Edinburgh is one of the most influential cities

Edinburgh is now the most influential small city in Europe.

That’s according to a new report from Colliers International index, as the global real estate adviser’s Cities of Influence report named Edinburgh as first, while Glasgow came 24th.

The Scottish capital was seventh overall and the highest placed of those with a population catchment below two million.

It follows the news last week that Edinburgh also topped Colliers International’s UK Hotels Market Index, which ranks ‘hot spots’ for hotel development and acquisition across the country.

The Cities of Influence report reviews and ranks cities based on their occupier attractiveness, availability of talent, and quality of life factors, alongside economic output and productivity.

Edinburgh was the highest ranking UK city in terms of ‘employee aspirational’ factors.

Douglas McPhail, head of Colliers International in Scotland

Douglas McPhail, head of Colliers International in Scotland, said: ‘Scoring highly for its economic output and the availability, talent and aspirations of its workforce, it’s not surprising that Edinburgh has outperformed most commercial property markets in recent years.

‘It is significant that the positions in our Cities of Influence index this year mirror investment volumes over the course of 2017, suggesting that investor activity is becoming closer aligned to broader, long-term drivers of occupational growth.

‘In Edinburgh in particular, with its exceptionally strong fundamentals, investment activity is expected to increase further going forward.

However, when compared to the German Big 7, and the major Nordic capitals, most UK cities look significantly under-invested.

‘Given its occupier strength and growth potential, Glasgow should see investment growth too, although it struggles to compete with Edinburgh on aspirational factors.’

The 2018 index ranked London as the most attractive city in Europe for a second year running, with Paris, Madrid, Moscow and Birmingham making up the rest of the top five.

Glasgow was 24th on the list topped by Edinburgh

This year’s new extended version of the report looks at 50 major European economic hubs – building on the twenty cities covered in the inaugural report – providing a broad geographic coverage of European markets that are of global, regional and national importance.

Peter Leyburn, EMEA director of client services at Colliers International, added: ‘Office occupier strength is the engine room for a city economy and as a driver of all other forms of real estate demand: be it retail (and thus logistics), hotels, leisure and residential.

‘Occupational strength will also help drive rental growth and longer-term this is the most important driver of capital value – especially in an environment where yields do not look capable of compressing any further in the vast majority of markets. So this analysis should be a good marker for where investment capital should go.

Richard Divall, head of cross border capital markets at Colliers International, added: ‘Urban transformations and new infrastructure are also very strong drivers of investment growth.

‘Given we are now approaching the peak of the investment cycle in terms of pricing, and thus volumes, the logical evolution of the cycle is to see a redistribution of capital into cities, illustrating a strong basis for occupier growth alongside those with new key infrastructure changes.’