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Dundee Emerges as Scotland’s New Hotspot for Buy-to-Let Investments

Dundee is on track to become Scotland’s new hub for buy-to-let investments, says legal firm Gilson Gray. The city, known as the City of Discovery, is witnessing a surge in interest from property investors, driven by significant urban regeneration and development projects.

Key to Dundee’s appeal is the ongoing transformation of its waterfront, the proposed Eden Project development, and the construction of a new 4,000-seat e-sports arena, enhancing its reputation in the gaming industry. These developments are beginning to have a noticeable impact on the property market.

According to Gilson Gray’s analysis of Citylets data, Dundee has experienced the most substantial increase in rents over the past year among Scottish cities, with an impressive 16.9% rise. This growth surpasses that of Edinburgh at 16.5%, and Glasgow and Aberdeen, which saw increases of 15.6% and 7.8%, respectively.

The momentum in Dundee’s property market is not just a short-term trend. Over a five-year period, Dundee’s average rental growth was only marginally lower than Glasgow’s at 53.6% compared to 53.9%. However, over a decade, Dundee’s rental increase of 67.2% lags behind Edinburgh’s and Glasgow’s, which stand at 95.5% and 88.5%, respectively.

The demand for rental properties in Dundee is fueled by factors such as its two universities, the burgeoning life sciences and biotech sectors around Ninewells hospital and medical school, and the growing gaming and technology business community.

Marcus Di Rollo, Lettings Director at Gilson Gray, highlighted Dundee’s metamorphosis and its ripple effect on the property market. He stated, “Dundee is going through a major transformation – there are a lot of positive moves being made and they are changing perceptions of the city. Major infrastructure projects, a growing local economy, and a large student population are making Dundee stand out as a great opportunity.”

He added that the year’s rental figures reflect this positive trend and noted that Dundee offers a relatively low barrier to entry for investors compared to other Scottish cities. “You can invest in a portfolio of properties – perhaps as many as five or six – for the cost of one equivalent flat or house in Edinburgh and the yield can be as much as 10%.”

Di Rollo concluded, “While long-term capital growth may not be as strong as other cities, we do expect property in Dundee to be competitive.” With around 160 rental properties under its management in Dundee, Gilson Gray anticipates continued growth in investor interest in the coming years.