There is only one London, which is a premiere investor destination as one of the leading global gateway cities of the world and a financial and trade capital of Europe. It has a host of attractive attributes, such as a diverse economy, highly educated and skilled workforce, rule of law, transparency, large supply of institutional-grade buildings, liquidity, etc.
However, given London’s lofty valuations, low cap rates, and an expensive and tight housing market, is it time to consider other major cities inside the United Kingdom? A number of U.K. regional cities, such as Birmingham, could offer pockets of opportunities.
As cities go, Birmingham has a lot going for it these days. Earlier this year, ULI and PwC’s Emerging Trends in Real Estate Europe 2015 report, created a list of top 10 most attractive European cities to invest in and London placed 10th and Birmingham ending up placing ahead at number 6 which is up from 14th in ULI’s 2014 review. Click here to see the full rankings.
One of the engines of this transformation was the Paradise project. It is a part of the city formally known as Paradise Circus located in the city center between Chamberlain and Centenary Squares. The redevelopment area will comprise some 7 hectares — roughly 17 acres.
This is a major £500 million ($780 million) mixed-use redevelopment project that runs from 2015 to 2025. The funding is from a partnership led by the Argent Group, which is handling the development aspects, along with the Birmingham City Council and BT Pension Scheme, managed by Hermes Real Estate. To see how it’s developing, visit the project website here.
The momentum for the city just keeps building. As noted in the Birmingham Post: “Major deals like the new HSBC [office building] at Arena Central saw 650,000 square feet of office let in the first half of this year — the equivalent of eight and a half football pitches. … This year is set to be one where Birmingham returns to — and exceeds — pre-recession levels in terms of office lets.”
Looks like there’s more room to run in the Birmingham market, and investors have been active in the market. For example, recently, Legal & General Property bought the Birmingham headquarters of bar and restaurant operator Mitchells & Butlers and an associated hotel from LaSalle Investment Management for £69.5 million ($180 million).
If Birmingham is not on your U.K. investment radar, perhaps it is time to give it a look.
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John Hunt is conference program manager of Institutional Real Estate, Inc.
