Average residential values in Birmingham have grown by 31% in five years, causing the traditional city centre boundaries to expand, according to Savills.
The firm’s Birmingham: Delivering Transformation report says there are 21,200 residential units in planning or under construction in the city centre, of which 1,800 are build-to-rent.
Joe Shorney, head of residential development sales in the Midlands at Savills, said: “Increasingly, we have seen investment from specialist and historically London-centric developers such as Berkeley and Galliard looking to Birmingham to capitalise on the continually growing market.
“This infiux of developers and institutional funders to the city centre is creating increased confidence and resulting in boundaries being pushed, with local and regional house builders looking for opportunities in the areas beyond the city centre.”
The local authorities that surround the city will need to play a role in absorbing overspill demand, says Savills, particularly for family housing which makes up 54% of requirements.
Birmingham’s current Strategic Housing Market Assessment sets housing need at 4,057 new homes per annum, though just 1,750 were delivered in 2017 and the city’s population is projected to increase by 150,000 (13.7%) by 2031.
Office market expansion
Savills said the city’s office market was also expanding outside of the traditional core. City centre take-up reached more than 1 million sq ft for the first time in 2017, 51% above the 10-year average.
While there is circa 600,000 sq ft of speculative commercial space under construction, it said that encouraging occupier requirements and a shortage of developable sites in the traditional city core was driving developers to look beyond the former inner ring road into previously fringe areas, such as the emerging tech and creative hub in Digbeth.
John Griffiths, head of development at Savills Birmingham, adds: “Commercial property growth beyond the historic core is likely to continue over the coming decade, shifting both to the east and west, for example the proposed 1m sq ft Axis redevelopment adjoining Arena Central. Innovation and flexibility in funding, tenure and design is bringing forward complex sites, resulting in the highest level of construction activity since the Global Financial Crisis. As new areas emerge, this will create pockets in which growth rates are even higher than the average across the region.”
Source: Property Week