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Private funding essential to meet Glasgow’s real estate demand across all sectors - Savills

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A report published this week by real estate specialists Savills hs revealed Glasgow’s economic growth exceeded that of the UK as a whole over the past five years with both residential and commercial demand consolidating around the central core of the city.

According to its findings, the property specialist says mixed-use schemes will be the key to unlocking supply of office, retail and leisure space thus determining how residents will live, work and socialise in Scotland’s largest city.

Bruce Patrick
Bruce Patrick

Bruce Patrick, head of commercial and mixed use development across Scotland, said: “Glasgow benefitted from the Commonwealth Games, not just in terms of an improved public image and a new sense of confidence, but also in the form on considerable public investment in the city. This is set to continue under the City Region deal, which in turn is attracting private sector investment.

“There has been a surge in activity across almost every aspect of the city’s real estate, whether we are taking about infrastructure investment, housing demand or commercial and industrial activity.

“There are a number of strategic sites in the pipeline where developers and funders are seeing the benefit of combining multiple uses and cash flows in order to get projects out of the ground, thus creating vibrant places where people want to live and work.

“It is a hugely exciting time for Glasgow, and the building blocks are in place for Glasgow to reaffirm its position as Scotland’s powerhouse, competing with the ‘Northern Powerhouses’ including Leeds and Manchester. Residents, investors, funders, developers and planners needs to capitalise on this current spirit of positivity and play their part in driving the city forward.”

Savills research, entitled The Future of Glasgow’s Real Estate, reveals a number of positive indicators demonstrating growth and untapped potential for private investment in Glasgow’s real estate:

  • Glasgow has enjoyed 9.9 per cent GVA economic growth over the past five years. This exceeds the Scottish average of 8.4 per cent and is set to achieve 7.2 per cent over the next five years.

  • The tourism industry brought 2.3 million visitors to the city in 2012, generating £495 million of income for the city. This is set to grow to £771 million by 2023 bringing an additional 6,600 jobs.

  • Latest figures reveal that while 4,749 new homes were completed in the six months to June 2016, this represents a 22 per cent shortfall, as identified by the Clydeplan Housing Needs Demand Assessment and as such there are major opportunities for house builders.

  • There is a growing residential rental market in Glasgow, providing opportunities for investors. The number of households in this tenure increased by 12,000 between 2011 and 2105 and it now accounts for 20 per cent of all households in the city. During the same period rents increased by 16 per cent and by a further 7.2 per cent last year alone.

  • Glasgow’s technology, media and telecoms sector experienced 11.5 per cent employment growth over the past five years and this upward trend is expected to continue, supported by investment in ultra-fast fibre internet network as part of the City Deal.

  • Concerns regarding the availability of funding, business confidence and investors appetite for risk is most evident in the office market. Despite a shortage of new Grade A buildings and 50,000 sqft of accommodation currently under offer, there are no new schemes capable of being delivered for occupation before 2020. This may play into the hands of owners who have oven-ready refurbishment projects on existing office buildings.

  • Buchanan Street in Glasgow’s Golden Z retail enclave is now fully occupied and there has been a surge in rental growth with a 14 per cent increase over the past two years, with rents now eclipsing £300 per sqft. Demand has outstripped supply and a renewed occupier focus on Argyle Street and Sauchiehall Street, closest to Buchanan Street is anticipated, supported by reductions in rateable values.

    • Savills report identified four sites with the potential to become vibrant mixed use hotspots within the city: Partick & Partick Hill, Charing Cross, North George Sq/Merchant City, Merchant City.

    Chris Stewart Group’s George Street Complex will provide student housing, hotel space, serviced apartments and office space around newly created public spaces. This combined with the new City of Glasgow College campus, the redevelopment of Queen Street station and redevelopment of Glasgow College of Building and Printing has the potential to provide a new lease of life for the heart of the city.

    Mr Patrick said: “The George Street Complex is just one example of creative thinking in the city. We are also seeing the University of Glasgow become a real catalyst for vibrant growth with ambitious plans which will transform the area around Patrick. Equally Charing Cross and Merchant City are places to watch.”

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