Commercial property and transport infrastructure on Budget Statement wish list
The Scottish Property Federation (SPF) has called on the Scottish Government to take positive steps to boost commercial property investment to aid economic development.
In a submission put to Finance Secretary Derek MacKay MSP ahead of tomorrow’s Budget Statement, the SPF highlighted the release of figures showing a fifth quarter of decline in Scottish commercial real estate investment levels in Q3 (June to September 2016).
The SPF has written to the Cabinet Secretary with a framework of 16 key proposals, including:
- Development rates relief, to support projects currently delayed through concerns over empty rates charges and to inspire confidence in the market.
- Raising the LBTT threshold is to £500,000 as a means of releasing additional economic activity and revenues for public services.
- Reform the large business supplement to support occupiers and move back into line with its equivalent in other parts of the UK to ensure Scotland retains a competitive rates system.
The SPF’s analysis shows the total value of all commercial sales in Scotland between July and September 2016 (Q3) fell to £636 million – 22.3 per cent down from Q2 2016 and 6.5 per cent lower than in Q3 2015. Aberdeen continues to see a major market realignment while Glasgow posted its lowest quarterly total sales value since Q2 (Apr-Jun) 2013.
In Q3 the city saw £53.9m in sales of commercial property from 114 transactions, down 73 per cent in both quarter-on-quarter and year-on-year comparisons.
In addition, SPF noted with some alarm that there is no speculative Grade A office development anticipated in the city until 2019 at the earliest. Edinburgh is also suffering from a lack of speculative commercial development despite reports of good take-up of office space.
David Melhuish, director of the SPF, said: “The latest investment transaction figures show that there was already a marked dip in commercial sales for investment across Scotland up to Q2 2016 – something that the uncertainty caused by EU referendum did nothing to correct.
“That’s why it’s more important than ever that the Scottish Government uses the policy levers at its disposal to show that Scotland means business when it comes to growing the economy, creating jobs and expanding the tax base sustainably.
“We have suggested sixteen measures, including making business rates competitive, reforming empty property rates to support new development and reforming the 5 per cent residential LBTT rates and would urge the Cabinet Secretary not to delay before providing the support that the sector and wider Scottish economy needs so urgently.”
Meanwhile the Scottish Chambers of Commerce said the Scottish Government must use its additional capital spending to tackle key bottlenecks in Scotland’s transport infrastructure, starting with the notorious Berriedale Braes section of the A9 in Caithness.
Liz Cameron, chief executive of Scottish Chambers of Commerce, said: “Scotland’s economy needs to be connected to succeed and this is particularly important for rural communities where transport infrastructure is fragile and provides a lifeline link to the wider Scottish and international economy. That is why the Scottish Government must use the additional £800 million of capital spending that it gained through last month’s UK Autumn Statement to invest in upgrading some of the most problematic sections of Scotland’s transport network, starting with the Berriedale Braes on the A9 in Caithness.
“The Scottish Chambers of Commerce network wants to see the Finance Secretary take the opportunity provided by this Thursday’s budget to commit funding to delivering the Berriedale Braes project as part of a renewed programme of transport investment in Scotland, driven by the additional resources unlocked through the Autumn Statement. A green light for the Berriedale Braes would be an excellent start to tackling Scotland’s problem bottlenecks.”
Trudy Morris, chief executive of Caithness Chamber of Commerce, added: “The Berriedale Braes has long been a notorious weak link in Scotland’s trunk road network. Too often, accidents there have cost lives and closed off the only practical road route in and out of Caithness, damaging trade and our local economy. Now that a planned upgrade to the road has successfully negotiated the planning process, the only barrier is the allocation of government funding.”