Quartermile – Does it make a good Edinburgh property investment?
We’re thrilled to be one of the recommended letting agents for the incredible Quartermile development; the redevelopment of the old Edinburgh Royal Infirmary. This multi-award-winning development, arguably Edinburgh’s most celebrated development in recently years, is a fantastic sight to see from our office across just across The Meadows; particularly at the moment with the Autumnal leaves! It’s a pleasure to deal with properties at Quartermile; they’re luxurious and located in an incredible setting close to Edinburgh’s old town, on the doorstep of Edinburgh University and a stone’s throw from the bustling office district around Lothian Road. There’s an emerging technology hub developing in Quartermile, with Fandual, Skyscanner and Cirus Logic all located here. It’s an exciting place to be and we’re over the moon to be so involved in such a vibrant district of Edinburgh.
Another Release of properties Announced this month
This month, Quartermile announced another release of properties at the stunning Meadow’s Point phase with a series of apartments introduced to the market at prices from £335k. Once again these properties are selling like hot cakes, attracting investors and occupiers locally and internationally (I’d recommend contacting the Quartermile team for accurate information on what they have available). But how are properties within Quartermile performing?
Properties Values Increasing
Relying on data captured by our friends at Warners, via their access to ESPC historical sales, we can see some interesting pictures emerging.
1 Bedroom Properties – The following chart plots the prices of second-hand 1 bedroom properties sold within Quartermile since 2011. As you can see there is a general upward trend in values from just over £200k in November 2011 with the trend line settling at just under £270k in August 2016. New releases of 1 bedroom properties within Quartermile sell for upwards of £330k as they offer larger floor plates than the properties sold in the initial phases to the East of the development (closer to Starbucks, Peter’s Yard & Sainsbury’s) which make up most of the second hand stock sold in the charts below.
2 Bedroom Properties – It’s a similar story for 2 bedroom properties. You can see the trend line increasing over a far shorter time period from below £400k in September 2014 to just shy of £500k in August 2016.
It’s worth remembering that this information is based on prices achieved on the re-sale of properties within Quartermile and doesn’t include prices achieved from brand new properties sold by the Quartermile sales team which sit even higher than this second hand stock sales we’ve based our charts on. You might expect that the growth of second hand stock might be diluted as investors and occupiers may opt to buy the bright-and-shiny new properties instead of the older stock. However there is no doubt, from reviewing these statistics of second hand sales at Quartermile that values within the development are increasing.
Rents on the rise too!
As for rental performance, well we know a thing about rents in Quartermile, with almost 70 properties under our management within the development. Apartments in the Quartermile are in high demand from tenants and, particularly over the summer months, we are inundated with enquiries from professionals, students and families looking to let the luxurious accommodation on offer at Quartermile. Tenant demand peaks in August/September when international students return to Edinburgh and take any slack out of the market and each year we see rents step upwards at this time of the year.
If you rewind to 2013 to look at rent levels, 1 bedroom apartments would let for around the £1,000-£1,100pcm mark while 2 bedroom properties would achieve rents around the £1,400-1,600pcm level. Fast forward to 2016 and over the summer we saw rents for 1 bedroom properties increasing to around £1,300pcm (a little less for the smaller apartments within the older sections of the development) while 2 bedroom apartments achieved upwards of £1,800pcm and even as high as £3,000pcm for some crackers on the upper floors with the best views.
According to research conducted by Edinburgh agent Rettie, the total number of apartments being offered to market for let grew from 70% between 2013 and 2014 then again by 60% to 2015, as more and more properties completed within the development. It is true that increasing supply (with newly finished stock being added to the market) causes a slow in rental growth (as supply out-weights demand with the development) however, the builders will be off-site by mid-2018 at which point there will be approximately 900 apartments available and no further building work to take place within Quartermile. We would therefore expect rents to push further upwards at this point as supply and demand forces playing their part. This will ensure Quartermile remains a fantastic investment option with rents and capital values continuing to increase in line with the wider Edinburgh property market.
What does this mean for Yields and what can we expect the future to look like
Gross yields within Quartermile have consistently been over the 5% mark. Looking at the most recent releases at Meadows Point we expect the remaining properties here to attract initial gross yields within the range of 4.5-5.5% which represents a great option for investors looking for a stable investment option with good long-term growth prospects.
As outlined in our previous blog the Edinburgh rental market has fared extremely well over the past 10 years and shows no signs of slowing. According to estate agent Savills, rents across the UK are set to rise considerable faster than house prices over the next 5 years. This report forecasts that rents will increase by 19% between now and 2021 with property values increasing my 13%.
Umega Lettings is an Edinburgh based letting and property management company managing a portfolio of over 600 properties through the city. We are recommended agents for Quartermile and we are experts in sourcing and managing investment properties for domestic and international landlords. For more information on our investment sourcing or management services, for an appraisal of your Quartermile property or indeed for anything else please contact [email protected] or call 0131 221 0888.