The real estate sector has welcomed Scotland’s rejection of independence from the UK.
Uncertainty over the future of the UK had, according to property agents, resulted in investment decisions being put on hold in recent weeks.
With 55% voting for the status quo, commercial and residential real estate advisers said Scotland could now enjoy an increase in investment and a return of confidence.
Knight Frank, Savills and JLL – which all have both residential and commercial offices in Scotland – agreed that investment and occupational markets could both now return to normal.
Knight Frank predicts prime residential values will rise by between 3% and 6% next year, while Savills predicts a 23% rise in prime residential prices between now and 2018.
Alasdair Humphery, lead director for JLL in Scotland, said: “Uncertainty surrounding the possible outcome has undoubtedly been a factor in the decision making process for many potential occupiers and investors.”
In the run-up to the referendum, there had been concerns that major occupiers would leave Scotland in the event of a vote in favour of independence. Standard Life today ruled out such a move.
International occupiers, Humphery said, had been reluctant to progress expansions plans until the issue of independence was resolved.
Savills said it had noted a lack of Scottish commercial property investment in the past six months. The firm’s joint head of Scotland, Mark Fleming, said the outcome could result in greater opportunity to invest and a “short-term uptick” in commercial leasing activity. Prime yields, he added, could sharpen to “much closer” to those of English cities.
Colliers also foresees a similar improvement, with “pent-up” leasing demand released from companies that had hesitated in the run-up to yesterday’s vote.
Humphery, however, said some investors would continue to hold back commitments until there was a clear indication of what the result meant for Scotland and the UK. The prospect of more devolution of powers – not only for Scotland but also for UK cities – was also highlighted.
“The devil is in the detail, and much of this detail has yet to be worked out,” Humphery said.
In a statement, Standard Life said further constitutional change was “very likely” following the result.
A lack of clarity on further devolution, said Investec’s head of equities, Guy Ellison, would “temper” the relief felt at Scotland voting against partition.
Scotland’s cities, said Knight Frank, were set for an “enhanced role” as political and commercial centres.
The Scottish Property Federation said market confidence would return to the commercial property sector. SPF director David Melhuish said certainty on the content and substance of proposals to increase Scotland’s powers was now needed.
This, said Knight Frank, could boost demand for commercial space and support the public sector, as Scotland realigned its public services to accommodate any new powers.
The agent said the majority of investors “love certainty” and could now plan ahead.
