Edinburgh needs 3,000 new homes a year and more office space
Some 3,000 new homes are needed in Edinburgh annually over the next five years to cope with increasing demand as Scotland’s capital city expands, new research suggests. It also needs to expand well beyond its current boundaries in order to remain competitive as a global city and meet the soaring demand for new homes and business space with 7.100 office based jobs set to be created.
Existing and proposed development west of the city’s bypass and the new Queensferry Crossing will provide short term solutions but in the long term a strategic approach will be required, says the analysis report from property firm Savills. Sites along the city boundary need to be identified for further development, supported by major infrastructure investment, the report also says.
‘Scotland’s capital is on the brink of a grand expansion on a number of fronts: from the gentrification of the east end, which has been turbo charged by the ambitious St James development, to the rapid residential developments that will reach well beyond the current city limits in almost every direction,’ said Nick Penny, head of Savills in Scotland.
‘As a result, Edinburgh needs to have a very different structure and shape of the next phase of growth which brings exciting opportunities for the city, allowing it to potentially compete with cities like New York, London and Tokyo for economic investment, tourism and new populations. But it also brings its challenges, not least how to cater for demand whilst maintaining the quality of life and dynamism of the city,’ he explained.
Edinburgh’s population exceeded 500,000 for the first time in 2016 and is forecast to grow by more than 5,000 people per year, and the number of households by in excess of 3,000 per year, over the next 20 years.
‘New homes development, while improving, is not enough to mitigate historic undersupply and significant development is required to deliver housing at affordable prices,’ the report points out.
It also points out that given the lack of supply in Edinburgh itself, almost 6,800 people moved out of Edinburgh to the immediate four surrounding local authority areas in 2016 alone, 3,000 more than the number that moved into Edinburgh from the same areas.
And the city’s booming tourist market will see an additional 2,400 hotel rooms added by 2020, reflecting a 17.5% increase in stock, and the expansion in tourism has impacted the retail sector with a 3.15% rise in sales in the city centre.
The report adds that while Edinburgh airport’s five year £220 million investment plan is envisaged to increase passenger numbers to 16.5 million by 2021.
When it comes to business, the report calls for more space to attract major companies and foster smaller start-ups. Edinburgh is home to more FTSE 100 companies than any other UK city outside London, and has attracted £1.2 billion of commercial real estate investment during 2016.
According to Savills, rental pressures and a shortage of appropriate space in the city centre has already seen the number of office leasing deals in Edinburgh’s out of town markets more than double from 20 to 53 between 2009 and 2016.
But the lack of prime Grade A office space has the potential to push rents as high as £34 per square foot for a top floor suite in the city centre by the end of this year, meaning that more space is urgently required.
‘With the likelihood of a second independence referendum receding, and the potential of a softer Brexit, Edinburgh is looking like a great place to do business, live, visit and invest, but developing the appropriate commercial and residential space is key to unlocking growth,’ Penny added.
‘As a city we therefore need to think of Edinburgh as somewhere with looser boundaries and explore, within reason, where beyond the bypass is appropriate for expansion,’ he concluded.