Find out how much you can borrow against your Edinburgh property development project now
Property development in Edinburgh
If you’ve ever read an article listing the UK’s top cities to live in, you probably found Edinburgh was pretty near the top. Testament to that, its population exceeded half a million for the first time in 2016 and an additional 60,000 households are predicted to be formed in the next 20 years.
The housing shortage in the city is therefore at a critical level, with 47,000 new homes required by 2032, for which land has been identified for less than half. At the same time, quality office space is also in desperately short supply, particularly in the highly desirable city centre, making Edinburgh somewhere that savvy property developers, with the right access to property development finance, can’t afford to ignore
Edinburgh is the most expensive place to live in Scotland, with property values roughly eight times average annual earnings, according to the Bank of Scotland, yet still demand for housing outweighs supply. Anywhere where over 35% of homes for sale are under offer is a seller’s market, and Edinburgh continuously enjoys offer levels exceeding this amount, with an impressive 57% currently under offer.
This is of course good news for developers looking to borrow property finance for a scheme in Edinburgh, if they plan to repay their lender via sale of a property. The market is obviously pretty hot right now, but it’s also key for developers to consider changing buyer needs is a post-pandemic world. Whereas competitive pricing and proximity to Edinburgh transport links have always come high on the buyer wish-list, priorities have shifted, according to research from Savills.
There’s a booming tech scene with over 30% of advertised jobs in the city currently in the tech sector, and continually proves a big draw for entrepreneurs, attracting significant numbers of start-ups every year, largely fuelled by talent emerging from the prolific Edinburgh University.
Despite the pandemic, in 2020 Edinburgh saw an increase of 30% in uptake of office space vs the previous year; the only UK city to see an uplift at all. A large portion of this was down to Asset Management company Baillie Gifford, which signed for 280,000 sq. ft at The Haymarket, Edinburgh’s new £350 million mixed-use development, comprising hotel, retail, leisure and events space in addition to three impressive office buildings.
It’s no surprise then that Edinburgh has the lowest supply of available office space in Scotland, and one of the lowest of the big cities in the UK. There is currently a total supply of 599,836 sq. ft of office space in Edinburgh city centre, of which just 335,640 sq. ft is the highest quality, or Grade A.
Tight planning regulations surrounding the historic city centre mean the development pipeline is also fairly limited, with 229,000 sq. ft under construction, for completion by 2022. Of that space, over a third has already been let, meaning there’s less than 224,000 sq. ft of space under construction available to rent, so a significant level of development is needed to meet the demand in the market.
Despite the changing habits of the workforce following the pandemic, demand for prime office space is predicted to increase this year as occupiers return to offices in Scotland. Vacancy rates of quality city centre office space are already alarmingly low, presenting a clear opportunity for developers to build new stock or refurbish existing buildings to meet the sought-after Grade A requirements. Providing wellbeing offerings and community benefits is also an emerging trend in the changing market and a key consideration for developers planning an office scheme.
Opportunity for developers in Edinburgh
It’s a great time to be a property developer in one of the UK’s most exciting and popular cities, if you have access to the right development finance, which is one of the top barriers to success for SME developers.
Property development finance is a short-term loan used to fund construction or refurbishment projects. It nearly always makes sense to borrow, because using someone else’s cash almost always proves cheaper that using your own.
Access to more funds also means you can take on bigger schemes that might otherwise be out of reach, as well as running several projects at the same time, increasing your portfolio and profit more quickly.
Outdoor space and a good size garden have shot to the top of the list for the city’s residents. More time at home imposed by the stream of lockdowns means outdoor space is more desirable than ever, also reflected by 55% of people who are now more attracted to a countryside location than prior to the pandemic. And over a third feel more inclined to work from home in the future, which means having a study or separate workspace and strong Wi-Fi signal are high priority.
Changing Buyer needs
said the amount of garden or outside space had become more important
more attracted to a countryside location as a result of covid-19
more inclined to work from home in the future
said a seperate space to work from home had become more important
said accessability to WIFI had become more inportant
Office space in short supply
The office sector in Edinburgh is another exciting market for property developers within the UK. Already home to the most FTSE 100 companies in the UK outside of London, with a large banking, insurance and financial services occupier base, it’s also a regional hub to some big global players, with the likes of Amazon and Microsoft both occupying space.
How to finance a development in Edinburgh
The development finance market can be difficult to navigate. It’s overwhelming, and challenging to see beyond the big banks, so it’s also easy to miss an opportunity if you don’t know where to look.
Brickflow brings the development finance market online, searching in real-time, providing instant online access to development loans. We only work with
lenders we know and trust, and we even help you to create the perfect lender presentation. With a few clicks, you can invite lenders to make their best offer to you, meaning you regain the power to select the finance that’s right for your project.
It’s the developers who can secure quality finance quickly, who will ultimately win in the race for the most competitive development opportunities in Edinburgh, and beyond.
To talk to us about development finance for a project in Edinburgh, or elsewhere in the UK, give us a call on 020 3488 1674, or email firstname.lastname@example.org.
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