Following the no vote in last year’s independence referendum, the Scottish property market has been one of the first places investors are looking when seeking to add to their portfolio. Here are three of the main reasons the market is thriving.
THE UK’S BIGGEST CAPITAL GROWTH POTENTIAL
The years of uncertainty prior to the referendum prevented property in Scotland undergoing the sustained price inflation that occurred in the rest of the UK. In fact, areas of Scotland are significantly undervalued.
To the investment community this means one thing – massive potential for capital growth. And evidence suggests, this growth curve is already underway.
Over the past 12 months, the Office for National Statistics shows property values in Scotland have increased by 14.6% – higher than anywhere in the UK. London property only amassed growth of 11.2%.
HISTORIC LEVELS OF RENTAL DEMAND
Like many areas of the UK, the Scottish private rented sector is undergoing a significant expansion.
A mixture of tougher mortgage criteria and a growing preference for rental accommodation means that rental demand is at an all-time high and investors know that they can not only get an immediate return on investment, but that yields are set for long-term growth.
Figures released in April revealed Scotland’s buy-to-let market recorded its fastest year-on-year increase in rental rates in five months with an annual growth of 1.6%.
The buoyant Glasgow and Clyde rental market drove this impressive performance with a 5.0% yield increase over the past 12 months.
As the supply of new housing remains restricted, investors and industry experts are recognising the market’s ability to continue yield growth.
Area Lettings Director at Your Move Brian Moran said: “Scottish rents have peaked at a new apex, as lethargic supply of rental homes fails to match up to towering demand for homes to let.
“After rental prices plateaued over the winter months, we’re seeing annual rent rises start to ascend again. Solid rent rises offer clear encouragement for those contemplating buy-to-let investment.”
A PRIME STUDENT ACCOMMODATION INVESTMENT OPPORTUNITY
Student property is currently the investment asset of choice. More than £9 billion has been spent on the asset class over the past three years and Knight Frank has identified that it currently outperforms all other property investments.
The Scottish segment of the property market is unique. Nowhere else in the UK can investors provide accommodation for students that do not have to pay tuition fees. Consequently, the domestic student market has much more disposable income. Furthermore, as most Scottish universities favour four-year degrees, the opportunity for repeat bookings and longer tenancies is much higher than elsewhere in Britain.
Education has always remained a key piece of Scotland’s identity and now the country is home to many of the UK’s most prestigious universities. These attract a huge number of students. In Glasgow alone, there are 80,000 students looking for accommodation – indeed, the West End of the city was recently found to offer the UK’s highest student yields.