Edinburgh continues to attract investor interest, according to survey

Edinburgh continues to attract investor interest, according to survey

The INVESTOR survey carried out by Lismore Real Estate Advisors showed that 90% would consider investing in Edinburgh in the second half of 2024.

The capital’s international appeal, vibrant culture and strong education base were seen as a highly attractive investment destination. Respondents also cite its thriving financial and technology sectors, robust city centre office rental growth, a resurgent prime retail sector, along with the UK’s strongest regional hospitality sector.

Key to Edinburgh’s success is its cross-sector appeal, which was cited by 32% of respondents as the most important factor for investment in the city.

Over the next six months, 44% of respondents selected housing as their most favored sector for investment, with the office, retail and industrial sectors accounting for just under 20% each. Real estate companies, funds and private equity investors favored the housing sector, with only investment managers more evenly split between 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 on the Housing Bill and rent controls is needed to unlock pent-up demand for BTR investment.

Craig McDonald, director and MD of Ardstone Capital UK, said: “The city offers a unique opportunity with its limited supply of prime office space, particularly attractive in the office and retail sectors.

“Given the critical shortage of office supply, over the next 12 months we anticipate rents could rise to close in at £50-£52.50 per sq ft for Grade A space. With the St James Quarter now full and other new entrants coming to the city, the case for opportunities with suitably scaled rents in the prime retail real estate of Princes Street and George Street is compelling.

“In the short to medium term, the main sectors driving demand include technology and the long-lasting financial services sector.

“Despite political uncertainty, our investment decisions are driven by solid property fundamentals and Edinburgh’s unique characteristics make it a prime location for investment.”

Chris Macfarlane, director at Lismore, added: “Edinburgh remains a vibrant capital city with a healthy employment market across sectors, which provides a compelling investment case.

“High-quality, well-located city centre offices with strong ESG credentials continue to attract a wide range of investors, including UK institutions, overseas pension funds and high net worth individuals, attracted by the city’s global appeal and strong market dynamics.

“With limited development and high demand, prime rents at £45 per sq ft signal healthy growth over the coming years. Strong rental growth is also expected for student accommodation and high street retail.

“Edinburgh has shown through thick and thin that its core markets remain liquid and, with a broad investor base, Scotland’s capital is a serious proposition for any investment decision.”