What are the key findings here?
In our latest JLL Investment Intensity Index, Edinburgh has been ranked as one of the world’s top five cities for investment due to its growing appeal among the international investment community.
As a mature and transparent market with low levels of development, Edinburgh is also highly liquid – which allows investors to have some certainty around exiting, a key concern when pioneering into new markets.Alasdair Humphery, Lead Director – Scotland , JLL
The index, which compares the volume of direct real estate investment over a three-year period relative to the city’s current economic size, places Edinburgh behind only Oslo, London and Munich.
Scotland’s capital also sits in second position globally for cross-border investment intensity, behind only London, and has scooped the top spot for Investment Intensity in the hotels sector.
Why is this significant?
As well as being a measure of how Edinburgh’s real estate market is performing, it’s also a very useful barometer of the capital’s overall ‘health’, underlining Edinburgh’s ability to punch above its weight in terms of attracting investment. With more cities appearing on the radar of globally minded investors each year, we are in an increasingly competitive market, leading to a situation where investors can afford to be very discerning about where they choose to spend money. In recent years, Edinburgh has increased its visibility among the overseas investment community, but to break into the top five is a great boon for the city and shows that Edinburgh is punching well above its weight.
What are Edinburgh's benefits for international investors?
There are number of key reasons for Edinburgh’s increased appeal among the international investment community. As a mature and transparent market with low levels of development, Edinburgh is also highly liquid – which allows investors to have some certainty around exiting, a key concern when pioneering into new markets. Allied to its strong fundamentals is its flexibility in the face of changing markets. The city centre is unique in its ability to accommodate a variety of different uses for land or obsolete buildings, which has been true even during tougher economic times.
While the capital’s commercial property market has been built on strong financial and professional services foundation, its recent growth in the tech sector, in particular, has shown the city’s agility and adaptability, providing it with a springboard to move forward as a ‘New World’ city, offering much more value and variety to investors worldwide. This perceived value is also apparent in Edinburgh’s young, highly skilled workforce, world class universities and high quality of life, all of which increase its appeal as a place to work, live and study.
Finally, Edinburgh produces some of the highest GVA (output) in the UK outside of London and, with Scottish assets currently trading at a marginal, but important yield discount when compared to other regional cities in the UK such as Manchester, the case to invest in Scotland’s capital is that much stronger.
What are your predictions going forward?
With Brexit and talk of second referendum, some market uncertainty across the UK is inevitable as we look ahead. Going by how the market reacted in 2014, we will most likely see UK and European investors exercising caution, which will no doubt create more opportunity and value for overseas buyers. However, with Edinburgh’s strength and agility, its commercial property market is likely to remain an attractive prospect for international investors as we move forward.
The city has consistently strong fundamentals and a diversified economy, with a sturdy foothold in the tech market. More so than many other cities in Scotland and the UK, Edinburgh will continue to perform well despite political uncertainty.
If you would like to find out more about how we can help you and your business establish, relocate or expand within the city region, or would simply like more information about what Edinburgh has to offer, get in touch today.