HBD Development Surveyor JOSH SPICER takes a look at some of the exciting changes that are taking place in the heart of the West Midlands. He predicts that Build to Rent in Birmingham has a bright future.
In property development, nothing stands still. Regeneration is always a reaction to the requirements of society. New asset classes like ‘Build to Rent’ are constantly emerging and will be key to the growth of regional cities such as Birmingham. The Private Rented Sector (PRS) is already the fastest-growing in the country and represents the second-largest housing tenure in England, with owner-occupation currently being the first.
Conversion of empty city centre office space into residential hubs is already considered a solution for growing vacant space in cities such as London, Paris and New York. Paris has now specifically committed to turning one third of its under-utilised office space into residential housing. This model could be an option for regional hubs such as Birmingham, taking some of its growing stock of empty city centre accommodation and repurposing space for residential use – much of it for private rent.
Birmingham certainly has a lot going for it. Of all the regional housing markets, the city is forecast to see the strongest house price and rental value growth over the next five years. HS2 and the 2022 Commonwealth Games are important catalysts for growth and Birmingham is already home to one of the biggest private rented sectors outside London. What’s more, it’s a top performer when compared to other UK regional cities, with one of the strongest levels of demand for rental accommodation.
Renters are now looking for ease and simplicity, and the single all-in cost typically offered in the PRS model is extremely attractive, with rent covering fast broadband, building management and maintenance, as well as the upkeep of on-site facilities. These homes mainly appeal to people between the age of 18 and 35, who are attracted by the offer of amenities, such as communal areas and gyms. And with nearly 40% of residents under the age of 25 and substantial growth in students, recent graduates and young professionals, Birmingham is an attractive opportunity for investors.
Additionally, Birmingham continues to have housing supply problems; there is a massive shortfall of new dwellings both in the city centre and the suburbs. To alleviate this, Birmingham City Council is seeking to accelerate the regeneration of council-owned assets to deliver new mixed-tenure housing solutions, including private sale, build to rent, student accommodation and later-living solutions.
One emerging asset class which has grown out of the Build to Rent sector is co-living. Co-living developments are typically apartment blocks where residents have their own separate bedrooms and bathrooms but share communal facilities such as a kitchen and living area. It’s a model which tends to appeal to a younger, urban demographic – which is typically willing to sacrifice a bit of private space to live in higher-quality accommodation in prime, city centre locations.
Co-living operators seek to offer a genuine alternative to shared houses, which are sometimes poorly managed by private landlords. The latest co-living developments now offer more spacious and independent space, with high-quality furniture and amenities providing the ideal space for people to come together. The model gives residents the opportunity to live in a sociable environment, and to take advantage of a much wider variety of facilities than would be available to them in an individual apartment or flat share. The approach has increasing relevance in a post-Covid world, with many co-living developments now offering specially designed co-working spaces, helping to build back that ‘workplace atmosphere’ while retaining the convenience of working from home.
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