Millionaires flock to ‘safe haven’ Scotland

Georgian townhouses in Edinburgh, properties within putting distance of a golf course in St Andrews and Highland sporting estates are particularly in demand by international buyers in search of a Scottish bolthole.

Figures released by the selling agents Savills yesterday show the top end of the property market performing well, with 146 high-value homes costing £1 million or more selling in 2010, compared with 106 in 2009.

Sales at £1 million and more during the first six months of this year were up by a third on last year, from 50 to almost 70.

Among the high-value properties sold was 9 The Links, a terraced house overlooking the 18th green and the 1st tee of the Old Course in St Andrews, which was bought by Canadian energy executive, and golf fan, James Kinnear for more than £4m.

Faisal Choudhry, Savills’ head of research, said wealthy buyers were attracted to the Scottish housing market because it was seen as a “safe haven” from global financial turmoil and problems affecting the eurozone.

“Since the credit crunch took hold we have seen the prime market fare better than the mainstream, due to its access to cash and equity in the face of restricted bank lending,” he said.

“It is also being fuelled by international buyers who are seeing the UK residential market as a relatively safe haven.

“We’re seeing ex-pats who have done well wanting to re-establish their roots in Scotland, international buyers from the Far and Middle East who feel Scotland is good value for money, those relocating from down south, or heading up to the oil market in Aberdeen.

“They are realistic about prices and know that there is ‘more bang for your buck’ in Scotland.”

Mr Choudhry added: “However, where mortgages have been approved, these have been concentrated on the same prime market – a double blow for the mainstream market.”

One of the consequences of loan-to-value mortgage lending is that banks favour higher value properties, where equity has been built up over the years.

The research showed loans associated with properties valued above £500,000 increased by almost 40 per cent during 2010 compared to 2009.

But those associated with properties within the average house price range in Scotland – between £125,000 and £175,000 – fell by over 12 per cent over the same period. While the peak of the market was in 2007 when there were more than 287 property transactions equal to or over £1m, business experts said the recent increase showed a return of confidence at the high end of the market.

David Lonsdale, assistant director at CBI Scotland, said: “This is an encouraging indicator that confidence is returning to parts of the housing market which will permeate out in due course. Obviously, the economy is still in a tough position but this shows some semblance of growth and shows that things are gradually starting to grow and improve across different parts of the economy. There are still a number of people and companies sitting on cash waiting for the right investment climate.”

David Bookbinder, head of policy and public affairs at the Chartered Institute of Housing in Scotland, said: “It’s hard for people to really understand why the availability of mortgages has gone from one extreme to the other, and there’s something almost perverse about mortgages now being easier to get for more expensive homes.”