Edinburgh has topped a list of the most attractive British locations for commercial property investment outside of London, according to new research.
Research amongst British property investors by the law firm Morton Fraser’s commercial real estate division ranks a list of 10 British cities according to their attractiveness as investment options.
Edinburgh is ranked best with 52% naming it as an attractive option, followed by Bristol with 48%, Manchester with 40% and Leeds and Cardiff, both with 31% and then Glasgow with 30%. Birmingham is ranked next with 26%, Newcastle with 21%, Dundee with 17% and Aberdeen 16%.
More investors found the top three attractive propositions than those who did not.
However, the remaining seven cities did not appeal to the majority of investors, with more rating them an unattractive investment proposition rather than an appealing one.
Aberdeen is rated the least attractive location for property investors and this is perhaps not surprising due to its energy dependent economy being hit by falling oil prices, leading to thousands of job losses and the contraction of the oil and gas industry.
‘The three ‘net positive’ cities in our league table have demonstrated real economic resilience since the recession. Their success in protecting inward investment, attracting business and talent, and developing infrastructure means property investors can more easily envisage long-term gains,’ said David Stewart, commercial real estate partner at Morton Fraser,.
‘Regional commercial property investment has a lower upfront capital cost but can often return higher yields and longer tenant leases, improving income security. However, those benefits are outweighed by perceived economic risks in most regional cities by potential investors,’ he added.
According to Morton Fraser, Leeds, Cardiff and Glasgow will all expect to move into a net positive investment score in the coming year after at least 30% of investors felt they were attractive locations. They have also negotiated city region deals with the UK Government collectively worth at least £3 billion.
‘Demand for equity stakes in commercial property vehicles has increased in recent years as investors seek value and flexibility in the asset class. City region devolution will play a key role in ensuring investors see regional locations as positive income generating opportunities,’ Stewart explained.
‘That said, experience shows that a good property investment can withstand economic fluctuations and the right opportunities can be found in all these locations,’ he concluded.