Edinburgh has been going through great change over the last decade with the installation of a new tram system. With that now complete, the focus has turned to the commercial side of the city, impacting on the residential market.
There are plans for new commercial buildings and the St James Centre off Prince’s Street is now undergoing a £850 million refurbishment, promising an influx of new jobs.
With all of this growth comes more people looking for somewhere to live. Experts are predicting rental prices to rise over the next five years, meaning that Edinburgh is one of the best places to invest in right now.
A Shortage in Properties
While businesses are flocking to Edinburgh taking up old and new commercial spaces, new homes are not being built to accommodate their employees. With such a lack of residential properties for a rapidly growing city, Edinburgh’s rental market is in a state of high demand and low supply.
A recent study by property consultancy JLL has looked at the property market and building industry in Scotland. The UK as a whole is going through this shortage of homes, which has been bolstered by the latest political and economic outlooks caused by the recession and, more recently, Brexit. What makes Edinburgh different is that the city continues to grow.
Director of JLL’s Residential Team, Jason Hogg, has said:
‘Housebuilding in Scotland continues to persevere against the backdrop of political uncertainty. The industry is in a confident and optimistic mood, buoyed by strong demand for residential in key city centres.
“However, there’s no doubting that the key challenge for the year ahead is to address the shortage of supply.”
What Does This Mean for Investors?
As a result of their study, JLL predicts that due to this shortage, house and rental prices will rise by 23.5% by 2021. That’s almost double the UK average and significantly higher than London by 4%.
This means that if you want to invest in Edinburgh property, now is the best time, before prices rise any further. But it also means that rents are likely to rise as people looking to buy are priced off the property ladder and demand for rental properties surge.
JLL’s study shows that by 2021, tenants will likely be paying 20% more to rent than they are now. To give you an idea of what this could be, the current average asking rent in Edinburgh is approximately £1,500 a month, so by 2021 the average rent in the city could rise to £1,800 a month.
Other factors To Consider
It’s not just new commercial buildings and refurbishments, and an influx of new workers creating such demand for properties in Edinburgh. The focus on new student accommodation is also a factor.
Home to three universities and a number of colleges, Edinburgh is a hot spot for students and the past year has seen a boom in student accommodation. Some of this accommodation are managed purpose-built flats and halls that investors can rent to students. Others are traditional individual properties that investors will adapt to create bedrooms to rent out to groups of students. This latter option often means fewer properties are available for families and professionals, again hiking up the demand.
For the property investor, this means that not only is Edinburgh a great place to invest in right now, but there are a number of options available. It’s worth doing your research and speaking to a professional agency or estate agent to make sure you’re investing in an Edinburgh property that will suit you.
If you’d like to find out more about investment options and properties in Edinburgh, get in touch with us today.
Want to know more about Edinburgh? You might be interested in our 11 Facts About Edinburgh you Might Not Know.