Economic growth in Edinburgh and Glasgow is set to more than double in 2022, while the two cities are also predicted to achieve record levels of employment, according to forecasts published by Avison Young.
Edinburgh is forecast to see its Gross Value Added (GVA) increase to 5.5% this year, more than double its pre-Covid 10-year average of 2.6%.
The Glasgow economy is also expected to see substantial gains, with the property advisory firm predicting 5.7% growth during 2022, almost four times its pre-Covid average of 1.4%.
During the course of the year, employment in Edinburgh is predicted to rise by nearly 8,500 jobs, of which around a quarter (2,100) will be traditionally office-based. This will take employment to a record high of over 382,000.
In Glasgow, 9,600 jobs are expected to be added to the job market, with traditionally office-based jobs making up 3,700 of these roles. This will bring the total number to 449,000 - also a record high.
Like other cities across the UK, growth is largely being driven by a rebound in accommodation and food services, arts and entertainment and education sectors.
In Edinburgh, accommodation and food services are forecast to see economic growth of 28.8%, arts and entertainment will increase by 16.9%, with the education sector increasing by 9.8%.
Office vacancy rate in Edinburgh city centre is lower at the beginning of 2022 than it was pre-pandemic.
Average growth in retail spending across Edinburgh is predicted to increase by 3.5%, higher than the average of 2.1% for other major cities.
Edinburgh saw strong house price growth in 2021 at 13.5%, well ahead of the national average.
Stuart Agnew, managing director of Avison Young Edinburgh, said: “After two challenging years as businesses have grappled with the impact of the pandemic, 2022 looks very much like the turning point for Scotland’s capital with the local economy and jobs market predicted to grow substantially.
“Despite restrictions being a key constraint on the number of people returning to the office, there continues to be demand from occupiers who are willing and able to take a medium-term view on their occupational needs - this has led to increased levels of activity during the latter half of 2021 with the focus very much on prime and new build accommodation.
“It also looks like it is going to be a strong year for retail growth in the city,” he continued, adding: “The opening of St James’s Quarter has been a great boost for Edinburgh city centre and has revitalised the retail and food and beverage offering, even if visitor numbers so far have understandably been constrained by the pandemic.”
The Glasgow accommodation and food services sectors are forecast to see growth of 28.8%, while arts and entertainment should increase by 16.6%. The professional and scientific sector is also forecast to post strong growth during the year - 6.3%, compared to a pre-covid 10-year average of 1.2%.
Glasgow continues to see strong demand for manufacturing space, with new developments looking to take advantage of increased demand from advanced manufacturing companies who are looking for accessible locations where they can collaborate with other high-tech companies, tap into academia and research institutions, attract talent and move forward on a pathway to net zero carbon.
Glasgow experienced house price growth in 2021 at 11.9% for the year, well ahead of the UK average.
Alison Taylor, managing director of Avison Young Glasgow, said: “Despite the challenges brought by Covid, Glasgow portrayed itself well on the global stage during COP26 and it is well-placed to expand its economic base this year.
“The real estate market is predicted to have a strong year, with new demand coming from entrants in the research and development, bio-science and technology sectors.
“The demand from small businesses for flexible office space is also likely to increase the provision across the market, with a number of high-profile operators who provide flex space already looking at the city.
“Additionally, occupiers with net zero carbon targets in the short-medium term are aware that they need to act sooner rather than later in order to acquire space that will help them fulfil their targets due to a lag on the development pipeline exacerbated by supply shortages, rising building costs and Covid.”
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