Birmingham’s build-to-rent boom set to continue

Birmingham has been identified as one of the top UK towns and cities outside London where demand for rental accommodation will be strongest over the next ten years, and a potential hot-spot for build-to-rent (BTR) investment.

Research by property consultants CBRE projects another 10,000 rented households in Birmingham over the next ten years, maintaining its position as the largest private rented sector (PRS) in the UK outside London.

According to latest estimates, 21% of Birmingham’s households are private renters. This is forecast to rise to 26%t in the next five years. The percentage of private renters in the city centre is significantly higher, currently accounting for 56% of households and forecast to rise to 63%.

One of the biggest boom areas is the BTR sector. More than £10bn has been invested in the UK’s BTR sector over the past five years. Figures from the British Property Federation indicate that investment into the sector has helped deliver in excess of 40,000 BTR homes – properties designed specifically for renters, which are owned and operated by a professional landlord. A further 110,000 BTR homes are under construction or in planning stages.

While around half of BTR homes are in London, regional towns and cities are also attracting substantial investment, which could shift the balance.

Of the 5,000 residential units currently under construction in Birmingham, around a third are build-to-rent. Developments include phase two of Exchange Square (375 apartments), Holloway Head (484 apartments) and Gilder’s Yard, Jewellery Quarter (156 apartments).

In 2019, PRS transactions in Birmingham totalled £326.7m, the highest outside London.

Stuart Eustace, director in CBRE’s Birmingham residential and development team, said: “London has led the BTR revolution so far, but Birmingham and other regional cities, while later to the party, are now witnessing their own BTR booms.

“CBRE’s analysis identifies three main factors influencing greater demand for rental accommodation, including locations with higher percentage of population aged 25 to 34, high numbers of students, and the relative size of the economy. Birmingham scores highly in each of these areas. Furthermore, there is good rental growth in the city, making it attractive for investors and developers.

“Put all these factors together and Birmingham’s BTR fundamentals are solid, with strong prospects for further growth in the sector.”