Scotland’s two largest cities, Edinburgh and Glasgow, have taken the first and second spot in the latest analysis of the top UK residential investment cities by JLL. The report, which ranks 20 UK cities based on their attractiveness for residential investors, highlights the strong performance and potential of the Scottish market, despite the challenges posed by the pandemic and Brexit.
Edinburgh tops the list with high demand and low supply
Edinburgh has emerged as the most attractive city for residential investment in the UK, scoring highly on economic growth, affordability, sustainability, and quality of life. The Scottish capital has a diverse and resilient economy, driven by sectors such as finance, technology, education, and tourism. It also boasts a highly skilled and educated workforce, with 57% of the population holding a degree or equivalent qualification.
The demand for housing in Edinburgh is high, as the city attracts both domestic and international migrants, as well as students and tourists. However, the supply of new homes is low, as the city faces land constraints and planning challenges. This creates a favourable environment for investors, who can benefit from high rental yields and capital appreciation. According to JLL, Edinburgh’s house prices are expected to grow by 17.1% over the next five years, while rents are expected to increase by 12.5%.
Glasgow follows closely with strong regeneration and infrastructure projects
Glasgow has secured the second place in the ranking, thanks to its ongoing regeneration and infrastructure projects, which are transforming the city’s landscape and economy. The city is investing heavily in areas such as transport, digital connectivity, renewable energy, and culture, creating new opportunities for businesses and residents. Glasgow is also hosting the COP26 climate summit in November 2023, which will showcase its ambition and innovation in tackling climate change.
The housing market in Glasgow is also buoyant, as the city offers affordable and quality living options for a diverse population. Glasgow has a vibrant and creative culture, with a rich heritage and a thriving music and arts scene. It also has a large student population, with four universities and several colleges in the city. The demand for rental accommodation is high, especially in the city centre and the west end, where many young professionals and students prefer to live. JLL predicts that Glasgow’s house prices will rise by 15.4% over the next five years, while rents will grow by 13.6%.
Scottish cities offer competitive advantages over other UK cities
The JLL report also compares the Scottish cities with other UK cities, such as London, Manchester, Birmingham, and Bristol. The report finds that Edinburgh and Glasgow offer competitive advantages over these cities in terms of economic growth, affordability, and sustainability. For instance, Edinburgh and Glasgow have higher projected GDP growth rates than London and Manchester over the next five years. They also have lower house price to income ratios than London, Bristol, and Birmingham, making them more affordable for buyers and renters. Moreover, Edinburgh and Glasgow have higher scores on the UK Green Cities Index than London, Manchester, and Birmingham, reflecting their commitment to environmental and social sustainability.
Scottish cities present attractive opportunities for residential investors
The JLL report concludes that Edinburgh and Glasgow present attractive opportunities for residential investors, who are looking for long-term returns and portfolio diversification. The report states that “both cities benefit from strong occupier demand, a supply-demand imbalance, and a supportive policy environment, which should underpin rental and capital growth going forward”. The report also notes that the Scottish government has introduced several initiatives to support the housing sector, such as the Build to Rent scheme, the Rental Income Guarantee Scheme, and the Private Residential Tenancy, which provide incentives and security for investors and tenants.
The report suggests that investors should focus on well-located, high-quality, and sustainable developments, which can cater to the changing needs and preferences of the occupiers. The report also advises investors to consider the different market segments, such as students, young professionals, families, and senior living, which have different demand drivers and growth prospects.
