INTERVIEW: Chris Stewart, property developer
‘Politicians must understand we are competing for global capital’
It was once a home to drug dealers and alcoholics, a no-go alleyway for locals and tourists alike.
Advocate’s Close, a steep and narrow passageway of steps linking Waverley Bridge at its foot to the High Street at the top was not high on the list of places to visit.
After a £46 million makeover it has been fully restored as one of the capital’s central arteries.
“It has become a destination,” says Chris Stewart, summing up how his company has turned a haven of anti-social behaviour into a fashionable location now populated by swanky serviced apartments, modern offices and the popular Devil’s Advocate bar and kitchen.
Stewart’s own head office sits above the bar and from this central position on the hillside he can look out from a battlemented balcony towards Princes St and beyond. He feels good about the reparations, a flagship project for his eponymous company which is slowly restoring the dignity of one or two other neglected Edinburgh locations.
Planners will soon decide on his plans to restore the former Royal Bank of Scotland head office at the corner of St Andrew Square which comes with a redevelopment of a neighbouring modern office block. The RBS building, briefly owned by former Hearts’ Lithuanian owner Vladimir Romanov, will be turned into a restaurant and hotel. Its original art deco interior will be recreated.
In Baxters Place near the Playhouse a delapidated row of Georgian terraces is being turned into a 240-bed Marriott hotel.
These, together with other projects in Glasgow, have helped position the company as something of a saviour among developers, beloved by heritage groups and local councils who see neglected sites being brought back to life and earning a useful return in the process.
Stewart admits he was always interested in buildings and knew he would work in the sector. He left university “after a short period” and with the help of property entrepreneur Mike Rutterford and retail agent, Eric Young he launched himself as a developer.
Last year he sold a minority stake to a US-based investment affiliate of Proprium Capital Partners, that will allow him to negotiate deals with a financial backer in place.
Does he see himself as a preservationist or does he prefer some other description of his modus operandi?
“The way I look at projects is to take a balanced view. I am a big fan of heritage buildings which provide a lot of character and value, but you cannot save every building. There is a misunderstanding that old must mean good. Some of them are badly built and have structural issues,” he says.
It is an argument in favour of demolishing a listed Victorian building opposite the Cafe Royal behind Princes Street which is part of the £60m St Andrew Square project. Attempts have been made to find a use for it, but his team say it would struggle to find a commercial tenant and would be better making way for something new.
“It represents, say, 10% of the listed buildings on the site. Our plan will restore the other 90% which has to be the right thing to do,” says Stewart.
His office is ultra modern, glass-walled with a large painting by the artist David Martin adorning one side.
Dressed casually in open-necked shirt and jeans, he has been something of a quiet man among Scotland’s entrepreneurs, not easily persuaded to say too much in public and, when he does, he prefers to stick to work rather than personal matters.
He admits, however, that he will have to be a little more public in his views and appearances now that he has become chairman of the 160-member Scottish Property Federation, succeeding John Hamilton, chief executive of Winchburgh Developments. It is a gathering of developers, architects, planners and others with a stake in the sector, and he believes it has a vital role to play in shaping an important industry.
Among his priorities will be to convince political leaders at national and local level that they must create conditions conducive to attracting investment for development. Since the collapse of bank lending to the property market much of this investment has come from overseas, mainly the US. He points out that Ireland and Spain are coming back and are tempting some of that money in their direction.
“Capital flows for the real estate sector are now predominantly international,” says Stewart. “and as a country we have become dependent on that flow being maintained, but we are also competing for this international capital.”
It is coming from private equity and funds and is finding its way into financing rented homes, hotel developments and regeneration projects like his own. Inevitably it will be a source of funding for the £10 billion of projects around Scotland being promoted by the Scottish Cities Alliance.
“We need to make the government aware that this global capital doesn’t see Scotland as anything other than one of a number of choices about where to put its money.
“That means it will be looking for the best returns, nothing else. So we, as a country, have to make sure we have the policies and framework that encourages this money to come in.”
He is clearly referring to taxation, planning and other key policy areas where any hint of a higher cost base or an obstructive system will be enough to cause capital to flee elsewhere.
“Real estate is a long term game. Capital can be sitting in an asset for 10 to 20 years. It is therefore important for the market to have some certainty about what Scotland wants and where it is going.”
Stewart says relations between the sector and Holyrood are positive and that “there is an appetite to understand the issues”. It is a good starting point for his year-long term of office.
Nevertheless, he will be urging closer “engagement” by both sides. “We need to engage closely and early in the policy making process to ensure policy is not created in a vacuum,” he says.
A continuing battle is being waged over the planning system. Communities minister Alex Neil recently launched a review and Stewart says the SPF will be keen to work with the government to find solutions.
He is not alone in wanting a faster and simpler system, which he describes as beset by being short-staffed, too complicated and dragged down by consultation and documentation.
“There is more capital ready to come in to Scotland, but we are due more cuts. It could see things grinding to a halt.”
He says he understands that planning departments are stretched, but to help avoid this getting worse he says the industry would consider paying higher fees to offset any planned cuts.
“At the end of the day it needs to be modernised and properly funded,” he says.
He also believes the government will be forced to address the shortcomings in the new land and buildings transaction tax which replaced stamp duty in Scotland and has seen a slowing of deals at that end of the market.
“The LBTT changes have stagnated the market. There was an expectation about revenue generation that won’t happen. There should be a reassessment of the banding.”
Education: St Andrews University (applied maths) – left before graduation.
Career Highlights: Launched his company in 1996
I have always been interested in it. I don’t know where it came from. I also like good design, whether its furniture, architecture or art.
Where were your first projects?
Redeveloping an old Georgian listed building in Park Circus in Glasgow into flats, then converting St Stephen Street School in Stockbridge, Edinburgh.
How old were you when you started the business?
Berlin and New York
Photos of Chris Stewart by Terry Murden