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New report on property trends

Scottish cities in top league for investors

100 Queen Street Glasgow

Glasgow and Edinburgh have emerged as the third and fourth most attractive commercial property investment locations in the UK outside London over the past ten years.

As part of a new report, Core Cities, Core Strengths, CBRE shows that Glasgow secured £5.3bn of investment and Edinburgh £4.9bn, behind Manchester (£8.2bn) and Birmingham (£6.5bn).

In total £44.4bn was invested across the twelve cities analysed in the report, the first of its kind to compile this level of detail.  

The report identifies the key factors behind a city’s success: civic leadership, talent in growing sectors, quality of life and ‘placemaking’, and infrastructure, provides a detailed review of the main city property markets outside London.

It also explores the opportunities and risks of devolution and includes ‘softer’ indicators such as the number of 5 star hotels or Michelin star restaurants.

In total, the regions beyond London and the South East account for almost 60% of all UK commercial real estate transactions.

Atria

The findings show that investors have diversified their property holdings as part of the recent economic recovery with emerging investment sectors such as healthcare and student housing increasing their share of the market.

Prior to the financial crisis, these assets accounted for 3% of investment; this has trebled to around 10% of total investment volumes today.

A decade of investment: total investment volumes in commercial real estate, selected cities (£m) 2006-2015 Q3, ranked by total investment

 

Office

Industrial

Retail

Other

Total investment

Population

Investment intensity

(£ per head)

Manchester

3,939

357

2,579

1,360

8,235

1,903,100

4,327

Birmingham

3,383

541

1,621

1,018

6,563

2,453,700

2,675

Glasgow

2,163

371

2,131

612

5,277

1,057,600

4,990

Edinburgh

2,365

91

1,391

1,041

4,888

487,500

10,027

Leeds

1,593

322

1,242

588

3,745

761,500

4,918

Bristol

1,899

501

906

261

3,567

706,600

5,048

Aberdeen

1,309

603

359

406

2,677

227,100

11,788

Sheffield

408

182

1,798

285

2,673

818,800

3,265

Liverpool

563

333

994

278

2,168

793,100

2,734

Cardiff

734

201

724

235

1,894

351,700

5,385

Nottingham

281

194

608

364

1,447

650,100

2,226

Southampton

253

202

644

202

1,301

369,900

3,517

TOTAL

18,890

3,898

14,997

6,650

44,435

10,580,700

4,200

Overseas investment into the regions has also reached its highest level since 2007, with the first nine months of 2015 seeing twice as much investment as in the whole of 2013.

Miles Gibson, head of UK Research at CBRE, said: “The UK’s core cities face an unprecedented opportunity. Whatever the relative position of individual cities, the ongoing economic recovery provides an opportunity for them all to maximise the hand that they have been dealt and, in some cases, the legacy they have to deal with.

“Volumes of international investment into the UK are now so significant that even London is struggling to absorb it all. The UK’s core cities have a unique chance to capitalise on the world’s current desire to have exposure to Britain and its property market. It is crucial for the continued success of the UK as a whole that they take it.”

Douglas Smith, executive director at CBRE Scotland, said:  “Over the last ten years, Scotland’s three largest cities have demonstrated that they have the capability to attract investment from all over the world, so it is perhaps not surprising to see them rank highly.

“Each of them has a differentiated proposition but they share transport infrastructure, world renowned universities and cultural and sporting facilities which are the envy of the rest of the UK.

“As in England, devolution and localism are very topical with both UK and Scottish Governments looking to leverage wider economic and employment growth from cities and their regions.

“Large cities in Scotland face many of the same challenges as elsewhere in the UK: ensuring adequate transport infrastructure, enabling conurbation-wide coordination and governance, and investing in skills.

“But there are contextual differences; for example, there are no Local Enterprise Partnerships (LEPs) in Scotland which means that the proposals from the Chancellor requiring Mayors to consult businesspeople on LEPs about increases in business rates cannot be copied wholesale in Scotland.

“So the role of collaborations such as Scottish Cities Alliance will become increasingly important as the agenda for Scottish cities begins to move into the delivery stages.”



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