The Scottish government, Brexit and the subject of a second independence referendum are never far from the headlines at the moment. Indeed just last week the Royal Institution of Chartered Surveyors (Rics) issued a report suggesting the Scottish commercial property market was falling behind that of the rest of the UK. There would appear to be a number of issues facing the Scottish commercial property sector in the short to medium term and many investors will be waiting on the sidelines to pick their moment.
Political uncertainty
There are many property markets around the world which are being held back by political uncertainty and concern in the short to medium term. There is general political concern in the UK although some experts believe that Scotland also has its own unique issues. It is no secret that the Scottish government, made up of the SNP, is pushing for a second independence referendum in light of the decision to pull the UK out of the European Union.
Despite the fact that the last referendum in 2014 saw a similar negative short to medium term impact on Scottish property prices, it seems that politicians are determined to push for another referendum.
Edinburgh and the central belt
Edinburgh and the central belt of Scotland are the home of some of Scotland’s leading businesses. Some experts have noted a reduction in new commercial property developments in the short term as investors await the conclusion of political talks. The problem is that this reduction in commercial property investment is very often mirrored by the business sector which will both have a negative impact upon the Scottish economy.
The Rics report has highlighted the challenges facing Scotland in the short to medium term even though politicians appear to be ignoring them.
Long-term prospects
If you look back at the 2014 Scottish independence referendum this saw many businesses putting expansion plans on hold in the short to medium term. However, once the result of the referendum was announced and the “once in a lifetime” vote was over, the market has been gradually improving. Scotland’s future lies either within the UK or within the European single market so while there are short-term concerns surely the long-term future is a little more secure?
At this moment in time it does look as though Scotland will remain part of the UK and the UK will eventually build a different relationship with the European single market. So, is the ongoing reduction in demand for Scottish commercial property a long-term buying opportunity?
Looking at the bigger picture
The array of negative headlines suggesting the UK economy will struggle outside of the European Union has certainly had a short-term impact upon sentiment. It is easy to forget that the UK is one of the largest economies in the world and the European Union accounts for less than 10% of the worldwide economy. Surely there are more opportunities for the UK to negotiate standalone trade deals with countries around the world?
There may be some short-term volatility and concern in the UK commercial property market, and perhaps more so with the Scottish market, but are we not ignoring the long term benefits of going it alone?