Property leaders demand support for global capital
Since the UK banks reduced their commitment to the real estate sector investment from overseas institutions has become more important to ensure major developments are adequately financed.
But this capital has no allegiance to any location, and institutions such as pension funds will place it where they can get the best return.
Property leaders are keen to ensure politicians are aware that unfriendly policies such as higher taxes, planning hold-ups and more regulation are likely to deter international investors.
A report last month – Emerging Trends in Real Estate Europe (ETRE) 2015, published jointly by the Urban Land Institute (ULI) and PwC – revealed that Edinburgh moved up one place to 18th of 27 European cities ‐ a turnaround from 2015 when the city dropped two places in the annual index. That was mainly due to political uncertainty in the lead up to and immediately following the September Referendum.
Dublin (3rd) and Birmingham (6th) are the only cities outside mainland Europe to feature in the current top 10.
Another report published this month by property agent Lambert Smith Hampton said investment in Scottish commercial property fell by 11% to £2.12bn, compared to 2014, against a rise across the UK.
Although overseas investors continue to see value in the market north of the border, it said there was a 53% drop in the number of deals in Scotland, from 36 in the last quarter of 2014 to 17. Edinburgh and Glasgow fell behind Manchester and Birmingham as good places for investment.
Scotland’s Deputy First Minister, John Swinney will be the keynote speaker at next month’s conference Attracting Global Capital. He will be joined by industry and finance leaders from the US, Europe and the UK.
Other speakers are Tim Morris of Proprium Capital Partners, James Muir of Patrizia UK, Ally Scott from Barclays bank, Gareth Lewis of PwC and Ian Marcus from Eastdil Secured.
The event on 9 March, just a few weeks ahead of the Scottish general election, will include a political hustings with Jackie Baillie (Lab), Gavin Brown (Cons), Kenny Gibson (SNP) and Willie Rennie (LibDem).
Chris Stewart, chairman of the SPF, said: “We need to start focusing attracting global capital. Local financing for new development is increasingly limited and so international capital is essential to Scotland’s commercial real estate sector and therefore the nation’s economic growth.
“As a sector we build homes for rent and purchase, which are desperately needed; we create new office space, which can attract expanding businesses and we can drive the regeneration of our towns and cities.
“But to do this we increasingly rely on investors, pension funds and private equity companies which have a global outlook and take an unemotional and risk averse view of their investments. This is the world we now compete within.
“The conference is the first time the SPF has brought together such an international line up of speakers and guests and it will give us the ideal opportunity to air the issues as well as discuss ways in which Scotland should adapt to maintain the interest of global capital.”
David Melhuish, director of the SPF, added: “The real estate industry is a vital contributor to both Scotland’s economic and social infrastructure, and attracting global capital plays a key part in bringing about the regeneration of our towns and cities.
“If Scotland is to attract inward investment, it needs to maintain competitive regulatory and tax systems, and it is essential that Government recognises this. Areas of the industry such as the build to rent and industrial sectors have the potential to deliver significant amount of new homes jobs, and securing international capital will be crucial to ensuring such growth.”
The Scottish commercial real estate sector contributes £6 billion to GVA and employs more than 60,000.
Photos: top – Chris Stewart; lower – St Vincent Plaza, Glasgow