The City of Discovery is attracting record levels of interest from property investors, the full-service legal firm said, buoyed by the regeneration of Dundee’s waterfront, the proposed development of the Eden Project, and the arrival of a new 4,000 seat e-sports arena as a focal point for its burgeoning gaming industry.

The huge changes to the city are beginning to be reflected in the property market. Gilson Gray analysis of figures from Citylets found that Dundee saw the highest increase in rents during the past 12 months.

Across all sizes of property Dundee saw the highest year-on-year increase in rents, with 16.9%. Edinburgh was just behind at 16.5%, while Glasgow and Aberdeen saw 15.6% and 7.8%, respectively.

The latest figures build on a strong year for property in Dundee. During the second quarter of 2023, Dundee saw the highest or joint highest year-on-year rent increases across one, two, and three-bedroom properties and the highest average for all sizes of property.

Over five years, only Glasgow has had stronger average rental growth, with 53.9% compared to 53.6% in Dundee. However, over 10 years both Glasgow and Edinburgh have seen substantially higher rental increases – 67.2% in Dundee compared to 88.5% and 95.5% for Edinburgh and Glasgow, respectively.

Demand for rental property in Dundee has been boosted in recent years by its two universities – as well as overspill from St Andrews university – the city’s life sciences and biotech sectors growing around Ninewells hospital and medical school, and its gaming and technology business community.

Marcus Di Rollo, lettings director at Gilson Gray, said: “Dundee is going through a major transformation – there are a lot of positive moves being made and they are changing perceptions of the city. Major infrastructure projects, a growing local economy, and a large student population are making Dundee stand out as a great opportunity.

“All of this is filtering through to the property market and we can see that in this year’s rental figures. In comparison to other Scottish cities, the barrier to entry in Dundee is relatively low. You can invest in a portfolio of properties – perhaps as many as five or six – for the cost of one equivalent flat or house in Edinburgh and the yield can be as much as 10%. Some landlords are also choosing to move their investments to Tayside on the back of policy changes, such as licensing for short-term lets.

“While long-term capital growth may not be as strong as other cities, we do expect property in Dundee to be competitive. Our team in Dundee is now responsible for around 160 rental properties across the city, and we have seen landlords increasingly keen to invest in the city. We only see that interest growing over the next few years.”