Regional growth property story of 2015 as Birmingham continues to boom

2015 will see the rebirth of the regions according to JLL’s head of research Jon Neale at its Midlands Property Predictions event, which attracted over 150 professionals from the business community.

This comes on the back of a stellar year, with Birmingham investment volumes overall up 19% at £1.04 billion, 86% ahead of the average for the 2008-2013 period. Investment also more than doubled in the West Midlands outside Birmingham, from £798m to £1.66bn.

Allan Wilson, JLL’s director of capital markets added: “Investment volumes during last year were higher than at the height of the property boom and look set to continue although perhaps not at the same rate of 2014.  Domestic institutions will look to recycle their capital from overheated markets to higher yielding areas such as Birmingham, with an international presence also continuing to grow in the city.

“Whilst a lot of Western money has been seen to date, attracting Far Eastern is more challenging. Marketing of the city and investment in infrastructure has put us in a better position; however, the key to our success is to think of Birmingham as a European city, not just as part of the UK, ensuring we have the economic and civic infrastructure in place to compete.  Clearly HS2 and the expansion of the airport will contribute greatly to this position.”

Employment growth too saw the Midlands among the leaders in 2013 and 2014, outpacing the UK average.Retail sales growth in Birmingham over the next five years is also predicted to be amongst the fastest in Europe, reaching nearly 2.5% per annum. This says Jon Neale would be helped by the arrival of Grand Central later this year.

The biggest story for the office market in 2015 is set to be the re-emergence of rental growth in the main regional cities, with 2.6% expected in Birmingham, with JLL’s office agency director, Jonathan Carmalt predicting a 50,000 sq ft pre-letting in the city:

“Letting prospects for the next round of speculative office development are far stronger as there will be a more staggered delivery than the last cycle, which were all delivered over a short 18 month period in 2008/2009.

“As occupier conditions are also more favourable, more inward investment is expected following in the footsteps of Deutsche Bank.”

Further speculative building was also predicted in the already booming industrial market, although not as much as during the mid 2000’s and in many cases, conversations with occupiers will continue to lead to many being let before practical completion due to a shortage of supply.

In the residential sector, JLL’s residential director, Michael Brough described the year as one of two halves, with the election dampening activity in the first half and growth not set to hit above 4% in Birmingham.  A more protectionist approach to planning reported by JLL’s planning director, Peter Leaver, in response to a threat from UKIP to the conservatives, is also expected to hamper future housing and employment land growth in the run-up to the election.

Generally however, there is much to look forward to in the region and Birmingham as summed up Ian Cornock, JLL’s lead director in Birmingham: “Investment volumes are up and the city has very strong credentials to sell. Birmingham is hugely entrepreneurial, we are delivering first class education and the Greater Birmingham and Solihull LEP has attracted more direct investment than any other LEP areas.

“This all bodes extremely well for continued foreign investment.  We all have our part to play in what looks set to be a very positive year.”