Edinburgh has been named the third most attractive city in the UK to establish a new business, according to a new report from asset brokerage Approved Business Finance.

Taking data from the UK’s sixty largest cities, the analysts found that the Scottish capital has three key factors attracting new businesses, including competitive commercial property costs, wide-spread, high-speed internet coverage, and a potential pool of highly educated workers.

According to the report, Edinburgh accounts for the most higher-educated residents per capita in the UK, with 73% of people taking on A-level equivalents or above.

However, the city fell behind Oxford, ranked as the number one spot to open a business this year, which the study found had lower costs per square foot for commercial properties at £36 versus Edinburgh’s £48, as well as having a lower number of business closures, at 34.3 per 10,000 as opposed to Edinburgh’s 42.7.

Other Scottish cities making up the top ten were Aberdeen in sixth place, with a strikingly low cost for commercial space at just £11 per square foot, and Glasgow, which ranked eighth despite having a lower number of average business closures that Edinburgh, at 39.5 per 10,000.

Coming just in front of Edinburgh is Bristol, with the report noting that almost 90% of businesses in the city are currently supplied with high-speed internet, beating out most other cities across the country.

Surprisingly, Cambridge ranks 20th in the overall index despite being widely seen as a rival of Oxford, which the research puts down to the relatively few commercial spaces available to buy at any one time, and an average cost of £328 per square foot for commercial spaces, making it among some of the most expensive areas to purchase.

Ranked as the least attractive city for new business was Southend, with the study finding major challenges for nascent firms. While the city doesn’t have the most expensive commercial space in the UK, at £115 per square foot, it suffers from poor high-speed internet coverage with just under half of businesses able to get a connection of 30mbps or more.

Edinburgh’s position within the top three was positively received by those working within the entrepreneurial sector in the city, with the University of Edinburgh commenting that it showcased the capital’s reputation as a centre of finance, business, and innovation.

An independent financial report in 2023 found that Edinburgh University entrepreneurs created £162 million for the UK economy and 1,830 jobs, while last year, University-associated companies attracted £141 million of investment.

Dr Andrea Taylor, CEO of Edinburgh Innovations, the University’s commercialisation service, said: “We are proud to play our part in Edinburgh’s thriving entrepreneurial ecosystem, supporting founders to make their ideas work for a better world.

“The University of Edinburgh has world-leading research in data science and AI, a track record in major therapeutics and life sciences spinouts, and emerging technologies in areas like cell and gene therapy, engineering biology and AI hardware.

“But as well as research-created solutions, our companies attract investment and bring jobs and renewed energy to our city and region. The recently opened Edinburgh Futures Institute, for example, provides innovation connection spaces and helps create fully integrated entrepreneurial communities in the heart of Edinburgh.”

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This latest study follows a flurry of research late last year that placed Edinburgh among the world’s most investable cities.

In October, sustainable development consultancy Arup gave the city a ‘best in class’ rating in a new global competitive city tracker, thanks to its high quality of life, digital infrastructure, and burgeoning technology and financial sectors.

A study from Wright, Johnston & Mackenzie in November then named the Scot’s capital as the top city in the UK outside of London for foreign direct investment, while figures from sharetech platform Vestd found that Edinburgh-based businesses secured the third most funding rounds in 2024 compared to other major UK cities.