Investors like certainty. The Scottish referendum showed just how much, with investment volumes tanking in the run-up to the vote and then a rush to sign deals once the results were known. Fast-forward 20 months and there is new uncertainty: the EU referendum. This comes at a time when a second Scottish independence referendum is still a possibility.
Surely all this uncertainty must deter investors from venturing north of the border? Maybe not as much as you might think, as this exclusive research from law firm Morton Fraser shows. During April, some 300 UK property investors were surveyed about their sentiment for investing in Scotland. Here we crunch the numbers and David Stewart, partner at Morton Fraser, analyses the results.
David Stewart of Morton Fraser says: “There will always be investors who won’t invest outside their own areas. Plenty of English investors will not invest in Scotland because it has a different regime. Scotland has an 8.9% share of the UK commercial real estate market and 11% say they are interested in investing.
Stewart says: “The question was not limited to people fundamentally pulled to Scotland. So that perhaps explains the high price point. The numbers become much sharper at the quality end of the market. It is fair to say that the robust occupier market and tight supply is resulting in a strong investment market. We have probably got more people more willing to come into the Scottish market if the price is right.”
Stewart says: “There is a bit of battle fatigue. We assumed [Brexit/independence] would be quite high up and actually found that if the price is right and fundamentals are right then the political uncertainty takes a back seat. The property industry has had 8-10 years of negative sentiment, but people adapt quite quickly to a new situation. It would be trite to say that political questions haven’t had an impact on investment volumes, the independence vote meant a slowdown in the months preceding and around six months of deals crammed into the final months of the year. What any market wants is certainty, what happens after, people weren’t viewing it as a longer term issue.”
Source: Morton Fraser
