Whether or not a second independence referendum takes place or not, Scotland is already looking beyond the UK and has developed a comprehensive strategy to strengthen the economy and attract foreign investments into the real estate sector.
The Scottish Cities Alliance (SCA), created to promote the economic potential of the country’s seven cities, is part of this strategy, delegates heard at PropertyEU’s Opportunities in Scotland Briefing, which was held at the Mipim fair in Cannes last week.
Each of these cities – from the capital Edinburgh to Aberdeen, Glasgow, Inverness, Dundee, Perth and Stirling - has its own strengths and selling points to investors, but they share information and have a common strategy, local authority representatives explained.
‘We have a £7.5 bn (€8.6 bn) pitch book of projects across Scotland and we have created a one-stop shop with a wide range of offerings to make it easier for investors,’ said Stuart Black, director of planning and development at Highland Council, SCA. ‘Investors who have development projects will find a very joined-up approach.’
Cooperation between cities also means the same rules apply. ‘We have seen a lot of investment in hotels and student housing, and we are keen to promote residential because there is a lack of rental accommodation, but there is no overbuilding,’ said Black. ‘We have been very cautious about selling land.’ The joined-up approach means that when an investor is interested in hotels, for example, the SCA will present opportunities in 3 or 4 cities to maximise economies of scale.
‘When you are competing on a global stage it is imperative to have collaboration,’ said Amanda Clack, current president of the Royal Institution of Chartered Surveyors (RICS). ‘It is important for cities to have their own culture and a strong identity but also to be connected. Scotland is really setting the agenda.’
‘Scotland is ahead of the game in many ways and there is a really good long-term story to tell,’ said Walter Boettcher, research director and economist, UK & EMEA research, at Colliers International. ‘There is a lot of interest in Scotland, but the positive message is being clouded by political uncertainty, first Brexit and then a possible referendum.’
Political risk factor
There is no getting around the fact that political events loom large in Scotland: the certainty of Brexit, which two-thirds of Scots voted against, and the possibility of a second independence referendum, which first minister Nicola Sturgeon is determined to hold.
Such question marks on the horizon are not necessarily a deterrent for investors, experts said, partly because political risk in the last year or so has become part of the landscape. People have had to learn to factor it in, but also to look beyond it and focus on fundamentals instead.
‘The fact is, political risk is certainly not a Scottish issue,’ said Hans Vrensen, European head of research and strategy at AEW Europe, and longer-term investments tend to be driven by structural issues.
‘Investors are getting used to political risk, but the predictability of cash flows is still what drives investment,’ said David Ironside, CIO for Continental Europe and international director at LaSalle Investment Management. ‘The Brexit syndrome creates uncertainty but it is not a disaster. After all, there is plenty of money looking for returns.’
