INVESTOR research by Lismore Real Estate Advisors has shown that 90% would consider investing in Edinburgh over the second half of 2024.
The capital’s international appeal, vibrant culture, and strong educational foundation were found to make it a highly attractive investment destination. Respondents also cite its thriving financial and tech sectors, robust rental growth in prime city centre offices, a resurgent prime retail sector, along with the strongest regional hotel sector in the UK.
Key to Edinburgh’s success is its cross sector appeal, which was cited by 32% of respondents as the most important factor for investment into the city.
Over the next six months, 44% of respondents selected living as their most favoured sector for investment with the office, retail, and industrial sectors accounting for just under 20% each. Property companies, funds and private equity investors all favoured the living sector with only investment managers more evenly split across the sectors.
Competition remains strong for PBSA sites in the city, with demand and supply dynamics continuing to prove attractive. However, it was noted that clarity over the Housing Bill and rent controls is required to unlock pent up demand for BTR investment.
Craig McDonald, principal and MD of Ardstone Capital UK, said, “The city offers a unique opportunity with its limited supply of Grade A office space, especially appealing in the office and retail sectors.
“Given the critical office supply shortage, over the next 12 months, we anticipate that rents may rise to close on £50-£52.50 per square foot for Grade A space. With the St James Quarter now full and other new entrants coming to the city, the case for opportunities with properly re-based rents in the best retail pitches of Princes Street and George Street, is compelling.
“In the short to medium term, key sectors driving demand include tech and the enduring financial services sector.
“Despite political uncertainties, our investment decisions are driven by solid property fundamentals and Edinburgh’s unique characteristics make it a prime location for investment.”
Chris Macfarlane, director of Lismore, added, “Edinburgh remains a vibrant capital city, with a healthy cross sector occupational market provide a compelling investment case.
“Top quality well located city centre offices with strong ESG credentials continue to attract a broad range of investors including UK institutions, overseas pension funds and high net worth individuals, drawn by the city’s global appeal and strong market dynamics.
“With limited development and high demand, prime rents at £45 per sq ft signals healthy growth over the coming years. Strong rental growth is also expected for student accommodation and prime high street retail.
“Edinburgh has shown through good times and bad that it’s key markets remain liquid and with a broad investor base, Scotland’s capital is a serious proposition for any investment decision.”
