As we finish the first quarter of 2015, so far the Real Estate market is living up to expectations, with regional cities, such as Birmingham, benefiting most.

2014 was an outstanding year for the UK property market with investment reaching a level not seen since before the downturn and returns at 20 year highs. The consensus envisages a moderation in performance in 2015, but our view is that this cycle has further to run. 

Within the Midlands, and Birmingham particularly, we are seeing continued demand from a wide range of investors. Not only inward investment from funds, property companies and private investors but also considerable interest from overseas investors attracted by better value than in the overheated London market, and the real prospects of rental growth.

The recent announcement of the relocation of HSBC to Arena Central, and new offices for HS2 at SnowHill, reinforces the point that Birmingham has a lot to offer when it comes to connectivity to the rest of the UK and underlines a desire from employers to access our talent pool within the region.  

The recent purchases of Martineau Galleries and Louisa Ryland House, and the redevelopment of Natwest Tower, will positively help in the further rejuvenation of the city core and bring exciting new product to the market.

The growing popularity of serviced offices partly reflects the changing nature of business in the economic recovery.  An increase in start-up firms represents a significant share of demand for serviced office space and Birmingham was the leader in business start-ups in the UK last year.  Today's employees place increasing value on workplace agility and touch-down spots for short stints in the office, plus collaboration areas for team working will all become more popular.  

Clearly there are deals happening in our region as demonstrated recently by our Midlands practice advising on the acquisition of the NEC Group by LDC.  With Grand Central opening in September we expect to see the sale of the investment generating huge interest from the fund and private equity buyers.

It will also be interesting to see what the future holds for business rates. The Government recently announced a review of business rates in the next 12 months and irrespective of which Party wins, we expect this to happen. The current rating system has been in place for the last 30 years, and it's likely the government will look at the models used by other countries for inspiration. There is lots of speculation as to what the changes may be, but one thing is for sure, the government will want to reduce the number of appeals that are received. One possible way it could reform the system is to measure the rates according to the turnover or profitability of a company, but with such a well-established system based on occupation of properties this would represent a radical change.

The election was also something that was highlighted at a recent event we hosted with the RICS, where local election candidates showcased their policy positions across a range of areas, including housing, infrastructure, planning, construction and devolution.

Whilst it's hard to predict what will happen post-election, what we can say is so far 2015 is shaping up to be another dynamic year for Birmingham.  Success will be measured by the ability to navigate through the fast changing world in which we now find ourselves.

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