Investors still willing to pour cash into city

INVESTORS still see the Capital as a viable option to put their money in, despite fears about how the city's economy will react to the financial crisis.

An authoritative new report has revealed that the credit crunch has hit other European cities much harder than it has Edinburgh.

Although there are widespread concerns that job losses at Royal Bank of Scotland and the Lloyds Banking Group could have a damaging impact on the city, the survey reveals that the Capital's economy is set to keep growing, albeit marginally, while rival cities weaken.

The report, by the Urban Land Institute and PricewaterhouseCoopers (PwC), said that Edinburgh is now the 14th top leading city to invest in – its highest position since dropping out of the top ten in 2006.

Although its own investment prospects have declined since 2007, the recent decline has not been as severe as other cities, meaning Edinburgh has moved up ten places in this year's table.

Drew Stevenson, a partner at PwC, said: "As prospects for real estate in Europe have worsened across the board, Edinburgh appears to be faring better than many.

"Nevertheless, there is no escaping the fact that this is already proving to be an immensely challenging time for property investors. For many – especially those who bought at the top of the market – the focus will be on survival."

The report, Emerging Trends in Real Estate Europe, notes that the failure rate of established companies in Edinburgh has been "minimal".

It also forecasts that the economy will continue to grow in the coming years, while other cities decline.

However, it did also say that the credit crunch is constraining activity and dampening the outlook for growth in Edinburgh, while city unemployment is worsening and consumer spending falling.

Alasdair Humphery, a director at the Edinburgh office of property firm Jones Lang LaSalle, said: "I think there is a cautious optimism about Edinburgh's prospects in the sense that the city has a broad appeal to UK and overseas investors as it is a capital city with good dynamics.

"Edinburgh has not got a massive oversupply (of offices and development) in the future so rents will not be pressurised in the same way as other cities.

"