Although HS2 has captured many of the headlines around transport improvements in Birmingham in recent years, the greatest development potential is likely to come from other links that will improve connectivity and capacity beyond the city centre and across the wider West Midlands.

Alongside a diverse range of uses in the urban core, Birmingham must provide high-quality, well-connected homes to encourage high-skilled workers into the city to support the growth of productive firms. Improved public transport connections are crucial for this, as they often mean that sites can support higher residential densities and command higher values, improving viability and enabling a higher quality of development.

Currently, residential densities are low in Birmingham for a settlement of its size, particularly immediately surrounding the city centre. The area within the Middleway inner ring road has a residential density of 8,125 people per square kilometre. A similar area of central Manchester is 20% denser at 10,242 people per sq km. Density drops off sharply to 3,300 people per sq km within 1km of the ring road.

The redevelopment of former industrial land adjoining Birmingham’s CBD is well underway, and will be supported by the expansion of the tram network eastwards through Digbeth and the new Sports Quarter. In the two years to September 2025, there were 4,832 EPCs lodged for new homes within the Middleway, accounting for more than half of all new homes in Birmingham local authority, and a large increase compared to the 587 delivered ten years earlier. There are a further 11,100 homes on sites under construction in this area and 26,400 at earlier stages in the planning pipeline.

The strength of the brownfield pipeline reflects the relative lack of greenfield sites for development on the edge of the city. This is a challenge for not just residential development, but also industrial and logistics, where the West Midlands remains in high demand, being behind only the East Midlands in occupiers’ ranking of preferred locations for new lets. This should prompt developers to look both at brownfield opportunities within the city, particularly considering change of use where older industrial units no longer meet occupier requirements, and also along key infrastructure corridors across the wider West Midlands area. The recently announced A46 realignment at Coventry, and the proposed M54 to M6 link road present significant long term opportunities to open up new locations.   

Improving viability

The viability of schemes across the city centre and surrounding area will depend on value increases driven by the improved transport infrastructure and the regeneration premium which will come alongside the improved public realm, leisure and employment opportunities. Median values achieved across Digbeth and Deritend in the year to August 2025 were between £200 and £275 per sq ft, making the viability of more complex brownfield sites marginal.

But alongside a placemaking premium, there is encouraging evidence that infrastructure improvements could drive higher residential values. Within a kilometre of the selected new or redeveloped train stations shown in the chart, house prices grew by around 10% more than the average for the wider local authority in the year before and year after each of these stations opened. University station in Birmingham saw a more significant growth premium around its redevelopment for the Commonwealth Games. Although the sample size of sales in this area is lower and the results may therefore be more volatile, this underlines the potential for the other transport improvements in Birmingham and the West Midlands to result in improved viability and greater development potential.

Transport improvements alone may in some cases be insufficient to drive improved viability, and the West Midlands can also seek to better use its pre-existing network of infrastructure to drive growth. Sales values for residential remain lower through Smethwick and West Bromwich, for example, which the tram and train network has served for some time. Here there is a key role for the West Midlands Combined Authority to play, alongside the local councils, to unlock the land opportunities and support regeneration, and it is encouraging that the Mayor has recognised this in the recent West Midlands Investment Prospectus, by designating this area a key Growth Corridor.

Forecast house price growth of 24.6% across the West Midlands region, with the potential for outperformance in those areas which are currently more affordable, should also go some way to unlocking these opportunities as well. Developers may therefore find that there are growth opportunities across residential, office, industrial and retail uses spanning further in the coming years than they have previously been accustomed to.

Increasing density

Along much of the new Camp Hill rail line, current residential values do not pose the same obstacle to development as in Digbeth or West Bromwich, with average sales values already in excess of £300 per sq ft across much of the line. In these locations, as well as surrounding the Midlands Metro extension through Dudley to Brierley Hill, the opportunity may lie instead in the potential to densify sites around the new transport hubs.

There is limited evidence so far that suggests an uptick in development around the Camp Hill or the Brierley Hill line stations. But there is a large pipeline of residential-led development in the inner city around the trams, particularly in Digbeth and along Broad Street and the Hagley Road. Growth in denser city living will be key in generating a more successful urban core, where agglomeration economies can be stronger.

Institutional investment in rental homes will be a key component of this. Investor interest in Build to Rent (BtR) has been strong and the pipeline has grown, particularly focused within the Middleway, but with potential to expand along improved transport links. Birmingham (alongside the wider West Midlands) is attractive to institutional capital, because the large young population offers a depth of demand for high-quality rental product. And for the city, the delivery of high-quality homes of varied tenures is important in attracting and retaining a range of skilled workers to fuel productive firms, including the 25,000 graduates which Birmingham’s competitive universities produce each year.

High interest rates and build costs have made viability challenging in the last couple of years. This has caused starts across BtR and Co-Living to drop to just 186 in 2024 and 2,000 in 2025 (as of September). There are now around 10,000 homes with detailed planning permission that are yet to start. However, with rental growth of 32% across the city over the last five years, viability should improve, allowing more of these homes to start on site.

Making best use of the Canal Infrastructure

The types of infrastructure which people and firms in Birmingham need have changed over time. Historically, the canals played a key role in the movement of goods. As this has declined, the canal network can instead support regeneration through a focus on leisure and residential uses, as is recognised in the Canal & River Trust’s 10-year strategy. This development is helped by the potential for a waterfront premium – looking at the canals in the west of the inner city, where regeneration has already taken place, homes within 100m of the canal are on average worth 10% more per square foot than other homes within 1km of the canal.

Around 20% of the land adjacent to the canals within the inner ring road remains in industrial use – a legacy of its historic role, although much of this land, particularly towards the east, is under-occupied or vacant. Coupled with the improving transport, there is huge potential to unlock value through transforming the waterways from transport infrastructure to become the central focus of placemaking for new residential development.

The redevelopment of Icknield Port Loop by Urban Splash is an evolving example of this, and there are many other parts of the West Midlands, from Wolverhampton to Wednesbury and Cotteridge to Castle Bromwich, where regeneration of industrial land along the canals could provide high-quality homes, leisure and public spaces.

But in rationalising how our urban land is used, the West Midlands must also ensure that the Industrial and Logistics firms which are vital to the regional economy can maintain their productivity. Any urban residential-led regeneration must be combined with an increase in the provision of high-quality industrial space. This will encourage firms to relocate away from their current canal-side plots, which are less crucial in an economy where goods are moved by road, and towards the major road junctions where they can be most productive. This will allow the region to hold onto and develop a key strength, while also facilitating the growth of new spaces and new industries in well-located areas.

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