A vote in favour of Scottish independence could have a negative impact on property values north of the border, delegates at an AEW Economic Briefing heard.

The ‘Scottish Question’ event, held at London’s Caledonian Club yesterday, saw a panel consider the impact of a vote for independence from the UK in two weeks’ time.

When AEW began planning the event earlier this year, the Scottish referendum was less of an issue. The close nature of recent polls, however, gave it more potency.

With high levels of uncertainty, Martin Potter, partner at Hymans Robertson, told delegates: “It’s the key question for the property fund industry right now.”

Potter, who advises UK pension funds, said they had been “left scratching their heads” on a number of issues.

He said there had been “some short-term noise”, with Scottish equities recently hit as some investors begin to price in a ‘yes’ vote. but he had not seen pension funds selling Scottish equities or properties.

Some had been checking where their individual fund investments were domiciled and where their fund managers were headquartered. 

AEW consultant James Hyslop said there was likely to be some impact on property prices over a three-to-five year period in Scotland.

The long-term implications of independence, said Hyslop, are impossible to know, but some form of short-term discount on property prices was highly likely as a consequence of ongoing uncertainty.

The need to attract companies and personnel to Scotland was also discussed, with Dublin given as an example of how to entice the likes of Google as major tenants.

“The key question is whether Scotland remains an attractive place to invest.”

Potter said Scotland, with its universities and call centres, was already in a good position to compete with other European cities for new tenants.

“I would argue it is more a case of being Scotland’s to lose over the coming years,” he said.

While Aberdeen’s oil links would probably continue to support its occupational demand, Glasgow and Edinburgh could be more vulnerable if the financial sector migrated to London.

Pension funds, Potter said, had been specifically coming to Hymans Robertson with concerns on currency, regulation, taxation and EU membership. A typical UK property fund, he said, has around an 8% exposure to Scotland.

Philippe Waechter, chief economist at AEW’s parent company Natixis Asset Management, said there were ‘six unknowns’ to consider. Currency, productivity, population, oil, debt and Scotland’s relationship with the EU were all, he said, “variables”.

The prospect of Scotland moving into its own business cycle and losing correlation with the UK could be “complicated to manage”, Waechter concluded.