GLASGOW - Most of the property analysis and news over the past few years has been about London and its never ending property costs and shortages of affordable housing. Other locations in the UK are now catching the attention of investors and others for property market investing. One of those is in Scotland’s largest city, Glasgow which is seeing new mixed-use developments in the city centre and the always needed new residential and office space.
In a recent analysis by Savills the local economy in Glasgow has grown 9.9% Gross value added (GVA) in the last five years while the Scottish national average has been at 8.4%. One key factor is the 2014 City Region Deal which has brought £1.3billion investment from Holyrood and Westminster. This will be used to construct transport projects that will feature an airport tram service, urban improvements and employment programmes.
As a result of the 2014 Commonwealth Games Glasgow has become quite popular with sport, retail and cultural sectors. The city attracts 90 million with its largest retail centre in the UK outside of London with the average consumer spending £2,480. The tourism industry alone attracted 2.3million visitors to Glasgow in 2012 injecting £495million and is expected to increase revenue to the city £771million by 2023 along with 6,600 new jobs.
The report credits the growth of the economy by the media, telecom and technology sectors which also over five years has grown 11.5% with a further growth of 4.8% in the next five years. As a result a ‘cultural hub’ has been established in the area of Port Dundas with exhibition space and workspaces.
For business and industry the supply of central Glasgow of office space was at 1.8million sq ft at the end of 2016 with a vacancy rate of 13.7%
Savills reports: ’Central Glasgow supply of Grade A space (including new build and top refurbishments) stood at circa 400,000 sq ft at the end of 2016. With circa 53,000 sq ft of new Grade A stock currently under offer there is less than 13 months of Grade A supply remaining.’
By June of 2016 housing completed units in Greater Glasgow consisted of 4,749 new homes with 31% being for social housing. Local authorities around the city of Glasgow supplied 87% of the new private private units for the year in June. With a five year average of 518 units each year supplied per concerns are for a shortfall of 11,000 homes for Glasgow that is expecting strong growth in its household sector. In established suburbs: ‘Bearsden and Milngavie in East Dunbartonshire command 43% and 10% respectively, above an already comparatively high average of £215,980.’
Like London affordability and shortage of supply has helped to fuel the rental property industry. Savills reports that from 2011 to 2015 there were 12000 renters which equals to 20% of the household in the city. During this time period rents increased by 16% with average rents being £754 per month. For potential investors in the buy-to-let market the report states:
‘Changes in tax liabilities for rental properties, the additional dwelling supplement on buy to let purchases alongside tenancy reform could reduce the supply of rental stock, ultimately creating greater opportunities for entirely rental driven development.’
One of the main sources of development has been for student housing. Currently there are 67,000 students with 12,000 ‘student beds’ but there is not expected to be any new construction anytime soon as a result of financial issues.
Where to Live
Where in Glasgow are the trends for space? There are four areas of Glasgow that are the most sought after for residential value. The first is Partick and Partickhill which is located close to the University of Glasgow and expected expansion in the university’s campus with new academic and research along with the potential of a large mixed-use development scheme featuring hotel, leisure, residential and retail uses. A renovation of the Western Infirmary in the Byers Road area should make this area more attractive for buyers and others.
Second location is Charing Cross with its regeneration of Sanctuary Housing Association, on St Vincent Street, where the new Scottish Power Headquarters has upgraded the surrounding streets. There is also potential commercial space available near Blytheswood Hill.
Third on the list is North George Square. A new complex by Chris Stewart Group featuring an array of new space featuring student housing, apartments, hotel, office and public areas. The redevelopment of the Queen Street Station and the Glasgow College of Building and Printing is expected to add new life to the area.
At fourth is Merchant City which is seeing the development of the former Goldbergs site at Canderliggs which will include apartments for purchase and buy-to-let and hotel, student housing and retail space. A new City of Glasgow College campus development is viewed as an opportunity for the location of Saltmarket and Gallowgate.
The report says the outlook is for improved infrastructure and mixed use developments with ‘The city is set to see significant change in how people live, work and socialise but ensuring that the city embraces and capitalises on these changes will be imperative in driving the city forward. ‘