Investment Conference: Seeking alternatives

Laura Mathieson of Savills. Image: Scott Louden

Whisky and residential property were highlighted as two alternative investments that could provide strong returns and safe havens in a volatile global market.

Laura Mathieson, associate director of Savills, said prices in the Scottish housing market were predicted to rise by 9.5 per cent over the next five years, against a UK rise of just over 6 per cent.

The Edinburgh market in particular had demonstrated “strong and steady growth”, running ahead of the more traditional investment space of the FTSE index, Mathieson added. The wider Scottish market had been stimulated by the desire for country living and holiday homes, with outdoor space a specific factor in driving prices up in urban locations.

The “super-prime” market in Scotland and particularly Edinburgh was performing very well, she said, with the number of houses sold for £1 million-plus increasing significantly since the start of the pandemic.

The restricted supply of rental properties in Edinburgh, Glasgow and Aberdeen had pushed up rents by 70 per cent in the last decade, but the growth of the market had been held up by uncertainty and red tape, Mathieson said.

She noted that the Additional Dwelling Supplement – an extra charge on second property purchases – was making the buy-to-let market tougher, and she advised landlords to invest for the long-term and seek energy-efficient properties that would not require significant renovation.

Both renovations and making properties energy efficient could incur very significant costs, Mathieson stressed. However, despite such costs – and changes to taxation – she said: “There is significant capital appreciation despite the challenges.”

Ben Lancaster, co-founder of VCL Vintners, the first company to offer whisky casks as an investment, said: “Investing in whisky is tangible, with a level of security, and offers great returns. It opens up a great avenue for diversification for savvy investors who are open to new ideas.

“With the level of market volatility, investors are having to think outside the box to make their capital work better for them, and whisky is an easy market to enter.”

Lancaster said investment could start from as little as £2,500-£3,000 and although the casks – that have a lifetime of up to 50 years –were held securely in bonded warehouses, investors could “visit” their investment.

“It’s vital to work with an experienced company not just to help you secure a cask, but also to sell it at the right time,” he added.

Investors made money through the maturation of whisky, which increases its value, said Lancaster, who also highlighted the “enormous” global demand for whisky.

“If you are looking for tax-efficient growth, these factors make for a really appealing investment, that is seen as recession-proof,” he added.

Owen McLennan, a partner in law firm Dentons, cautioned that investors should “do their homework” carefully when considering any kind of alternative investment.

Understanding the product is vital, and so is liquidity,” he said. “Diversification of a portfolio is crucial too.”

Commenting on the commercial property market, McLennan said that the market for nursing homes and student accommodation – types of accommodation where there was high demand and regularly-changing occupants – was still driving a strong market.

Mathieson agreed, noting a high demand for “best-in-class, energy-efficient commercial property”.

McLennan said there was a high degree of legislative and regulatory change to consider when looking at alternative investment.

In terms of property, the Overseas Entities Register now demands that a “beneficial owner” is registered to give greater transparency of ownership, he explained.

However, there had been quite significant non-compliance with the register and McLennan wondered: “Will we now see a move to enforcement and if so, what tools will be used?”