No better time for buy-to-let investors to widen horizons

Scottish investors, however, can be equally myopic when it comes to their own wee bit of hill and glen, closed as their minds are to the possibilities offered by locations other that Edinburgh and Glasgow when weighing up returns frofm residential property north of the border.

The attraction of the two main cities is, of course, understandable, even in today's depressed market. Edinburgh's traditional stock, in particular, has an enviable record of being almost immune to any of the price falls common in other parts of the kingdom.

Capital growth may have stalled even here over the past two to three years but healthy rental yields are keeping landlords happy. For all that is wrong with the economy, Glasgow still seems to attract its fair share of inward investment, which has a positive knock-on effect on rental demand as the launch of any new business venture in the city always requires a certain executive presence from outside.

Glasgow, moreover, is underpinned by its position as an "alternative" capital - eg, as home to BBC Scotland, Scottish ITV, most national newspapers, the two major football clubs, and the entertainment industry.

However, when it comes to rental yield (which with little or no capital growth is the raison d'etre for investing in residential property at present), buyers may find that the Scottish 'secondary' markets' - and we're not talking about the middle of nowhere - offers superior returns to the two main cities.

Properties currently or recently offered for sale in two fashionable rental locations include a one-bedroom flat at £155,000 in Stockbridge, Edinburgh, and a two-bedroom flat in Hyndland, in the West End of Glasgow, at £180,000. If occupied continuously, the annual rental yield from the two properties would be 4.64 per cent and 5.3 per cent respectively - impressive when compared to returns from bank and building society deposits but not as good as yields that could be achieved from less rated locations outside the two cities.

Take the Carrick Knowe district of Edinburgh, popular with semi-skilled working-class families and situated just three miles west of cosmopolitan Stockbridge. There, a two-bedroom "cottage flat" (ie, one with its own garden ground) could be had for £125,000, leading to a probable annual rental income of £8,400 - a yield of 6.7 per cent. Move ten miles further west to the new town of Livingston (still relatively affluent despite the economic downturn) and a modern two-bedroom flat (not ex-local authority) can be acquired for under £100,000 and potentially produce an annual rental yield of 7.5 per cent.

With a large local employment base (particularly in hi-tech industries) and wide-ranging shopping facilities (the town centre boasts one million square feet of modern retail space) a well maintained flat in a good area of Livingston should have no trouble attracting responsible tenants.

Meanwhile, it is worthwhile keeping an eye on the older established West Lothian towns lying close to Livingston, even though they have not been historically looked upon as "private tenant territory". This could all change thanks to the restoration (and electrification) of the former Airdrie to Bathgate railway, which has been linked into two existing lines serving Edinburgh and Glasgow, thus providing these communities with frequent commuter rail services to the centres of both the main cities.

With white collar households in central Scotland increasingly having one spouse who works in Edinburgh and the other in Glasgow, the financial savings (and lifestyle benefits) from living in a location that is comfortably commutable to both cities cannot be underestimated.

Hamilton, located just 11 miles south-east of Glasgow, is another "provincial" town where high rental demand combines with relatively low prices to produce the prospect of substantial rental yields. As well as being within easy commuting distance of Glasgow city centre by both rail, bus and motorway, Hamilton boasts a number of business and technology parks on its doorstep, which contributes to demand for rented property (John Lewis has recently established one of two national call centres there).

A modern, two-bedroom flat in a pleasant part of town was recently on the market for £87,000 and if rented would probably produce an income of £8,400 per annum, a yield of almost 10 per cent.

Up to now I have concentrated solely on the advantages offered by provincial letting investments so it is only fair that I refer to a potential disadvantage - the fact that when house prices do eventually start to rise again, Edinburgh and Glasgow properties will almost certainly prove to be the superior investments in terms of the rate of renewed capital growth.

However any major recovery in house prices is unlikely to be seen on the horizon soon, with some forecasters anticipating that values will not return to their 2008 levels until 2018. For this reason Scotland's "secondary markets" offer some interesting prospects for investors who prioritise current yield over projected capital values at an undetermined future date.

• David Alexander is proprietor of the Edinburgh and Glasgow-based letting and estate agency D J Alexander