Building Briefs – March 11th

• Strong end to 2018 for Scotland’s commercial property market

Industrials also had a strong end to the year, achieving the highest return of the three main sectors.

Office and industrials returns have increased year on year, with offices achieving 8.2% compared to 5.9% in 2017, and industrials increasing from 7.9% to 8.6%. Offices were 2.0% ahead of the UK figure of 6.2%, whilst retail returned 4.7% compared to the UK’s -1.1%, and alternatives, which has continued to be the best performing sector in Scotland, and the only one to achieve double-digit returns in 2018,  achieved 10.6% compared to the UK’s 7.5%.

Despite weaker performance throughout the year, industrials regained their status as the best performing sector in Scotland, producing total returns of 2.7% in Q4. Capital and rental value growth both saw substantive improvements during the year, with capital values up by 2.5% and rental value growth of 1.0%.

The total return for the office sector in Q4 2018 was 1.8%, which although below the mid-year highs of 2.4%, marks a significant improvement from the lows of 2016 when total returns bottomed out at -2.3%. Despite rental values falling by 1.1% during 2018, capital value growth was 2.8% over the year.

Given the current challenges facing the retail sector, it’s unsurprising that at the close of the year the outlook remained subdued. Despite a drop from 1.0% in Q3 to -1.2% in Q4,  Scottish retail outperformed the UK in 2018, most notably for high street shops, which produced an annual return of 4.7% compared to the UK’s -1.1% . The decline in retail capital values accelerated in Q4 with values down by 2.6%, meaning a fall in capital values of 4.2% over the full year. Rental values also declined during the year, by 1.0%.

Compared with performance for the whole of the UK, Scottish returns have been more resilient in Q4. This is best seen within the retail sector where annual returns for the UK have fallen by 2.75% during Q4 compared to a 0.40% fall for Scottish retail. At the all property level, the picture is very similar with UK returns down by almost 1.5% whilst Scottish returns were unchanged.

At a city level, industrials remain the star performer of the three main sectors with both Glasgow and Edinburgh industrials topping annual total returns at 16.1% and 15.3% respectively. In Aberdeen, although total returns were significantly lower, industrials at 3.4% still outperformed the other main sectors. Edinburgh offices saw an annual total return of 12.7%, with Glasgow offices at 8.6%. Whilst retail performance was weak at a national level, Glasgow notably bucked this trend at 6.8%. Aberdeen’s weak performance was in part due to a significant fall in the retail sector during the last quarter of the year when the annual total return dropped to -6.7%, the lowest on record since 2009. This was driven by a large fall in capital values in the final quarter of 2018, down by 8.3% over the final three months, leading to an annual decline of 12.2%.

During the last quarter of the year, £642m of stock was transacted in Scotland, demonstrating a strong final quarter, bringing the annual total to £2.49bn in 2018. This is broadly in line with the £2.5bn achieved in 2017. The retail sector total was boosted by the sale of Fort Kinnaird Retail Park, located on the eastern edge of Edinburgh, which was acquired from The Crown Estate by M&G Real Estate for £167.25m. 2018 also stood out due to the lack of any major shopping centre sale, which has traditionally boosted volumes in the sector.

• Ashleigh Construction begins work on new school facilities

Young learners and residents in Bellsbank are celebrating as work officially began to build them a bright new Primary School, a new Early Childhood Centre and a new community facility.

The new facilities represent a £6.1 million investment to replace the existing school with £4.65m coming from East Ayrshire Council and an additional £1.45m from the Scottish Government Early Learning and Childcare capital funding programme.

The council had already planned to create a new Primary School, but the additional government funding has allowed the original plans to be expanded and significantly enhanced, creating an exciting social, leisure and educational hub in the heart of the village together with early childhood facilities that meet the needs of the Scottish Government’s commitment to provide free childcare for all 3-5 year olds and eligible 2 year olds.

The building work will also see Ashleigh Construction offer a number of local pupils work experience, with additional apprentices being taken on to learn on the job. Site visits and engagement events with the local community and schools are also planned, allowing the community to have an insight and up to date knowledge on the progress and eventual benefits.

The new Bellsbank school and ECC is scheduled to open in spring 2020.

