Hotels drive Edinburgh’s property sector

Edinburgh’s hotel industry is the driving force behind an otherwise fragile construction industry in the city, a Drivers Jonas Deloitte survey has outlined.

In its annual Crane Survey of construction in the Scottish capital, DJD indentified 10 new projects had got underway in the Scottish capital since the last survey in 2010. Of these 10, three were hotel schemes.

Hotel occupancy rates in the Edinburgh market were also identified to have grown by almost five percent over the past year to 73.7 percent – a rate second only to London. Growth in this sector was well ahead of most other property sectors in Edinburgh, with the exception of the student accommodation market where two new developments are underway.

The survey found that new Grade A office developments were languishing in the city as a result of funding constraints in spite of growing demand for space. Sandy Gilmour, Assistant Director at DJD, identified this situation as problematic going forward: “Unless something happens to ease the supply pressure on office space then we can probably expect landlords to start holding out for higher rents next year.”

Overall, the survey also suggests a better situation for construction in the city. The 2010 Crane Survey found only one new project had got underway during the period of 2009 to 2010. While the hotel sector will not prop up Edinburgh’s property industry by itself, growth in this area is indicative of positive developments in other of the city’s major industries, such as culture and tourism.