Opportunities and challenges: new study sheds light on property markets in Edinburgh and Glasgow
But despite the challenges posed by the switch to online shopping alongside cost-of-living pressures, property experts believe that an increase in inbound tourism will support growth in footfall and potentially boost the fortunes of the area. The repositioning of redundant retail stock in Glasgow is anticipated to revive key streets and the city centre in general, according to the study by Avison Young UK, the commercial property services firm.
Its report provides an insight into key trends and opportunities in various sectors - office, retail, industrial and residential - across Scotland’s two biggest cities. The pandemic, the conflict in Ukraine and interest rate shifts are said to have triggered a “profound reshaping” of the property industry, affecting all aspects of commercial real estate, from asset adaptation to development funding.
The research also examined the various property markets in Edinburgh where it found that the prime shopping destination has shifted from around Princes Street to the nearby £1 billion St James Quarter, completed in 2021. It noted that George Street has become popular for “aspirational retail and food and beverage operators”, catering to the increase in tourism. Rents in George Street have increased, and vacancy rates have dropped, the firm added.
Paul Broad, regional managing director, Avison Young Glasgow, said: “[The] report reveals impressive labour market growth of 2.8 per cent is predicted for the next five years, surpassing the national average for Scotland of 1.6 per cent, fuelled by the knowledge industries. The office sector sees a surge in demand for flexible office spaces, presenting profitable opportunities for both occupiers and investors.
“In the retail sector, the findings uncover a potential resurgence, with historically low capital values presenting an attractive prospect for investors and projecting 7.9 per cent consumer expenditure growth over the next five years.”
Avison said the purpose-built student accommodation (PBSA) sector is expected to thrive in Glasgow, driven by the conversion of obsolete office and retail assets. However, the 2022 rent cap has impacted build-to-rent (BTR) activity, and investor confidence may take time to rebuild. Edinburgh’s desirability as a city to live and study in, coupled with a “highly constrained delivery environment”, is creating strong housing demand across all tenures, the report notes.
Stewart Taylor, regional managing director, Avison Young Edinburgh, said: “Edinburgh’s economic forecast shines with an impressive 8.1 per cent GVA [gross value added] growth, outpacing the UK average. Key sectors including information and communication, transport, accommodation, food and professional, scientific and technical are poised to drive substantial 4.4 per cent job growth in the next five years.
“Edinburgh’s ambitious regeneration plans create an extended window for strategic development partnerships and acquisitions, fostering collaboration between the public and private sectors,” he added. “Our report not only offers insights into the market but also serves as a catalyst for local growth, providing investors with a roadmap to seize opportunities.”
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