Surprise survey findings
Investors ‘not put off’ by EU poll or independence
Almost four in five (79%) said Scotland separating from the UK would not affect their decision to invest.
A similar number (85%) said that “leaving the EU would have no impact at all on their likelihood to invest in Scotland”.
It is widely believed that property investors are deterred by uncertainty over the EU vote and the prospect of a second Scottish independence poll in the event of a “Brexit”. One property agent last week told Daily Business that the market was very quiet.
But the findings of the survey by Morton Fraser appear to undo suggestions that the EU referendum will dramatically affect property investment sentiment towards Scotland in the longer term.
Other factors, such as yield, capital growth and a stable tax regime rank higher in importance.
One in four property investors is open to investing in Scotland with more than one in 10 (11%) actively monitoring or currently pursuing opportunities. Proportionately, this is above the nation’s 8.9% share of the UK commercial real estate market.
David Stewart (right), commercial real estate partner at Morton Fraser, said: “Viewed in context, one in four investors leaving the door open to entering the Scottish market and over one in ten actively pursuing investment opportunities is much more positive than it can appear at first blush.
“It is easy to overestimate the potential impact of Scottish independence on the property market. Investors are ready to enter the market if the right opportunity arises, regardless of the political status of the country.
“That gives us optimism for the future of the Scottish real estate industry. If the price is right and the market conditions are at least on a par with other regional areas across the UK, investors will follow the returns. The prospect of a neverendum in Scotland may drag investment, but it’s not the deciding factor for many.”
With rental yield the number one criteria for potential British property investors looking to enter the Scottish market, Morton Fraser has uncovered the ‘tipping point’ at which a yield premium would encourage investment.
Of the property investors likely to invest in Scotland if there was a higher yield premium, 70 per cent said a benchmark of more than 3% or higher would encourage them to invest, with 31% saying more that 5%. That figure should be viewed in the broader context of many respondents being initially “cold” on investing in Scotland, so the true figure for active investors is likely to be sharper.
Mr Stewart added: “Many investors are prepared to overlook ideological or political issues to run the rule over Scottish property investments.
“The ‘yield gap’ between Scotland and other regional cities in the rest of the UK can always be met with a quality opportunity – whether you are looking to invest in Edinburgh or Manchester, Glasgow or Bristol, a high quality asset will always stand on its own merits.”
*All figures, unless otherwise stated, are from YouGov. Total sample size was 311 British adults with investment in properties. Fieldwork was undertaken between 5th – 11th April 2016. The survey was carried out online.