Edinburgh-based estate agent Rettie & Co outlines mixed Scottish residential investment landscape
The Edinburgh-headquartered firm has highlighted what it sees as strong fundamentals underpinning the residential investment opportunity north of the Border. However, it also says political risk, including the continuation of a rent freeze cap as part of emergency legislation, has translated to negative investor sentiment towards Scotland.
These views are expressed in the organisation’s Build to Rent (BTR) Scotland, Scottish Market Review 2023, with John Boyle, Rettie’s director of strategy and research, saying current investor sentiment should be considered a “major concern” given the scale of the housing supply crisis.
He said: “It’s impossible to hide what can only be described as a pessimistic picture of the Scottish [private rental] and BTR sectors, although we believe the market still has the potential to deliver for those bold enough to invest, so, we’re not ruling out a year of discontent moving into more of an Indian summer.”
Gillian McLees, director of BTR at Rettie & Co, added: “While it was hoped that institutional investors would step in to fill the shortage of housing in the private rental sector, a number of factors including political intervention in the sector continues to exacerbate the problem of supply.
"This means that we are getting thousands of applicants for our properties who we are having to turn away, many of whom are in desperate need... but there is nothing close to an adequate supply of housing.”
The property business, which says it now has almost £1 billion in assets under management, working with organisations including Forth Ports and Moda Living, also says that while the sector continues to grow in Scotland, the speed of development is still “significantly” behind that elsewhere in the UK.
The report indicates that an improved investment environment will help to drive the approximately 14,000 planned BTR and mid-market rent units in Scotland, collectively valued at around £3bn, which are still to reach the construction phase. It also notes that of the 17,000 or so BTR units operating or in the pipeline in Scotland, around 8,500 are in Glasgow, 6,500 are in Edinburgh, and about 1,300 are in Aberdeen.