Edinburgh needs developments to act as incentive for investment

Posted on 18 January, 2018 by Bailey Clarke

The Scottish city of Edinburgh has recently been ranked as one of the top three places in the world to live, but for anyone searching for a new office, there are slim pickings. The city centre’s commercial growth is being hindered by the lack of office space the city has to offer and even with a high demand in the area, there has still been a lack of development in recent years.

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Edinburgh is facing its lowest overall vacancy percentage rate in ten years with it currently at 3.8%, and in 2018 there is only a limited line-up of speculative development scheduled to be completed. The current summary is that there are no signs of having an immediate improvement in the present situation.

One of the main reasons for the lack of development is the lack of finance available since the recession of 2008 developers have faced a restriction in the market for finance. There are some major UK clearing banks have looked to reduce their exposure to the office sector and to speculative development, this move could help the recent situation in Edinburgh.

There are some lenders based in Germany that will fund such schemes, but their attention is set to the more major city centres across the UK, leaving places like Edinburgh having to look elsewhere.

There also are fund lenders that will lend on speculative developments, but at a much higher cost, which in the long run may not be suitable for Edinburgh city centre. All these factors lead to a potential turnaround being a longer process for the city.

The interesting comparison here is that in 2017 Edinburgh’s housing market saw great gains being made over cities in England. For example, Edinburgh’s housing market grew 6.7% which compared to the UK average of 4.9% is an interesting juxtaposition to its commercial market. While the overall housing market growth was down to the fact that Edinburgh was able to stay strong shows promise.

The only question remaining is whether we will we see Edinburgh’s commercial sector dust itself off in 2018 and follow in the footsteps of its residential market.



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