Property headwinds ‘never more challenging’
Property development is being held back by a series of unprecedented challenges, according to one industry leader.
David Peck, managing director at Buccleuch Property, told a gathering of sector professionals that a number of headwinds meant the opportunity to move forward was “almost impossible”.
Speaking at the MyCity event organised by Cushman & Wakefield in Edinburgh, he said: “I do not think I have seen a more challenging environment. There are so many headwinds it is making the viability of opportunities challenging.
“Typically there may be planning delays, but it feels like we have everything coming at us at the moment.”
He said there were some positives in the market, such as the developments at Fountainbridge in Edinburgh, the potential redevelopment of Argyle House and the Winchburgh project. His company has also completed a retail investment on George Street.
“We are also sitting on a lot of cash earning 6% interest,” he said, though he noted that this is money that is not being invested in the market.
Aside from planning and regulatory issues holding back progress he said the sector faced rising costs and a “stand-off” between buyers and sellers to settle on value.
He and other panellists at the event echoed widespread dismay at the Scottish Government’s rent freeze which coincided with rising costs.
Donald Anderson, of Playfair Scotland, said this had led to £1.5 billion of investment in the build-to-rent sector being diverted south of the border.
“The rent freeze was an irrational decision,” he said. “It stopped the development of houses that people are screaming out for. Policies like that do not make sense and do more harm.”
Delegates gathered to hear about research into the re-shaping of cities over the years to 2040. They were told that remote working meant the UK office market is forecast to shrink by 17% and by as much as 30% at its most extreme. This would be the equivalent to losing or re-purposing the entire office space in the City of London.