A retail renaissance has led the way in the regeneration of a once depressed city. Thousands of homes are being built to meet demand, and capital appreciation in 2003 was 17 per cent. Edel Morgan reports.
Bill Clinton is quoted in The Times in October 2002 as saying he was astonished by its beauty. "The buildings, the art, the use of water. It is an extraordinary jewel of a city . . ." he enthused.
The fabulous metropolis he was referring to wasn't Rome, Paris, Florence, or even Prague, but Birmingham, which he visited for the G8 summit and which he says bowled him over.
Whether or not one agrees with the use of the words "beautiful" and "Birmingham" in the same sentence, there is no doubt it has emerged from its dingy and declining past into a young, dynamic and inviting city. But as Clinton pointed out, this transformation is little known outside the UK - although quite a few Irish investors are capitalising on its emerging status.
Marketing Birmingham - a body set up in 2002 to boost the image and profile of the city - knows it has its work cut out to change outsiders' perceptions.
The city may have transformed "but many people's opinions of Birmingham sadly, have not" says the organisation's website.
"As long as people continue to have an outdated image of Birmingham, neither the city nor its businesses will fulfil their potential," it continues.
This outdated image stems from a period of mass unemployment and stagnation which began 20 years ago when its bedrock manufacturing industry dwindled and Birmingham was left without a focus. While the manufacturing sector remains important, it has been usurped somewhat by the service sector, which now provides 79 per cent of all city jobs.
An economic strategy began as far back as the early 1980s to revitalise the city's core, demolish eyesores on its landscape and promote mixed-use development. This initiative is now beginning to reach fruition in the city centre, which has seen some stunning and boldly modern development in recent years.
Like many English cities north of London at the moment, its city centre skyline is populated by cranes. In 2001-2003 it underwent more development activity than in the previous 40 years - and an estimated further investment of £5.1 billion (€7.5 billion) is promised over the next 10 years.
Much of this redevelopment has been led by a retail renaissance the sheer scale of which is overwhelming. The £500 million (€740 million) new Bullring is Europe's largest city centre development: the size of 26 football pitches, it has 111,483 sq m (1.2 million sq ft) of retail space covering 16.2 hectares with two main anchors, Selfridges and Debenhams.
Selfridges is in a vast curving futuristic building covered with aluminium spun discs - a shimmering symbol of the new-look Birmingham.
It should look incongruous beside medieval landmark, St Martin's Church, which has undergone a £6 million (€8.88 million) facelift; the spire of the church looms surreally behind the highest point of the Bullring, which is a feat of modern architecture.
The new Bullring has created 8,000 new jobs and a need for more inner city residential accommodation. There are now 5,000 people living in the city and this is expected to increase to 20,000-40,000 in the next 10 years.
A five-minute walk from the main shopping area is the €150 million Mailbox development on Wharfside Street, formerly the unsightly Royal Mail sorting office, and now a stylish mixed scheme with a shopping centre crammed with designer names and anchored by Harvey Nichols. It also has offices - BBC Birmingham has its headquarters there - two hotels, bars, a canalside restaurant and luxury apartments.
The regeneration of the city has seen capital appreciation jump way above the UK national average in 2003 at 17 per cent, and this year it is again expected to reach double digits.
James Carroll of Investor First says there are two main types of Irish investor in Birmingham. "The big bulk-buyers snap up 100 units and get a big discount which often goes into their own pockets. They may tell the investor they are passing on that discount but that isn't necessarily true. There are also a lot of informed buyers making their own judgements who may buy one property in several cities to see how it goes."
He says a rental yield of 5-7 per cent is the norm. "The days of 10-13 per cent rental return are gone but there is a major supply shortage in England, so the demand is there."
In Birmingham, rents have decreased by £100-£150 (€148-€222) in recent months due to an upsurge of supply but Carroll puts this down to "swings and roundabouts" in a city centre market that will settle as the population grows.
Two-bedroom apartments in the city centre are currently fetching €750-€900 (€1,110-€1,332) per month.
At present, a property costing over £200,000-£210,000 (€296,081-€310,885) will struggle to get a maximum rental yield. However, many investors are high net worth individuals who are more interested in long-term returns.
These would be more likely to be interested in the 22-storey Orion building, for example, situated between the prestigious Mailbox and New Street station - a development of 300 luxury apartments by Crosby Homes priced between £130,000 (€192,455) for a studio to £220,000 (€325,677) for a two-bed apartment in the last phase. Fashion designer John Rocha was involved in the design of the scheme which is aimed at young hip professionals.
New residential developments are going up within a five to 10- minute walk from the equivalent of Grafton Street (New Street) and these tend to be of most interest to Irish investors.
"The Mailbox and Bullring developments are creating a slipstream effect within five minutes of them because they have created many thousands of jobs between them," says Carroll.
Some speculators are buying units off the plans and offloading them as soon as the building is completed.
Denis Kavanagh of Olivers estate agents recently sold a block of apartments in the Jewellery quarter near Broad Street to a group of Irish investors.
The average price for a two-bed apartment in Birmingham is £150,000-£200,000 (€222,053-€296,086).
Those who look outside the city centre may be rewarded with healthy capital growth. Cradley Heath is an example of a suburban area within easy reach of the city centre which is being regenerated with the help of EU structural funds.
A two-bed apartment there will cost £92,500 (€136,940). Rental income for a two-bed unit is currently around £450 (€666) per month.
In the more desirable areas of Sutton Coldfield and Harbourne a two-bed apartment will cost £200,000 (€296,086) and the average rent is £700 (€1,036) a month.
The forecast for 2004 is good. A recent survey revealed that Birmingham ranked second in the top UK cities to live in after Leeds. Sixty-four per cent of residents in Birmingham described their quality of life as excellent. Birmingham has a work force of nearly 600,000 of which 103,000 are working in banking, finance and the insurance sector, 82,000 in manufacturing and 19,800 in teaching.
Birmingham has benefited from £500 million (€740) in EU structural funds since the early 1980s, which has seen the construction of the international convention centre and Symphony Hall, the National Sea Life Centre and the Ikon Gallery on Brindley Place in the city centre.
While the Bullring/Broad Street/Brindley Place area snares most of the attention, the £6bn (€8.9bn) regeneration of Eastside is aimed at making the east of Birmingham as desirable as the west.
Eastside is 420 acres (170 ha) in size and, as its name suggests, sits on the eastern side of Birmingham city centre. It is an exercise in changing the way the city is perceived, extending the centre eastwards through Digbeth and Deritend to the Middleway ring road.
However, with the demolition of Masshouse Circus and the creation of €114 million (€168 million)Millennium Point - the museum of innovation that opened last year - the property industry is rapidly becoming convinced of Eastside's worth. As a result of all this investment, Birmingham is now securing one-fifth of all new direct investment in the UK and predictions are for another 50,000 jobs to be created in next decade.
