Scottish cities: magnets for investment

In a globally challenging environment for foreign direct investment, Scotland – which has perennially punched above its weight when it comes to attracting investment – is outperforming domestic, regional and global FDI trends.

According to the EY 2023 UK and Scotland Attractiveness Survey released in June 2023, Scotland outpaced both the UK and Europe on foreign investment for the second year in a row. It secured a record 126 inward investment projects last year (up 3.3% on 2021’s 122 projects).

Scotland has also secured a record 13.6% share of UK FDI projects, and is polling at record levels of attractiveness to investors as an FDI location outside London. It is Scotland’s fourth successive annual increase in FDI projects, and is set against the background of a 6% decline in total UK projects and growth of just 1% across Europe. Scotland’s share of all UK projects is up from 12% in 2021 and 11% in 2020, EY reported.

Scotland’s main cities are magnets for investment, boasting successful clusters in such sectors as aerospace and space, creative industries, industrial and manufacturing, life sciences and biotech, renewable energy, retail and leisure, urban residential, and tourism and hospitality.

The proliferation of companies establishing themselves in Scotland brings significant opportunities in commercial real estate. Scotland has more than 5,100 international companies with tech giants such as Skyscanner, FanDuel, Amazon and SKY, as well as start-ups including Nucleus Financial, FreeAgent and Money Dashboard, already taking advantage of the many benefits of locating in this data-driven economy.

With more than 215,000 people working in financial and business services, supplemented by over 97,000 graduates a year, Scotland offers high quality, staff with skills covering a range of activities.

Joined-up approach

Behind Scotland’s FDI success is a joined-up approach to investment promotion, to which the Scottish Cities Alliance (SCA) is a testament. SCA comprises Scotland’s cities and the Scottish government, and is a one-stop shop offering investors a unified approach to create a variety of different projects at scale.

The SCA was established in 2011 to progress the Agenda for Cities. The aim is to achieve an economically stronger future for Scotland through the joint efforts of Scotland’s eight cities (Aberdeen, Dundee, Dunfermline, Edinburgh, Glasgow, Inverness, Perth and Stirling) and its long-term investment promotion strategy, in a bid to attract capital investment to these cities.

“The investment opportunities are huge and the Alliance and its partners are committed to working with potential investors to optimise growth for the benefit of the whole of Scotland.”

John Alexander, Scottish Cities Alliance

By working together, the Alliance partners are able to share knowledge and create projects of scale which offer attractive investment prospects across the business spectrum. To date, the Alliance partners have not only played a key role in the development of the Scottish Government’s refreshed Agenda for Cities and International Trade and Investment Strategy, but the Alliance has also helped it showcase more than £10 billion of investor-ready opportunities across the cities via its online Investment Prospectus.

“Collaboration is at the heart of everything that we do. Working with our stakeholders, we are a conduit for bringing relevant opportunities from key public sector organisations, such as Scottish Development International, Scottish Enterprise and the Department for International Trade, to the attention of the cities, ensuring they are part of informing the overall strategic approach to attracting investment to Scotland,” says councillor John Alexander, chair of the SCA and leader of Dundee City Council.

Thriving destinations

Scottish cities are modern thriving destinations each with their own distinct personality and sectoral strengths. There are many reasons to invest in Scotland’s sustainable and smart cities, from their excellent connectivity, to their attractively low tax rates, a high quality of life, a highly skilled workforce and last, but certainly not least, a proud history of innovation. It’s on this culture of innovation that Scottish cities are building their aspiration for inclusive economic growth.

Smart City technology is transforming Scotland’s cities, enabling them to become more internationally competitive and boost economic growth. To seize the opportunities offered by new technologies, Scotland’s cities have worked collaboratively to deliver a ground-breaking Smart Cities Scotland ERDF programme, which is helping services across the cities become more efficient and greener, which provides a strong foundation to attract and grow new hi-tech businesses that will drive future sustainable economic success.

Scotland has passed legislation targeting net zero emissions of all greenhouse gases across the country by 2045.

Hydrogen production

The Scottish Government is committed to working with investors to develop projects that will enable large-scale, hydrogen production with export routes to Europe. In 2022, the Scottish Government revealed its hydrogen action plan and pledged £100m in capital funding for renewable hydrogen projects.

The Inverness & Cromarty Firth Green Freeport will help to transform the local economy whilst delivering significant benefits for the country’s transition to net-zero, boosting innovation and attracting £4.8 billion of investment and 25,000 high quality jobs. The Freeport will underpin Inverness’ ambitions for Hydrogen.

The Cromarty Hydrogen Project being developed by Storegga and Scottish Power is set to produce 11 tonnes of green hydrogen per day, increasing to 110 tonnes in its build out phase. Alongside this a Green Hydrogen Hub in Inverness is being developed with the capacity to generate up to 10 tonnes of green hydrogen, or enough to fuel 400 HGVs per day, which could be scaled up to deliver a supply of 25 tonnes per day into the network.

Green fuel supply

Meanwhile, Aberdeen has developed Scotland’s first commercially scalable, investable, hydrogen production and distribution facility, making use of the region’s renewable resources to provide a truly ‘green’ fuel supply with ambitions to scale over time to provide hydrogen for heat, industry, and export.

“The investment opportunities in Scotland are huge and the Alliance and its partners are committed to working with potential investors to optimise growth for the benefit of the whole of Scotland,” says Alexander.

“The eight city regions have a strong story to tell, and collaboratively they are making a significant impact in a very competitive environment. The Alliance will continue to support and promote the opportunities on offer across the cities to our growing database of investors who welcome our unique one-stop-shop approach to attracting investment.”

If you would like to find out more about the investment opportunities across the Scottish cities or sign up to the Alliance’s investment newsletter please contact [email protected] or visit our website www.scottishcities.org.uk

This article is published in October’s edition of REAL FDI. Find out more here