Political uncertainty threatens to take the gloss off an otherwise thriving property market, according to panellists at EG’s Edinburgh Question Time. By Shekha Vyas
Edinburgh has more to boast about than many of its UK neighbours. A formidable reputation for world-class education, arts and culture and more is now being supplemented by a burgeoning tech scene, a flurry of office lettings, and a thriving private rented sector, giving the property industry much to feel positive about.
But Brexit has hit the Scottish capital with a double blow. There is not just the implications of a split from the EU to be concerned about, but the threat of a second independence referendum as well.
How can the city shake off the tremors of these two major setbacks?
Inevitable and unavoidable
There is no looking back, according to Ian Wall, board director of the Scottish Council for Development and Industry, who said a second referendum for Scottish independence is “unavoidable”.
“The UK government hasn’t prepared for Brexit one jot – if they were running a company they would be kicked out. The question will be, do the Scottish people feel – having rejected independence in light of their desire to stay in the EU – balanced between the two? A referendum is inevitable and unavoidable.”
But there is a silver lining, he continued: “If England and Wales leave and we stay, I think we become very attractive as a place to invest. But we have to have a national position. You could not have just the English or Scottish government making a decision.”
Wall was speaking among a panel of industry heavyweights at Estates Gazette’s Edinburgh Question Time, held at Central Hall on 4 October.
Fellow panellist Chris Harte, chief executive of Morton Fraser, emphasised the ruling Scottish National Party was walking a very fine line.
“You can maybe lose one referendum but you can’t lose two. It would be difficult now to feel confident about it but they still have to keep the debate alive without rushing headlong into it,” he said.
“Until we know what the UK’s relationship with the EU will be, how can you ask anyone to assess what Scotland’s relationship with the UK will be? For that reason, I don’t think there will be a headline rush to it, but I think that creates further uncertainty.”
Time is damage
But all the panellists agreed that while Brexit could open opportunities in the Scottish market, when combined with the prospect of a second independence referendum, the uncertainty was bad for Scotland.
Bryan Sheriff, investment director at Drum Property Group, said the SNP should “concentrate on running the country”.
“Talk is cheap,” he said. “If they thought they would win, they would have done it, but they haven’t so let’s move on. Whether it’s north or south of the border, everyone is bored of the discussion.”
Nick Penny, head of Scotland at Savills, said: “I think Nicola (Sturgeon) could gain a huge amount of credibility if she shows us she is using the devolved powers she has been given widely to benefit individuals and businesses, and then perhaps look at it further down the line, but I guess one thing that keeps the SNP together and the reason they exist is independence.
“But is the uncertainty about independence damaging to our industry? My view is yes.”
The impact of Brexit would only be seen once it was clear whether the UK would reach a hard Brexit arrangement – which is likely to see the UK give up full access to the single market and of the customs union along with the EU –
or soft agreement, the experts concurred.
For Penny, it was all about reaching a decision quickly: “There could be a situation where Scotland becomes a more attractive place to do business but the challenge will be how long it takes to get from a period of negotiation to a period of stability.
“We voted to leave and I don’t think anybody feels there is an opportunity to reverse that so the sooner it happens the better.”
Wall said he believed two years was not enough time to negotiate. He added: “I think it will seriously damage the UK economy with the possible exception of Scotland. But if the economy is hammered, which I believe it will be, I think we will lose markets. Switzerland currently has 192 different agreements with the EU.”
But national and European politics were not the only themes pervading the debate. The panel was unanimous that the result of the US election would have a pronounced impact on Scotland’s economy.
But the tone was kept light, with Harte joking: “Perhaps the positive impact of Trump winning will make us feel a whole lot better about Brexit.”
Wall added: “There is certainly a good opportunity for the private rented sector in Edinburgh for Americans trying to get out of the US. But Trump is very interesting – he has very little money from big businesses because he has so much of his own. Most politicians owe so much. He has the danger of being a genuinely wild card because in some sense there are no confines against him.”
Infrastructure improvements
While the global and national political arena was at the forefront of panellists’ minds, they all agreed the government had a role to play in making the city appear attractive to investors and infrastructure had to be improved under Edinburgh’s City Deal.
Chris Harte, chief executive of Morton Fraser, said: “What local and central governments need to do is create an environment where economic growth is much more likely to be fostered. We live in a world of brands; a lot of what we are seeing [politically] in America and with Brexit is about impressions people have, and the government can do a lot in giving the right impression.”
Nick Penny, head of Scotland at Savills, said that attracting tech occupiers was also important – an occupier like Apple would be a “huge draw”.
But Bryan Sheriff, investment director at Drum Property Group, insisted that Edinburgh was “doing its best”.
“Unlike Glasgow or Aberdeen there is a lack of available sites to attract people. For example Haymarket has been talked about for a long time, pre-lets have been discussed, but is still hasn’t come out of the ground.”
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