While the UK braces itself for significant political and economic hurdles in the year ahead, key property industry figures are confident the Scottish market will remain resilient after a solid 2018.
Danny O’Neill, chief executive of Ediston, says that Scottish real estate is starting the year “in a good place” given its relative lack of volatility, observing that investors are undeterred by the current political climate.
“One of our international clients recently commented that the reason she liked to invest in Scotland was because it was ’dull’ – and she wasn’t referring to the lack of sunshine,” he quips.
“This backhanded compliment of sorts made the case for investing in a market that doesn’t see the sharp peaks of a bull run nor cliffs to fall off when values face downward pressure.”
Strong fundamentals
Miller Mathieson, senior managing director of CBRE in Scotland and Northern Ireland and new chairman of the Scottish Property Federation, says that both economic and property fundamentals in Glasgow and Edinburgh remain “extremely strong”. He adds: “2019 should be a success in Scotland despite the political turmoil that prevails.”
The developers and investors predicted to lead the pack this year include Drum Property Group, HFD Group, Chris Stewart Group, Knight Real Estate, GSS Developments and Ediston.
However, an ongoing “time lag” in terms of new developments will create “upward pressure” on office and industrial rents in Glasgow and Edinburgh, notes Mathieson.
“Both cities need new developments on site as soon as possible to meet demand,” he says. “I anticipate a greater level of public sector and private sector partnership to capitalise on the city deals with the major universities playing a key role.”
Resilience beyond Brexit
In the run-up to Brexit, transaction volumes are broadly expected to tail off and investment decisions put on hold. However, David Stewart, partner in the commercial real estate team at Scottish law firm Morton Fraser, expects this will be a “temporary blip”.
Moreover, the prospect of a second referendum on independence doesn’t appear to be troubling the market for now, says Stewart, as it is overshadowed by the wider Brexit debate.
However, he notes that the “big unknown” is how pricing will be affected. “At this stage, it’s impossible to predict with any confidence,” he says.
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