Will Scarlett: Why wise investors are looking to Edinburgh's east
THE 12 days of Christmas that lie between Boxing Day and Epiphany on 6 January commemorate the journey that the Wise Men made as they followed a star in the east until it settled over a stable in Bethlehem. Property investors are also looking east.
Whether it’s the Trongate in Glasgow or Shoreditch in London, regeneration projects are breathing fresh life into the east end of our city centres; and Scotland’s capital is no exception.
The redevelopment of Edinburgh St James by TH Real Estate is acting as an anchor for a revitalisation of Auld Reekie’s east end. The 1.7 million sq ft development, which is due to be completed in 2020, will include a mix of high street and high-end shops, 30 restaurants, an Everyman cinema and hotels from W and Roomzz. The scheme is one of the UK’s largest and most significant regeneration projects and represents a major international vote of confidence in the Edinburgh market – and in Scotland itself. The transformative power of the development is already having an effect; Scarlett Land and Development received ten bids for the nearby Forth House and Playfair House office investment. Those came from a selection of residential, hotel and investment bidders, which demonstrates the broadening appeal of the east.
Yet the shift is about much more than simply Edinburgh St James. Artisan Real Estate Investors have made significant progress with their award-winning New Waverley development, which includes the completion of three hotels and a new 190,000 sq ft office hub (completion June 2019), in part pre-let to HMRC. The office will bring some 2,900 civil service jobs to the east end of Edinburgh’s city centre.
The development has won several awards with the highlight being the national Royal Institution of Chartered Surveyors’ award for the best city regeneration project in the UK.
The redevelopment of South St Andrew Square has attracted London restaurant brands such as The Ivy, Dishoom and Gaucho, joining existing retail labels such as Harvey Nichols, the boutiques on Multrees Walk and Apple on nearby Princes Street.
There is more to come on St Andrew Square with S Harrison Developments having acquired Buchan House on the north side of the square site for development of a luxury hotel of around 70 bedrooms and restaurant, and Knight Property Group now developing “4North” (formerly Edinburgh House) on North St Andrew Street into a 41,000 sq ft office, pre-let to Computershare.
On the east side of the square, The Registers development by Chris Stewart Group’s is transforming the former Royal Bank of Scotland into a game-changing, mixed-use scheme that will link St Andrews Square through the Register Lanes area to Edinburgh St James. The Registers combines more than 15,000 sq ft of ground-floor restaurant and bar space together with 61,000 sq ft of Grade A office accommodation and more than 50 serviced residential apartments; it will offer a new city centre destination for locals, visitors, tourists and office occupiers alike. The proposals allow for West Register Street, between St Andrew Square and Register Place, to be pedestrianised with the cobbled roadways and paved footpaths re-laid to create a smooth, shared surface. Lighting, street furniture and greenery will be used to enhance both the ambience and security of the external area.
St Andrew Square will also become home the Scottish Chamber Orchestra’s new purpose-built concert hall. Located in the former Royal Bank of Scotland’s Dundas House, the world-class arts centre will provide the orchestra with a new home, a 1,000-seat auditorium and a studio for rehearsals, recitals and recording; a superb asset to our cultural capital.
The combined effect of these projects is transformational – in an area that already has the highest restaurant rents in the city, according to the leading retail property expert, James Godfrey of Culverwell. The projects will unlock the social, cultural and economic potential of this strategically important location, linking more of the east end to St Andrew Square and beyond.
Over the coming months, I expect a halo effect to continue, with the interest in the city centre’s eastern fringes spreading out into the surrounding areas. The closure of Meadowbank stadium and sports centre will trigger a regenerative effect in the surrounding area, perhaps including the neighbouring St Margaret’s House, which could be attractive for flats or student accommodation. We have seen this regenerative effect reflected in demand for a residential site on Marionville Road that we have recently placed under offer (circa 125 units).
Few areas are likely to benefit from Edinburgh’s eastern promise as much as Leith.
The Shore is already a vibrant setting and Leith Walk is now being transformed too. CSG have completed a development on Baxters Place, at the top of Leith Walk, into a 240-bedroom Courtyard by Marriott hotel.
With a tram link from the city centre to Ocean Terminal looking increasingly likely, Leith stands to benefit even more. Major proposed developments in the Ocean Drive area include: CALA with 338 homes and 19 workspace units; S. Harrison Developments, which has a site acquired for development of a hotel of around 200 bedrooms; and S1 Developments which has a site with the potential for around 240 apartments at “Skyliner”. The combined effect of these will be transformational, bringing more residents and visitors to eat and shop locally. Some were surprised at CALA’s acquisition of the former Royal Mail sorting office on Brunswick Road but any doubts have been dismissed by the achievement of exceptionally strong sales. Currently, S1 Developments has exceeded expectations with 36 off-plan sales already at their 450 unit Ropeworks scheme on Salamander Street in Leith.
All these positive developments are stimulating further interest in Edinburgh from UK and international investors seeking regional diversity outside London. I predict that student housing investment will follow, given the vibrancy, strong transport links and excellent connectivity from Leith to the city centre.
We expect that the year ahead will see more UK and overseas investors attracted to the Scottish capital, driven by factors such as Edinburgh being ranked in first place in the 2016-17 foreign direct investment strategy category by Global Cities of the Future, and in ninth spot in a new index of Europe’s most dynamic cities compiled by Savills. While there is still a reluctance over build-to-rent in Scotland among certain funds, we are seeing an increasing number who are now actively seeking to commit funding to the Scottish capital.
With developments stretching from St Andrew Square and Edinburgh St James out to Meadowbank and Leith, it looks increasingly likely that 2018 will attract wise property investors keeping their eyes on the east.