_London and Birmingham, a view on investing in the UK’s two largest cities
Having remained out of the spotlight for much of the past decade Birmingham is having something of a renaissance at present. This resurgence is being led by an influx of blue-chip companies taking large office spaces and major residential developments by the industry’s leading players making large land acquisitions in key city centre locations.
Given the City’s heritage, it is perhaps surprising that it has laid relatively dormant for so long, after all; Birmingham has more Canals than Venice, has the busiest theatre in the UK; The Birmingham Hippodrome, and is home to The Custard Factory.
Not an actual custard factory, but a street lined with wonderfully colourful houses. Let us not forget Birmingham is also the birthplace of music legends Led Zeppelin.
"Birmingham is a cheaper city to live in, not only for apartment costs, but also for transportation, dining and entertainment. However, is cheaper necessarily better? "
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Birmingham is a thriving city with a population of 1.1 million people, and home to four universities. The median age of the population, like London, is low at 36. It is full of young working people, keen to rent in the city centre, which results in high occupancy levels and a solid investment opportunity. The average price to rent a 1 bedroom apartment in the City Centre is £877 per month vs London’s £1,488 per month.
Perhaps this lower cost of living and a manageable 1 hour 20 minute train journey into London is why HSBC has just taken a significant amount of office space in the city centre that will house over 2,000 employees.
In addition, Barclays Bank, PWC and EY have also taken up occupancy, totalling 420,000 sq ft at Snow Hill. These office moves cost in excess of £200m and show real commitment from major blue-chip companies to Birmingham and the UK post Brexit.
There is a reason that London remains the Capital City. It has fought off New York to remain the financial Capital of the World. It is home to 21 universities and 240 museums. Has a GDP of $565 Billion and over 72 billionaires, and remains the playground for the rich and famous. It is home to 5 airports, not to mention it is a whole degree warmer than Birmingham. It’s a cultural, green and inspirational hub.
Given the demand to live in the capital, it is not surprising that sales values in London are up 50% over the last 10 years, compared to Birmingham, which is still below its previous financial crisis peak. Whilst the focus post Brexit has been on the banking sector, we need to look at the TMT sectors too.
Tech jobs now outstrip banking jobs in the Capital and with companies such as; Facebook and Apple taking large office space, this is a trend that will surely continue.
In the last year alone, Snap Chat and Expedia have taken a whopping 174,000 sq ft of prime office space and the unemployment rate for the capital is at its lowest since records began at just 4.8%.
With this influx of new jobs, London certainly will not be short of tenants or buyers. This continued growth and evolution will help to keep London the safe haven investors have known and loved for the last 40 years.
Whilst investor regulations have tightened, London is still an extremely attractive proposal for many foreign investors; with a legal system revered the world over, relative political stability coupled with huge lifestyle factors, London remains the go to city in the world for many.
In addition, Knight Frank predicts that over the next 5 years there will be an average growth in Prime Central London of 13.1%.
On balance, fair weight needs to be given to both locations; Birmingham is undergoing a revival through regeneration, it is the second largest city in the UK, is under 90 minutes from London and is a fantastic investment opportunity for those seeking affordability and long-term growth.
London remains the financial and legal capital of the World, is home to many of the best universities globally, has an array of culture that cannot be matched, and remains the safe haven for many discerning investors. Perhaps the question is not Birmingham vs London but investor vs investor; what are the driving factors for the purchase; as those will likely dictate which city is best suited to your needs.