London snubbed in £1.4bn race to buy Scots property

�10.5 billion was invested in real estate outside London by international investors in the eight months to the end of August 2015. Picture: Ian Rutherford

�10.5 billion was invested in real estate outside London by international investors in the eight months to the end of August 2015. Picture: Ian Rutherford

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Wealthy foreign real estate investors put off by the spiralling cost of property in London are flocking to Scotland with almost £1.4 billion a year being invested north of the border.

Outside London, which many property experts believe is nearing a property bubble, Scottish real estate has received the highest amount of non-domestic investment in the UK – £1.33 billion – narrowly edging out south east England which attracted £1.32bn.

Investors are attracted to Scotland by the higher yields than English cities

Mat Oakley

Added to this, a five-year wave of activity in home sales and a surge in house price growth is expected in Scotland and Edinburgh in particular.

Analysts at property group JLL predict that the cost of the average home in the Scotland will increase by 19.3 per cent by 2020 - with prices soaring by 26.2 per cent in the south east of England. The most dramatic rises will be witnessed in Edinburgh, Manchester and Leeds fuelled by university graduates and those relocating to new jobs.

Overall, £10.5 billion was invested in real estate outside London by international investors in the eight months to the end of August 2015, and Savills predicts that this will rise to £14 billion by the end of the year, the highest volume since it started collecting data in 2000.

The most popular sector for investment was retail and leisure, accounting for 57 per cent of investment, driven by several large transactions and the sale of some large hotel and retail portfolios.

Offices and industrial property were second and third, accounting for a 17 per cent and 16 per cent share of investment respectively.

Mat Oakley, head of commercial research at Savills, said: “Investors are attracted to Scotland by the quality of the assets and covenants, and the higher yields than those that are available in equivalent English cities.”

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