A report by real estate giants Savills said Glasgow had the building blocks in place to reaffirm its position as “Scotland’s powerhouse” to compete with the “Northern Powerhouses” in England including Manchester and Leeds.
The report said Glasgow’s economic growth “exceeded that of the UK as a whole over the past five years.”
Savills’ research, called The Future of Glasgow’s Real Estate, revealed a number of indicators demonstrating growth and untapped potential for private investment in Glasgow’s real estate.
The report said:
- Glasgow enjoyed 9.9% gross valued added (GVA) economic growth over the past five years — exceeding the Scottish average of 8.4%, and is set to achieve 7.2% over the next five years
- Tourism brought 2.3 million visitors to Glasgow in 2012, generating £495 million of income. This is set to grow to £771 million by 2023, creating an additional 6,600 jobs
- While 4,749 new homes were completed in the six months to June 2016, this represented a 22% shortfall, as identified by the Clydeplan Housing Needs Demand Assessment, leaving major opportunities for house builders
- There is a growing residential rental market in Glasgow. The number of households in this sector increased by 12,000 between 2011 and 2105 and it now accounts for 20% of all households in the city. During the same period, rents increased by 16% and by 7.2% last year alone
- Glasgow’s technology, media and telecoms sector experienced 11.5% 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 sq ft of accommodation 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 zone is now fully occupied and there has been a surge in rental growth with a 14% increase over the past two years, with rents now eclipsing £300 per sq ft. Demand has outstripped supply and a renewed occupier focus is on Argyle Street and Sauchiehall Street
“With both residential and commercial demand consolidating around the central core of the city, 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,” said Savills.
Bruce Patrick, Savills’ 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 identified four sites with the potential to become vibrant mixed use hotspots in Glasgow: Partick & Partick Hill, Charing Cross, North George Square-Merchant City and Merchant City.
Savills said 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,” said the firm.
Patrick added: “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.”