Glasgow has risen up the ranks to become the UK’s top city for residential investment for the first time, due to a mix of economic momentum, strong rental yields and affordability, according to Colliers’ Top UK Residential Investment Cities report.
Edinburgh takes second place, with London, Cambridge and Manchester rounding out the top five.
The capital’s slip from first to third place has been driven by weaker GDP projections and poor scores across Colliers’ property ‘pillars’, namely high house prices and rents leading to affordability challenges. London does, however, remain at the top of the R&D pillar with more than 400,000 students.
Oliver Kolodseike, head of research and strategic insights at Colliers, tells Property Week that demand in the capital is secure due to its long-term fundamentals, but “the gap between the regions and London is closing”.
He adds: “London is normally there or thereabouts in our top five; but in most of the property indicators, it isn’t doing too well – house prices aren’t growing at all and are declining in some areas. Housing delivery remains materially below identified need, although there will always be a strong case for London, despite the affordability issues.”
Glasgow, ranked 11th in Colliers’ first report in 2021, remains more affordable than many UK cities, helping sustain demand. The city has also seen recent improvements in net business creation, broadband connectivity, house price growth and rental yields.
The city’s average rental yield of 9.3% is the joint highest, alongside Belfast, and well above the 20-city average of 7.6%.
Kolodseike adds that Glasgow had seen “steady improvement over the years across all 24 of our indicators, making it a standout performer”.
Edinburgh, meanwhile, is the only city to have consistently ranked in the top five and continues to benefit from its diverse economy and population growth along with its high proportion of properties rated Energy Performance Certificate ‘C’ and above.