Political meddling blamed for plunge in investment – Daily Business

Property professionals heard today that political interference had led to “six years of uncertainty” and led to a plunge in investor confidence in Scotland’s real estate sector.

Delegates attending the Scottish Property Federation’s annual conference in Glasgow were told delays over new rent rules in the Housing Bill were holding back the delivery of new private rented homes.

This was evidenced by a 45% reduction in build to rent construction activity from an already low level.

SPF chairman Stuart Oag said: “Why are we making what to do so difficult to achieve?  Is it possible that politics is getting in the way?”

Scotland has under 4,000 new purpose-built private sector rental homes, while England has delivered and diversified over 110,000, he said.

The SPF is calling on the Scottish government to move quickly to support new build homes at market and mid-market rents and “decisively quash any proposals to extend rent controls beyond sitting tenants.”

Mr Oag told delegates that because of next year’s election the debate on the Housing Bill on possible exemptions for rent controls will have dragged on for six years.

“That is six years of uncertainty,” he said. “Six years where private sector investment in new build housing for rent has been effectively stopped, and six years spent dismantling rather than encouraging a sector of the economy critical to economic growth and the supply of housing.”

Lismore identifies living sector investment

Student accommodation remains popular with property investors despite concerns over international student numbers, according to the latest research.

The end of rent caps is seen as encouraging more interest in the “living sector” which is attracting the attention of 72% of investors polled by advisory firm Lismore Real Estate Advisors.

Lismore’s research shows that sustainability (28.3%) remains a top priority for Purpose Built Student Accommodation (PBSA) investors, reflecting the sector’s alignment with ESG standards, while demand is also driven by unit mix considerations (24.1%) and reliance on overseas students (23.0%), particularly in prime locations.

Chris Thornton, associate director of Lismore, said: “The PBSA sector continues to be one of the shining lights, performing strongly, driven by resilient demand and stable capital values, particularly in cities with a Russell Group university.

“Despite concerns over international student numbers, institutional investors, private equity firms and specialist platforms remain highly engaged in this sector.”

Murdo Mcilhagger, managing director of MYS Student Living, added: “The PBSA market has returned to fundamentals, with strong assets continuing to perform well, supported by macro tailwinds such as growing international student demand and policy shifts.

“While transaction volumes remain below average, activity is picking up as debt costs
ease.

“Investors must focus on customer demand, location quality and operational efficiencies,
particularly as sustainability becomes a key factor in both revenue generation and cost
management. However, challenges persist, including a lack of sellers, thin interest in
secondary assets and fire safety remediation impacting liquidity.”

Elsewhere in the market, Lismore’s quarterly review statistics show that it has been relatively
slow start to the year, with cautious investor sentiment, limited stock availability and ongoing
economic uncertainty dampening activity.

Transaction volumes in Q1 totalled £202 million, with the largest being Realty’s £66.20m acquisition of Abbotsinch Retail Park in Paisley (as part of a portfolio) from Ashby Capital.

Other notable transactions included L&G’s purchase from Glencairn Properties of the PBSA development at Lower Gilmore Place, Edinburgh, Cervidea’s acquisition of 98 Buchanan Street / 31 Royal Exchange Square in Glasgow and French investor, Remake Asset Management’s acquisition of the Nike Store at 18-20 Buchanan Street, Glasgow.