Momentum has been gathering pace following the unveiling of the Curzon HS2 masterplan which aims to maximise the development potential around the station, particularly in Eastside, Digbeth and the eastern side of the City Centre Core.

According to Birmingham City Council, these areas alone can provide 600,000 sq m of employment space and 2,000 new homes. Within the masterplan area, the regeneration is also expected to provide 14,000 jobs for the period to 2056 and as a result generate £1.3bn in economic uplift. Improved connectivity brought about by the arrival of HS2 in a newly constructed station on Curzon Street will also enable higher densities to help address the increasing demand for office, retail, and housing space in the city.

Near the terminus, redevelopment of Martineau Galleries has potential. The anticipated masterplan is likely to focus on offices, residential, hotels and ancillary retail – a move away from the previous Martineau Galleries retail scheme.

Crucially, this redevelopment would open the route from HS2 into the core of the city centre, leading to the financial district of Snow Hill. The third and final phase of Birmingham’s Snowhill development is due to start soon, reflecting growing demand for premium office space and supply shortage on the back of increasing employment activity.

The effects of regeneration around the station would also support development in the existing knowledge quarter of Eastside, home to Aston and Birmingham City Universities.

More extensively, it could catalyse development opportunities in adjoining areas, such as Smithfield lying just south of the Bullring and in Digbeth, the creative quarter. However, this is subject to issues of accessibility through and around the station being addressed. Digbeth is also home to two conservation areas. So, while potential exists, there are issues to address when considering regeneration.

Birmingham Interchange

In addition to a station at Curzon Street, HS2 plans include an interchange station adjacent to Birmingham Airport and the National Exhibition Centre (NEC). This will provide easier access to HS2 for those living in towns to the east and south of Birmingham, such as Solihull and Coventry. Solihull Council has published an initial statement envisaging 30,000 new jobs around this interchange station.

The impact could be even greater. By adjoining the airport, NEC, Resorts World, Jaguar Land Rover and Birmingham Business Park, the new interchange enhances the potential for development in the area.

Given that a high-speed rail interchange would place Birmingham Airport just 38 minutes from London, and the ongoing debate regarding capacity at London airports, HS2 could provide an opportunity for the airport to compete effectively with Heathrow and Gatwick. These links would improve the area’s attractiveness to occupiers and investors, potentially attracting more inward investment.

Housing

Birmingham’s better connectivity enhances its potential as a location for headquarters, attracting more inward investment and drawing in higher value jobs. Faster access to London’s large base of suppliers increases the chances other corporates will follow Deutsche Bank and HSBC, creating new sources of higher skilled jobs in the city.

Growth will put pressure on its already stressed housing market. Birmingham needs 89,000 new homes between 2011 and 2031, the equivalent of 4,450 a year. Given that not all of these new homes can be accommodated within the city’s local authority boundaries, neighbouring councils will also come under pressure to house Birmingham’s rising population.

Birmingham saw 1,810 net additional homes delivered in the year to March 2015, which leaves the city with an annual shortfall of 2,640 new homes, even before the backlog is taken into account. This shortfall could build up to at least 26,000 homes from now until HS2 is expected to start operating in 2026, by which time Oxford Economics projects that Birmingham’s 1.1 million population will have grown by 8.0%.

Price rises

The increased demand will inevitably push up values if supply remains restricted. With frequent trains and a journey time into London of just 30 minutes and a population size similar to Solihull, Reading provides a proxy for future values in Birmingham. Figures suggest a greater convergence potential for residential values than for office costs.

According to the Land Registry, average house prices in Reading stand at £253,756, still well below London’s average of £490,926 but higher than either Birmingham (£118,926) or Solihull (£214,554).

Birmingham’s and Solihull’s residential market may also feel the impact of London wealth more directly as more frequent commuting between Birmingham and the capital becomes possible via HS2. However, as this is likely to be limited to higher paid professionals given the ticket costs, the greatest impact is likely to be at the higher end of the market.

Over time, the gradual influx of wealth both in the shape of commuter’s salaries and a greater number of better paid corporate employees in Birmingham means that the top end of Solihull and Birmingham are likely to outperform the local market.

^{Source: Land Registry, Rightmove}

Increasing Density

If HS2 could drive up house prices it also provides opportunities to increase housing supply. Better connectivity enables higher densities.

The local development framework recommends a city centre density twice as high as the density for suburbs. By extending the city centre further eastwards, HS2 would allow denser development and could bring forward a significant increase in Birmingham’s housing supply.

^{Source: Savills Research, Birmingham Curzon Masterplan}