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Birmingham: U.K.’s Second City Rises

The former industrial center is transformed by refurbished factories, improved transportation; a demand for city lofts

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The gritty Birmingham of hit gangster television series “Peaky Blinders” may still exist on the small screen, but in real life, Britain’s second city is on a comeback, even in the wake of Brexit. WSJ Video

The gritty Birmingham of the post-World War I gangster television series "Peaky Blinders" still exists on the small screen, but in real life, Britain’s second city has been on the up and up.

About 120 miles north of London, the city was the heart of industrial Britain before being hit by a manufacturing decline in the late 1970s and early 1980s. Now, after a decadeslong recovery, the city has experienced something of a revival, and its real-estate market is growing. A PricewaterhouseCoopers 2015 survey of nearly 500 real-estate industry experts named Birmingham Europe’s sixth-best real-estate market to invest in—above London and Munich, but below Berlin, which had the top spot.

Diane and Dwain McDonald bought an apartment in a renovated Jewellry Quarter building after becoming empty-nesters.

PHOTO: VANESSA BERBERIAN FOR THE WALL STREET JOURNAL

The city, as locals say, has "more miles of canals than Venice." Bars and shops line the water along one of its main arteries.

Central to the change are derelict factories that have been transformed into luxury lofts. Improved transportation also is helping.

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"Refurbishments. That’s the key for the Birmingham market," said Kathryn Molloy, director of Maguire Jackson, a local real-estate agency. Ms. Molloy said there has been a rise in the number of sales of homes priced between $700,000 and $1.4 million—something that would have been rare in the past. Last year, one top-floor apartment in a former warehouse sold for $2.6 million, said Ms. Malloy.

Rachel Hyde, a local agent at Fine & Country, which primarily works with suburban properties, says her firm plans to open an urban office near a large shopping district in central Birmingham on Sept. 1. "We’re opening purely to deal with the demand for city-center living," she says.

Some say the U.K. residential market may slow following the country’s Brexit vote to leave the European Union. But for now, Ms. Hyde says, "we haven’t seen any impact one way or the other."

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Judy Freeman’s penthouse apartment in Concord House features a large terrace.

PHOTO: VANESSA BERBERIAN FOR THE WALL STREET JOURNAL

The demand has been largely from two sources: professionals moving in to take new, high-paying jobs, and relocating baby boomers looking to downsize to a city home after their children have grown.

Deutsche Bank, for example, expanded its investment-banking presence in 2014 to a new office at Brindleyplace, a retail, leisure and office development. HSBC has announced plans to relocate its personal- and business-banking operations to Birmingham in early 2018.

The executives and managers filling those positions are buying luxury units in the city center, said Douglas West, director of business at real-estate investment company Lavignac Securities in Windsor, England. Those house hunters are drawn to districts such as the Jewellery and Gun quarters—neighboring areas in north Birmingham whose names signify their historical roles in the city’s economy.

Dwain McDonald, chief executive at the U.K. arm of parcel company DPD, has worked in Birmingham for the past 28 years. For most of that time, he has lived 50 miles away, in Longsdon. Now that he and his wife are empty-nesters, he wants to be closer to his office.

Ms. Freeman’s two-bedroom penthouse apartment has an open-plan living/dining area.

PHOTO: VANESSA BERBERIAN FOR THE WALL STREET JOURNAL

His desire for a home that isn’t "one of those apartments that are boxy and standard"—led him and his wife, Diane, 48, a hospital volunteer, to the Jewellery Quarter. In January, they bought a $991,000 three-bedroom apartment in a renovated building set to be completed this year. Features high ceilings and a view of St. Paul’s Square, a leafy, Georgian area with a historic church.

"I’ve seen how the Jewellery Quarter has evolved," says Mr. McDonald, 50 years old. "It has a very classic style; a lot of the buildings are old down there and it has really been brought to life with bars and restaurants."

The two say they plan to keep their Longsdon home—a five-bedroom valued at about $1.2 million—for weekends.

Developer Stuart Holt is looking to draw buyers with sleek warehouse homes. His company, Javlin Block, has overseen several Jewellery and Gun quarters renovations, including a four-unit complex called Viceroy, a six-unit complex called Riflemaker, and a forthcoming, 20-unit, five-building project called Comet Works, with prices ranging from $276,000 to $955,000. Mr. Holt says 18 units in Comet Works have been sold.

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To decorate his developments, he buys antique furniture, lamps salvaged from old ships, and saves materials discarded in his renovation work. He lives in a renovated factory on the border of the Gun and Jewellery quarters.

A new rail line is another selling point. Realtors tout "HS2," the high-speed link slated to shrink the trip to London from 80 to 45 minutes within the next decade.

Better transportation was one reason Judy Freeman, 61, a semiretired recruitment-company director, invested about $917,000 in October in a two-bedroom, 2,237-square-foot penthouse in Concord House in the city center. A lifelong resident of Birmingham, Ms. Freeman at first saw the apartment as a rental opportunity for professionals. "But the kids have left home now," says Ms. Freeman, who lives in the suburbs. "I’ve got an eye on possibly wanting to live there myself one day."

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