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Birmingham continues to be a magnet for property investors as city ranks 22nd in Europe for overall real estate prospects

27 Jan 2022

  • Birmingham ranks 22nd for overall real estate prospects, up from 25th in 2021
  • City also ranks 18th on the local outlook for real estate prospects in rent and capital values

The Emerging Trends in Real Estate Europe 2022© report from PwC and the Urban Land Institute (ULI) highlights the views of European real estate sector leaders’ and expectations for the year ahead. The 19th annual survey finds a clear upturn in confidence among leaders despite the impact of Covid-19 on real estate. The report also finds that 2022 will be stronger than 2021 in forecast returns.

The report, based on the views of 844 property professionals across 25 countries, records the highest levels of business confidence since 2014 and reflects a sense of relief that the industry remained resilient during the pandemic, noting that real estate remains a favoured asset class. Logistics and residential are the top sector prospects alongside alternative asset types, such as new energy infrastructure and data centres.

Around half of respondents think that business confidence (52%), profitability (49%) and headcounts (53%) will rise in 2022.

However, there is a sense that the short-term bounce back is masking volatility that may come to the fore in the longer term. There is also uncertainty around rising levels of inflation and supply chain issues.

Jonathan Clements, real estate tax director at PwC UK, said:

“As the UK appears to have passed the peak of the Omicron wave, the real estate sector will be hoping that 2022 offers more stability than the turbulent and uncertain year that was 2021. There are expectations that performance of real estate will be strong in 2022 but that it may face headwinds in the form of rising inflation and continued supply chain issues.

“The uncertainties of last year shifted priorities in the real estate sector as the pandemic accelerated a number of trends, including a significant increase in remote working and demand for e-commerce, forcing investors to re-examine the return of their assets. The demand for alternative sectors, such as new energy infrastructure and data centres, as well as industrial property and logistics warehouses, looks set to continue strongly this year. Investors have broadened out from the traditional real estate classes into the environment and infrastructure that surrounds us.

“Birmingham is is well placed to benefit from the impact of further investment due to its strategic location, excellent transport links and highly skilled workforce, as well as the upcoming Commonwealth Games and the Government’s levelling up agenda, with central government departments, including HMRC and DWP moving to the West Midlands.”

Nick Green, Chair, ULI Midlands and real estate partner at Squire Patton Boggs, said:

“It is fantastic to once again collaborate with PwC to produce this year’s edition of the Emerging Trends for Real Estate report. The report demonstrates that Birmingham and the West Midlands is in a strong position to build on the progress made in 2021. With £5.1bn being invested in rail, tram and bus rapid transport systems, Birmingham is well positioned to leverage its geographic location to attract future investment.

“With a highly skilled workforce, Birmingham also offers a pipeline of talent which will serve the city and the West Midlands for years to come. To continue attracting talent, however, the city needs to be a leader in the country’s transition to a green future. We know that making the city a sustainable place to live and work will continue to attract talent, as green investment and net zero initiatives are at the forefront of people’s minds following COP26.”

 

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