Most people consider their family home to be an investment as much as a place to live. With that mindset, it’s easy to think that all the property investment action is concentrated in London.
But two cities outside the capital are winning a lot of attention from investors thanks to their juicy rental yields and modest entry prices.
Both Manchester and Birmingham continue to undergo major regeneration, including commercial, residential, and transport infrastructure.
As a result, both cities have enjoyed strong population growth, good graduate retention and continued business investment over the past few decades.
This has created demand for quality housing, particularly in up-and-coming, city centre neighbourhoods, where rents and house prices can be exceptionally frothy.
In this post, we take a closer look at why we expect Manchester and Birmingham will continue to steal the limelight in 2026.
Overview
The numbers back up the claim that Manchester and Birmingham are two of the UK’s key regional property investment markets.
According to Numbeo data, property in Manchester has a gross rental yield of 7.8% in the city centre and 5.6% in the suburbs.
Property in Birmingham currently yields 5.3% in the city centre and 5.4% outside.
Manchester
It’s not difficult to see why Manchester continues to go from strength to strength.
Four things have underpinned the city’s popularity among property investors:
- Jobs growth: The city has been particularly good at attracting high-value jobs in sectors such as digital technology, financial and professional services, advanced manufacturing, and life sciences. Â
- Student population: The city and its environs play host to over 100,000 students across the University of Manchester, Manchester Metropolitan University, and the University of Salford.
- Graduate retention: After London, Manchester has the second-highest graduate retention rate in the UK – over 50% of students remain in the Greater Manchester area after graduating from a local university.
- Regeneration: The city continues to undergo major regeneration, especially around Victoria North, the city’s biggest regeneration project, which will see the creation of over 15,000 new homes, and Mayfield/Piccadilly, the site adjacent to Manchester Piccadilly Station which will transform the once-derelict site into a multipurpose, mixed-use neighbourhood.
Birmingham
Although rental yields have tended to lag those of Manchester, the city is not without its attractions for investors.
Its strength as a property investment opportunity lies in:
- Demographics: Over half the city’s population is under the age of 35.
- Students: The city is home to major universities: University of Birmingham, Birmingham City University and Aston University, which bring tens of thousands of students to the city each year.
- HS2 & Regeneration: The arrival of HS2 at Curzon Street, alongside Birmingham’s major regeneration and real estate projects, especially the £1.9bn redevelopment of Smithfield and Edition Birmingham, a 46-storey block of luxury flats positioned between the Paradise regeneration site and Centenary Square.
Conclusion
Manchester and Birmingham continue to do well, but the world of property investing never stands still, and 2026 will perhaps be something of a tipping point.
Competition is most definitely intensifying.
That’s why it’s often a good idea to have a company like Select Property in your corner. They market some of the most promising property developments in Manchester and Birmingham, and can guide you through the investment process from start to finish.
