in the year to July, compared to a fall of 0.7 per cent in London. The East Midlands also saw strong growth, with prices climbing 3 per cent over the year to July. This mirrors analysis KPMG carried out earlier this year, in which we predicted that house price growth in the Midlands is likely to surpass London over the next five years.

For those in the world of property investment, the last few years have been a bit of a rollercoaster, particularly with a succession of tax and regulatory changes that investors, and their agents, have had to get their heads around. But even with all the talk around stamp duty and portfolio landlords, the fundamentals of property investment haven’t really changed; the challenge is still to identify which areas tenants will want to rent in, and the sorts of properties which will appeal to them.

A perfect example, in many ways, is Birmingham. The city is home to a number of excellent universities, which is undoubtedly a great foundation for landlords. And, universities don’t just mean a steady supply of tenants, but it also points to a substantial number of graduates who look to build their lives after their studies in the area too. You only have to walk through the city centre to see the enormous investment in infrastructure and several large regeneration projects designed to change the face of the city.

For those wanting to invest in commercial real estate, the Midlands is again at the fore, having contributed to 45 per cent of the overall take-up figures for grade A floor space in the UK, according to figures from JLL. We’re seeing a lot of interest in the region from overseas investors and with a weaker pound, it’s almost a no-brainer. I expect this high demand will continue for some time, as savvy investors are well aware of the potential for greater returns by choosing towns and cities seeing significant growth, and the Midlands is full of them.

Looking to the east, the East Midlands is home to a number of towns and cities that are increasingly attractive to investors, with Leicester and Nottingham being among the top-10 UK cities for landlords, in a ranking by GoCompare. This is in large part down to the universities in both cities, and for Leicester in particular, the relatively low levels of unemployment seen in the city. Not to mention, the enormous investment being pumped into the region through the Midlands Engine, which only adds to the growth prospects across the region.

I’m sure this is a start of greater things to come, as the momentum building up has already begun to gain the attention of investors. So, in a nutshell, our region is filled with towns and cities with firm foundations that place investors in a good position to ride out any difficulties that may be lurking around the corner. It’s clear that property investors are, and will continue to look at the Midlands closely.