Lismore: Edinburgh’s appeal sparks major investment interest

Lismore: Edinburgh’s appeal sparks major investment interest

Lismore: Edinburgh's appeal sparks major investment interest

An investor survey conducted by Lismore Real Estate Advisors found that 90% of investors would consider investing in Edinburgh in the second half of 2024.

The real estate consultancy’s research shows that Edinburgh’s international appeal, vibrant culture and strong educational foundations make it a highly attractive investment destination. Respondents also cite its thriving financial and technology sectors, strong rental growth in prime city centre offices, a thriving blue-chip retail sector and the UK’s strongest regional hospitality sector.

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

Over the next six months, 44% of respondents chose residential as their preferred investment sector, with office, retail and industrial accounting for just under 20% each. Real estate companies, funds and private equity investors all favoured residential, with only investment managers more evenly split between sectors.

Competition remains strong for PBSA sites in the city, with supply and demand dynamics continuing to prove attractive. However, it was noted that clarity on the Housing and Rent Control Bill is needed to unlock pent-up demand for BTR investment.

Lismore spoke to Craig McDonald, Managing Director of Ardstone Capital UK, who said: “The city offers a unique opportunity with its limited supply of Grade A office space, which is particularly attractive in the office and retail sectors.

“Given the critical shortage of office supplies, over the next 12 months we expect rents to rise to around £50-£52.50 per sq ft for Grade A space. With St James’s now full and new entrants arriving in the city, the case for opportunities with properly re-priced rents in the prime retail locations of Princes Street and George Street is compelling.

“In the short to medium term, key sectors driving demand include technology and the sustainable financial services sector.

“Despite political uncertainties, our investment decisions are driven by strong real estate fundamentals and Edinburgh’s unique characteristics make it a prime investment location.”

Chris Macfarlane, Director of Lismore, added: “Edinburgh remains a vibrant capital city, with a healthy cross-sector business market that makes 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, drawn by the city’s global appeal and strong market momentum.

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

“Edinburgh has shown, in good times and bad, that its core markets remain liquid and that with a broad investor base, the Scottish capital is a serious proposition for any investment decision.”