The report from international commercial property adviser Colliers placed the Scottish capital just behind Cambridge, which took top spot. Edinburgh was ahead of Bristol and London, in third and fourth places respectively.
The study recognised the Scottish city’s strong economic fundamentals, high quality universities and solid house price growth.
Edinburgh took top spot in the UK on economics thanks to its performance and demographics, with the city’s population forecast to grow at an average rate of 1.2 per cent every year up to 2030. Its economy grew at an average annual rate of 1.8 per cent between 2010 and 2020 and is expected to expand at 2.3 per cent per annum between 2021 and 2025.
In the new research, key cities across the UK were compared against 20 indicators in the four main areas of economics, education, “liveability” and property to create a list of the ten most attractive cities for prospective property investors to consider.
In the area of research and development, Edinburgh was ranked fourth in the UK, with its highly educated workforce and top-quality universities being singled out.
Andrew White, head of residential at Colliers, said: “Often residential investors are attracted to the big name cities.
“However, our analysis offers a wider perspective for investors to consider when making these decisions. Our analysis has confirmed our suspicions that the likes of Edinburgh, Bristol and Manchester present good investment opportunities.”
He added: “The city’s compact size means that for business or pleasure, Edinburgh is easy to traverse by foot, or the efficient transport system.”
Edinburgh performed well on a number of measures, according to the report. Colliers noted that unemployment has historically been much lower than in most other cities. Its diverse economy, large population and highly skilled workforce make the city an attractive destination for employers, experts added.
Meanwhile, employees are said to be drawn to the city’s employment opportunities, cultural heritage and liveability.
The outlook is also optimistic for Edinburgh. The report noted that the £1 billon St James Quarter, a major shopping and leisure complex due to open this summer, will introduce “aspirational” retail, tourism and leisure brands, creating an exciting mixed-use focal point to the east end of Princes Street.
However, the study did point out that, similar to most cities with a big exposure to financial services, there is a relatively high degree of income inequality, resulting in affordability issues in the Scottish capital.
While Glasgow did not make the list of top ten cities overall, Scotland’s largest city took third spot when the report focused solely on property because it remains affordable, despite strong house price growth.
Last month, it emerged that many property prices in Edinburgh had soared by 17 per cent since the pandemic hit in March last year. The average sale price of a home in the city over the past three months was £274,972, up 5.5 per cent compared to the year before.