Edinburgh emerges from ‘lifeless’ slump in property

Edinburgh's construction sector has returned to health in the past year. Picture: PA

Deloitte’s “crane survey” said Glasgow also saw improvement with four new projects, after an equally barren year before.

Across the UK, there was an 80 per cent increase in the number of sites starting work in the year to July, compared with the previous 12 months.

And more was invested in Edinburgh office property in 2013’s first half than in all of 2012.

Investors spent £55 million on office buildings in the first half of 2013, against £26m in all of 2012, in what Deloitte said was a sign that the recovery is reaching the property sector.

It believes the green shoots could pave the way for a return of funding for larger speculative developments.

Alasdair Ramsay, head of Deloitte commercial property in Scotland, said: “Edinburgh, like most major cities, has suffered from a lack of investment in property, because there’s been an obvious lack of upside for anyone with money to spend.

“After last year – a ghost town in terms of new development activity – there’s been an encouraging number of new schemes getting under way as developers and investors feel a bit happier about taking some risk. It would be premature to say that things are once again rosy in the garden, but there’s a change in atmosphere which mirrors the improving fortunes of the economy as a whole.”

New developments in the Scottish capital during the year to July included offices at Morrison Street, mostly within the two Atria buildings. Residential developments saw a total of 103 homes begun at two city sites.

Student housing schemes have proved more popular with investors – four projects kicked off in Edinburgh city centre and will create 941 bed spaces.

Deloitte said there are more student developments in the pipeline. Ramsay said: “Investors like student accommodation because it provides stable income in a growing part of the market.

“Edinburgh is an attractive place to live and work and its student population reflects that, which also has longer-term benefits for other sectors, including residential and office.”

Of the construction sector, he added: “While we’re not exactly looking at a boom – the signs have gone from being non-existent to genuinely encouraging.

“I’d expect activity to embolden developers and investors to start capitalising on existing assets or speculating on something new, which will hopefully create a strong pipeline of activity over the coming months and years.”

In Glasgow, developers concentrated on offices as they sought to cash-in on the city’s well-publicised need for prime space. Three new office projects totalling 332,000 square feet were launched.