A changing of the guard as SPF digs in

Published on Monday 16 November 2009 18:15

MORE than 150 people are expected to attend a reception in Edinburgh tomorrow night given by the Scottish Property Federation, which was launched only two years ago to, among other things, sustain and promote the interests of businesses who own or invest in property in Scotland.

The guest speaker will be finance secretary John Swinney and the popularity of the event underlines just how quickly the SPF has made a name for itself with a rite of passage that, in a short space of time, has moved from the commercial property heyday at its inauguration into a recession.

The SPF continues to attract the property heavyweights. Tomorrow night, chairman Ken Ross, chief executive of Elphinstone Holdings, will hand over to Phil Miller, chief executive of Miller Developments, and into the vice-chairman role will step Malcolm Naish, who is global head of property at Scottish Widows Investment Partnership (Swip).

He is the first institutional investor to come on board and ahead of assuming the office he is full of praise about the SPF relationship with the Scottish Government – a view which might be at odds with those of other leading business organisations.

He states: "I think the big thing for me is that I have been enormously impressed about how accessible the government in Scotland is.

"You can engage with people – the official response is 'let me understand what the issues are and we will see if there is a way of assisting'."

That does not mean that all is well between the two and that there are no issues the SPF believes need close attention by the government. Sustainability – the "greening" of commercial property is one – with the SPF clearly of the view that there should be positive action from the government and not just regulation.

Phil Miller states: "Policymakers need to realise that regulation changes have already inflated building costs for some new developments in Scotland by at least 10 per cent and compliance with forthcoming targets could add up to 60 per cent to the cost of new buildings, which simply won't be built unless the industry is offered incentives. A carrot and stick approach is needed – to date, all we are seeing are sticks."

On the investment side, Naish says that investors are coming back in but the occupational side, what he calls the other side of the investment equation, looks fairly fragile.

He goes on: "The big question is what is the debt position going forward and will debt become available for speculative development? No institution is going to buy anything that is not fully let – the development market for some time is going to be muted. We are talking to two or three lenders at the moment and they are very keen to support us with the right investment."

A "right investment" would undoubtedly be like the Edinburgh retail park Hermiston Gait, a high-quality asset with strong income streams, which Swip bought from Invista Real Estate for 66 million.

Has Naish got any more like that up his sleeve?

"I wish we had a few more. That type of investment is a sweet spot. I think it would be a brave person who would build a new Hermiston Gait at the moment.

"What institution would fund something like that from the ground up? I don't think we are far enough through the current cycle. Yes, there are deals in this market, but it is as important now to be selective about what you buy as it was to be cautious when the market was at its peak."

4.6m deal offers an industrial boost

IN A deal reckoned to show that the Scottish investment market is seeing signs of recovery, an Aberdeen industrial unit has been sold for 4.63 million. Acting on behalf of Hamilton Portfolio Syndicate, Knight Frank sold Cairn Facility, a 42,693sq ft unit at Dyce, to Threadneedle with the existing tenant, Halliburton Manufacturing Services, in there for 15 years at 380,000 a year. Hamilton bought the property in January for 3.9m.

THE Royal Scottish Academy of Music and Drama has paid a "mutually acceptable seven-figure sum" for about 28,000sq ft of industrial units at Barratt Trading Estate, Garscube Road, Glasgow, for use as studio, rehearsal and production space. James Barr acted for the seller, a private investor, with Ryden for RSAMD.

DEALS worth 1.4m were achieved at the latest SVA Property Auctions in Glasgow. Properties sold under the hammer included a water treatment works in Gourock, a five-bedroom villa in Scone and the Tobermory Mussel Farm, with thousands of mussels waiting to be harvested. The guide price for the farm was around 90,000, but a Tobermory resident snapped it up for 30,000.

THE Convention of Scottish Local Authorities has taken a second-floor 665sq ft office suite at 11,750 a year at Cadell House in Waterloo Street, Glasgow, on a five-year lease, the first letting in the recently-completed building. Knight Frank acted for the landlord, United Wholesale Grocers.

EASTGATE Shopping Centre in Inverness has attracted five new retailers – fashion retailer Republic (5,000sq ft), diamond merchant Chisholm Hunter (1,782sq ft) toy shop Hawkins Bazaar (1,428sq ft), the Good Food Shop (748sq ft) and Past Times (2,030sq ft). Cushman & Wakefield and SGM Property Consultants represented the landlord, the Grosvenor Shopping Centre Fund, with Republic advised by Kenney Moore, Chisholm Hunter by Griffin Webster, Hawkins Bazaar by Williams Gunter Hardwick, Past Times by Twenty Retail, with Good Food Shop.

A NEW office development in New Cross Shopping Centre in Hamilton has secured its first tenant – Work Directions has taken a six-year lease on 5,967sq ft at about 11 a sq ft. Lambert Smith Hampton acted for the landlord, Elandome.

OCEAN Terminal in Edinburgh has concluded a 1,876sq ft letting to Holland & Barrett on a ten-year lease on a base-and-turnover rent, with 15 months' rent free. SGM Property Consultants and Douglas Stevens for the landlord, Cushman & Wakefield for the tenant.

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