A second independence referendum could have “serious consequences” for the Scottish commercial property market on top of the uncertainty being caused by Brexit, according to an influential report to be issued this week.
The study being sent to clients from consultancy Ryden comes in the wake of an update from the Royal Institution of Chartered Surveyors (Rics) last week which said Scotland’s commercial property market is lagging the rest of the UK because of political uncertainty.
Mark Robertson, Edinburgh-based partner at Ryden, said uncertainty in the market over Brexit was now being “compounded by the possibility of a second Scottish independence referendum”.
Ryden’s review warns of serious consequences for the Scottish commercial property market which it said prior to the EU referendum had been enjoying a steady recovery.
“The further layer of uncertainty that this would create would inevitably drag upon investment and development within the Scottish market and adversely affect commercial property values,” notes the report.
It says the investment needed in key sectors of the Scottish property market such as Edinburgh offices and industrial space in the Central Belt was being curtailed. “The uncertain landscape is not helpful and is having an adverse impact on both occupiers and investors.”
The report – which examines key office, retail and industrial lettings and investment deals over the past six months – says transaction volumes were likely to decrease over the short to medium term as the pressures faced by large retail property funds from investors looking to withdraw funds subsides.
But it adds that the healthy appetite of investors for sectors such as student accommodation and serviced apartment developments continues. “With a weight of money seeking such defensive opportunities it is anticipated that pricing will continue to improve for such assets. Many of these assets will offer a hedge against inflation if as anticipated this begins to rise.”
In the office market, the Ryden report said that Edinburgh and Glasgow were experiencing strong occupier demand and limited new-build development opportunity, while Aberdeen faces a “multi-year market adjustment”.
In the industrial sector, the report says the Brexit referendum has contributed to what was a mixed summer for the market, with inquiry levels and the number of significant new entrants both lower than expected.
In the retail and leisure sector, the report found that most locations were improving or holding their own in comparison to the findings of the last report in April.