BIRMINGHAM: EPICENTRE of all the country’s worst traffic jams thanks to Spaghetti Junction, home to several mid-table football clubs and the butt of a thousand and one bar-room jokes. It is unloved, forgotten and in danger of becoming just another provincial city.

Many now consider Manchester to be the country’s second city: regeneration projects have turned Lowry’s grim view of Salford into a thriving, architecturally exciting place to live and shop, while in the city centre old warehouses are being converted into apartments and garden squares and Will Alsop’s Chips building, which is the centrepiece of the New Islington project, will turn the run-down Ancoats area into a sought-after place to live. In 2002 it successfully hosted the Commonwealth Games and is home to the country’s most successful football club in recent years. But how does a city go about reinventing itself so favourably? Can Birmingham halt its decline?

The residential research arm of the estate agency Knight Frank is about to publish a paper that looks at Birmingham and analyses how the city is trying to turn itself around. The decline in its traditional industrial base over the past 20 years has been hard to arrest: the recent closure of the MG Rover plant at Longbridge — the largest factory in the area, employing about 18,000 people — has been the latest, painful, nail in the coffin.

Manchester has been very pro-active in regenerating itself by forming MIDAS, a partnership organisation covering the ten local authority areas of Greater Manchester, and working with the Northwest Regional Development Agency to push forward the area’s position within the economy, both domestic and foreign. A three-year partnership between the two organisations has been agreed and during 2005 and 2006 MIDAS hopes to secure investment of more than £50 million.

But Birmingham, it seems, is struggling to awaken itself. A couple of years ago a survey by the Joseph Rowntree Foundation named Bournville, a suburb in the southwest of the city built by the 19th-century philanthropist George Cadbury next to his chocolate factory, as the nicest place to live in Britain, but this has proved to be the exception rather than the rule in the West Midlands. And yet the city centre, once reviled for its concrete Bull Ring and grim selection of shops, is changing. The extraordinary Selfridges building, which opened almost two years ago, is part of, according to the site’s developer, the Birmingham Alliance, “Europe’s largest retail-led regeneration project, representing an investment of more than £1 billion, providing 110,000sq m of new retail accommodation over three trading levels”.

But the pace of this change is slow. According to Knight Frank, it is estimated that there is more than £11.4 billion of investment planned for the city over the next ten years, the majority of this in the city centre alone. The canals have been a focus for the redevelopment, particularly in the form of apartments, but it is the south of the city that is undergoing the most significant regeneration. Southside, a development of 461 apartments by Crosby Homes, is due for completion in the first half of next year and, on release, was the city’s fastest-selling development, with more than half the properties now sold.

But does Birmingham, for all its redevelopment, offer the investor and the owner-occupier a good deal? Hometrack reports a drop of 0.4 per cent in prices for the Birmingham area in the past month, while the annual figure for the rate of house-price inflation from the Office of the Deputy Prime Minister for the West Midlands was at 10 per cent, but while these capital values are now stabilising, rents are rising in Birmingham. In 1999 investor purchases accounted for 45 per cent of new-build sales, but by 2003 this had risen to 70 per cent.

According to Knight Frank, the early signs from 2005 are that the market — as in the rest of the country — for the short term, make-a-quick-buck investor has declined, with them making up just 10 per cent of purchasers now. With annualised inflation in the city standing at 0 per cent and no apparent decline in new-build prices, rental demand is strengthening and rents have increased approximately 13 per cent in the past year, yielding 5.1 per cent this year, up from 4.5 per cent in 2003-04. The average rental value of a two-bedroom flat with parking is £850 a month.

But buildings alone — retail and residential — are not the indicators of a city’s rebirth. For Birmingham truly to come alive and reclaim the title of Britain’s second city it needs to look to its own people, its inner ability and ambition. Manchester is a recognised leader in areas such as style and trends and sporting excellence: Birmingham now needs to make progress in these areas truly to compete, or the greatest piece of construction in the region will be seen as the M6 Toll, whisking investment between London and Manchester.

catherine.riley@thetimes.co.uk

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