Investors to flock back to Birmingham city centre property market after Brexit

Ashley Hudson, head of Knight Frank's Birmingham office

Investors will flock back to trade in the Birmingham city centre commercial property market as soon as the current political uncertainty is resolved, according to a leading property investment specialist.

Ashley Hudson, head of Capital Markets at the Birmingham office of global property consultancy Knight Frank, said: “Whilst the UK funds are currently sitting on their hands, it is expected that they will come back into the market once the uncertainty surrounding the market is resolved.

“We are aware of approximately £500 million worth of tradeable stock in Birmingham that is currently waiting in the wings until the current political confusion dissipates.”

Knight Frank’s new Birmingham Office Insight Report shows that despite Q3 witnessing relatively subdued levels of investment, Birmingham’s central office market has remained transactional amongst the political commotion during the third quarter of the year. At the beginning of the third quarter, Bank House was purchased by Longmead Capital for £19,100,000, reflecting a net initial yield of 5.97%, whilst 120 Edmund Street recently sold to Credit Suisse for £52m, reflecting a net initial yield of 5.75%.

One of the city’s larger assets, The Mailbox, is also currently under offer to M7 at circa £190m. The end of the quarter saw Topland Group complete the purchase of 60 Church Street from Catalyst Capital for £16.84m, reflecting a net initial yield of 6.81%.

During the quarter investment purchasers were equally split between UK and overseas investors.

The Knight Frank report also claims that there is no need to panic over latest HS2 developments. It says that although the proposed HS2 rail line is currently under review by Boris Johnson’s new government, Birmingham has the strength and critical mass to continue to benefit from the scheme regardless of the investigation’s outcome.

“Whilst there is no doubt that HS2 will benefit Birmingham in terms of bringing it closer to London, it is not critical for the city to continue to flourish on the national stage,” said Ashley Hudson. “It is the positive dynamics of supply and demand in Birmingham’s occupational market that has attracted investors to the city, with office take-up in H1 2019 totalling over 500,000 sq ft. This demand cannot be exclusively attributed to the announcement of HS2, but also the unprecedented levels of development underway in the city.

“High levels of inward investment in projects including the tramline, Grand Central, Paradise and Centenary Square have placed Birmingham firmly in front of investors as the leading investment alternative outside of the capital.”