• Committee seeks views on Scottish National Investment Bank proposals

Views on a proposed national long-term investment bank are being sought by the Scottish Parliament’s economy, energy and fair work committee as part of a new inquiry into the Scottish National Investment Bank (SNIB) Bill.

The Bill was introduced to Holyrood on February 27, and grants the powers required to establish the bank.

The committee is now exploring whether the bank will help support economic growth in Scotland and what strategic direction it should take.

As part of the inquiry, the Committee will scrutinise the rationale for the bank, the objectives and focus of investment activities, operational costs and its organisational structures.

The call for written views will close on Friday 3 May 2019.

Written responses should be sent electronically, in the template format to economyjobsandfairwork@parliament.scot

Further information on the call for views can be found here.

• Holyrood committee endorses proposed new enterprise agency for the South of Scotland

The creation of a new South of Scotland enterprise agency has been given full support by the Scottish Parliament’s rural economy and connectivity committee.

The findings come in a Stage 1 report on the South of Scotland Enterprise Bill.

The committee has been considering the Bill, which aims to establish a dedicated enterprise agency specifically for the Scottish Borders and Dumfries and Galloway.

The committee said it is of the view that the aims of the new agency set out in the Bill should be supplemented to include matters such as encouraging the development of a sustainable economy; supporting the enhancement of transport networks and digital connectivity; supporting community land ownership and assets ownership; and encouraging the sustainable use of the environment.

The deadline for Stage 1 consideration is 29th March. Find the committee’s full report here.

• Council launches new tool for publishing Business and Industrial Land data for Highland Areas

The Highland Council has today announced the release of a new mapping tool for available business and industrial land across the council area that is aimed at supporting investment in the Highlands.

The Business and Industrial Land Audit (BILA) measures the availability of land allocated in the Local Development Plan(s) for business and industrial uses and grades it according to how quickly the land can be made available and prepared for use. The results of audit are used to formulate strategies and inform policy documents.

Sites were assessed in late 2018 and the final results reveal that a total of 324 were available for development. Sites were categorised by availability and any constraints delaying development were identified. 94 sites comprising of a total of 221ha were assessed as being immediately available for development. The information provided within the BILA will be of use to developers and other parties with an interest in business and industrial land.

Presented in a “Story Map” format and hosted on the Highland Council’s website it provides multiple views of the same data aimed at better explaining the availability and status of land across the Highland Council area. Presentation in this form includes graphs and summary tables, descriptive text and interactive mapping.

The BILA Map is available here.

• Holiday park plans lodged at West Linton golf club

An application has been submitted to turn a former Borders golf course into a large holiday park.

Middlesex-based Sandy Lane Resorts Ltd wants to build 180 lodges at Rutherford Castle near West Linton.

The full planning application also includes a retail village, swimming pools, a bowling alley, bar, restaurant and function room.

A pre-application notice was submitted last year and the company held a series of consultation events.

It has now scaled down its plans - removing touring pitches, glamping pods and tree houses - from the initial masterplan.

• Work to begin at Dunoon Breakwater

Work to improve the ferry passenger experience at Dunoon Breakwater will begin today.

Following the announcement by the Scottish Government that CalMac Ferries will provide a passenger-only service between Dunoon Breakwater and Gourock Ferry Terminal, Argyll and Bute Council has committed to making changes to passenger facilities at Dunoon.

The work will improve safety and provide facilities more suited to a passenger-only service, while any disruption will be kept to a minimum.

The first stage of the work will see the toilets and waiting area relocated, which will be undertaken over the course of the week and require those facilities to be closed in that time. Temporary toilet facilities will be provided for the duration of the works and the ferry schedule will not be affected. Shelter for waiting passengers will be available at the existing shelter at the Breakwater and at the existing bus shelters.

Works are due for completion by Friday 15th, with the waiting room expected to be operational mid-week.

• BEAR to carry out essential resurfacing works on Tain South

The Highland Council has issued revised dates for essential resurfacing works on a section of the A9 Trunk Road, on the Tain Bypass.

The new dates are from Sunday 24 March to Friday 29 March 2019.

The works will be carried out by BEAR Scotland, acting on behalf of Transport Scotland.

The works will require the Tain South junction with the A9 to remain closed between the hours of 7pm and 7am from Sunday 24 March to Friday 29 March and traffic will be diverted onto the B9174 via the Tain North Junction.