Whilst so much attention has been about London’s property growth, another market has also become popular for investors and planners, Scotland’s capital city Edinburgh. The growth in 2016 for commercial property investment has come mainly from overseas investors with the city having one of its biggest recorded sales years since 2007. The residential sector has also been receiving new attention by investors as new deals by the local council is now freeing land parcels for home development.
Similar to London, Scottish Construction Now (SCN) reports that because of the high levels of demand and low property supply in Edinburgh investors now see an opportunity. Savills reported that this year’s total Scottish commercial investment figure at the end of Q3 is expected to be £1.04billion with Edinburgh having £478.8million of the sales.
Rod Leslie, associate director for Savills Scotland, is quoted by Property Investor Today saying: ‘A move by investors to redistribute money away from the more volatile stock markets, lower yielding gilts and riskier equities, together with an improved debt market and stabilised liquidity within the retail funds, have all combined to maintain a healthy level of investor activity in Scotland’s real estate sector.’
The Savills report indicated that 41% of the investors were from overseas and have been able to take advantage of currency devaluations which have put a discount on prices of 15 to 20% less since this summer. The report also stipulated that concerns on local property prices falling any further is not likely to occur.
In the 18th and 19th century the inner city of Edinburgh for the wealthy was not an attractive place to live and as a result many had their homes and grounds on the cities edge. This created a series of greenbelt parcels that by law had remained off limits to developers for years. Like so many urban areas the increase of population and lack of building space has brought changes to the preservation of the green spaces. Earlier this year the Scottish Government gave the City of Edinburgh Council approval to begin using these locations for much needed new housing developments.
The Edinburgh & Lothians Greenspace Trust has stated ‘The current economic boom within the Lothians has greatly increased demand for the release of greenbelt land, for transport, industrial and housing development. The new Structure Plan and associated Local Plans attempt to reconcile the many competing demands on the greenbelt and provide the statutory planning framework.’
The plan for the Edinburgh city calls for 7,500 new homes to help house a population that is expected to rise at least 20% in the next quarter century. But some argue that this will still fall short of what will be actually needed and advocates for the green belt spaces vow to protest against the new development schemes.
One development, in the Maybury area, is the 140 acre parcel in West Edinburgh which is expected to become a 1,000 private home site. Once council approval is given the land value could reach £100million.
So what about the luxury private home sector?
The Edinburgh Grand
The development of the former home of the Royal Bank of Scotland (RBS) is expected to transform St Andrew Square into a luxury district featuring apartments, bars, gym, retail outlets and restaurants. The development is expected to open in 2017 with 50 luxury apartments.
The developer Chris Stewart Group is known for its previous work in the city. Karen Brown a designer commented in a recent interview: “The development of the old RBS headquarters is part of a wider plan to create a vibrant, active area in a prestigious part of the city – which has been neglected for a number of years – by providing an attractive and safe environment for all. This will include the pedestrianised West Register Street and the addition of lights, street furniture and greenery, which will enhance both the ambience and security of the area.’
Edinburgh St James
This 1.7million sq. ft. development is expected to be completed by 2020 and will transform a 1970’s shopping centre in to an 850,000 sq. ft. site with retail space, a luxury hotel, 150 new homes, 30 restaurants and a multi-screen cinema. Plans also include 1,600 car spaces to accommodate residents and shoppers for the four story retail shopping property. It is expected to create nearly 3,000 permanent jobs in the retail and service sector and is considered one of Scotland’s largest investments this year. A Retail and Hospitality Academy is planned for the staff to coordinate with the retail and leisure opportunities that will be part of the development.
The project is described as:
The new development will be the Scottish capital’s prime shopping destination and new heart of the city, linking with and expanding the existing retail pitch of George Street, Princes Street and Multrees Walk.
One aspect of the development includes improvements in the surrounding areas infrastructure and public spaces. The council and the Scottish Government have created a new model known as the Growth Accelerator Model which will have £61million in funding available for these upgrades.
The future of property investment in Edinburgh was recently described by PropertyWeek: ‘But while Edinburgh faces challenges – large ones – there are also opportunities. Talking to industry experts, it feels like a huge transformation is afoot: that Edinburgh’s suburbs, especially in the west and south east, are about to spring to life, spurred on by developers and investors.’
By Kevin Murphy: www.kevinmurphy.london