Edinburgh ranks high for property investment

Edinburgh ranked 12th in a survey of cities that looked at direct investment over a three-year period. Picture: Ian Georgeson

In a survey by property consultancy JLL that looked at direct investment over a three-year period relative to the economic size of a city, the Scottish capital ranked 12th.

The firm said green credentials and quality of life are increasingly valued alongside economic prospects, and northern Europe’s mid-sized cities provide both.

Oslo is in top position globally, with the other major Scandinavian cities featuring closely behind – Stockholm, Copenhagen and Gothenburg all make the top ten. Mid-sized German cities Munich and Frankfurt are also favourite destinations for investors’ cash.

JLL said the common characteristics were that all are “scalable cities” of between 500,000 and three million people with a high quality of life and strong environmental credentials – factors that are increasingly being incorporated into corporate and investor location strategies.

Many of the top cities also have particularly strong technology, bio-technology or niche financial sectors.

Alasdair Humphery, JLL’s lead director in Scotland, said UK cities were also popular because of the high level of transparency and liquidity in the property market.

Humphery said London’s sky-high prices meant that investors were looking for UK alternatives, with Edinburgh a popular choice. “Edinburgh is a very cosmopolitan city and is known by individuals overseas, never mind just investors. The world is changing and people value quality of life and the environment.

“These are soft factors but when you put it all together investors feel happy to bring their money here. They know the market is liquid so they can exit easily, and being able to repatriate your funds for whatever unexpected reason is very important to many  investors.”

He said there was a “real mix” of international buyers, who all had their own preferences. Recent major deals have included Egyptian buyers, while German institutional investment has increased sharply due to deregulation in the sector.

“Typical German investors are looking for a nice clean shiny office building for between £20 million and £100m,” Humphery said. “They like a low-risk profile, something that will give steady lease returns for ten or 15 years.

“American investors will go for higher risk, maybe a slightly older building that needs bringing up to modern standards.”

London remains a favourite and came third in the survey, but Tokyo, the world’s largest real estate market, came in 58th as levels of transparency are below that seen in top investor destinations.