Commercial property firms are braced for a rebound in activity north of the Border as pent up demand is released, but say uncertainty regarding the final devolution settlement means some investors may still hold back.
The sector had seen a lull in investment deals and expansion activity over the summer as businesses battened down the hatches in the run up to the independence referendum. Following yesterday’s outcome, industry experts expressed relief, forecasting an immediate upturn.
Alasdair Humphery, lead director for property consultancy JLL in Scotland, said: “The result will provide a welcome boost to Scotland’s property market.”
He said uncertainty surrounding the possible outcome of the vote had undoubtedly been a factor in the decision making process for many potential occupiers and investors.
However, he believes some will continue to hold back commitments until there is a clear indication of what that result means for Scotland and the wider UK.
“Following the result, I am optimistic we’ll see more confidence returning to the market and an increase in activity from international occupiers, some of whom had previously been reluctant to progress expansion plans,” he said.
“The constitutional and fiscal changes that will occur if Scotland is granted ‘devo max’ are at this early stage an unknown quantity. We will clearly be keeping a close eye on proposals for further devolution of powers, and what these might mean for our clients not only in Scotland but across the UK.
“However, the devil is in the detail, and much of this detail has yet to be worked out.”
Walter Boettcher, director of research and forecasting with Colliers International, said projects on both sides of the Border that had been shelved by international investors this summer due to uncertainty over the outcome of the vote would now be “dusted off”, providing a lift to an already recovering commercial property sector.
He gave an upbeat longer-term outlook, saying: “From a narrow business perspective, economic and financial confidence has perhaps regained its balance and this will drive higher levels of activity as pent up demand and projects shelved temporarily will be dusted off and pushed through.
“From a broader strategic business perspective, given international appetite for infrastructural development by sovereign wealth funds in a very low interest rate environment, the opportunity for commercial real estate investment and development is staggering and may sustain activity levels well beyond the normal limits of traditional property cycles.”
He added that the likelihood of further devolution for Scotland and other parts of the UK provided a chance for regional decision-making that could help business development.
David Melhuish, director of trade body the Scottish Property Federation, said: “The uncertainty over Scotland’s constitutional future is now settled and it is important that political certainty is now regained if market confidence is to be secured in the commercial property sector.”