The review from Rettie & Co. highlights the strong fundamentals surrounding the residential investment opportunity in Scotland, but also negative sentiment towards Scotland’s Private Rental Sector (PRS) from UK and International investors.
However, political risk, including the continuation of a rent freeze cap as part of emergency legislation, has disrupted investor appetite in Scotland’s Build to Rent market.
“It’s impossible to hide what can only be described as a pessimistic picture of the Scottish PRS and Build to Rent 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.”John Boyle, Director of Strategy and Research, Rettie & Co.
Rettie & Co. says that while the sector continues to grow in Scotland, the speed of development is still significantly below the trajectory elsewhere in the UK. The report indicates that an improved investment environment will help to drive the approximately 14,000 planned Build to Rent and MMR units in Scotland, collectively valued at around £3bn, which are still to reach the construction phase.
Of the approximately 17,000 Build to Rent units operating or in the pipeline in Scotland, around 8,500 are in Glasgow, 6,500 are in Edinburgh, and in the region of 1,300 are in Aberdeen.
“While it was hoped that institutional investors would step in to fill the shortage of housing in the Private Rental Sector, numerous 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, and we would love to accommodate, but there is nothing close to an adequate supply of housing.”Gillian McLees, Director of Build to Rent, Rettie & Co
Rettie & Co. now has almost £1bn in assets under management, working in partnership with organisations including Forth Ports and Moda Living.