GVA

GVA and PRSim to advise on new rental income guarantee scheme

A build to rent project is underway at Edinburgh's Fountainbridge

A build to rent project is underway at Edinburgh’s Fountainbridge

A strategic partnership has been appointed by Scottish Futures Trust (SFT) to advise on the Scottish Government’s landmark policy for supporting the emerging professionally managed Build-to-Rent (BTR) sector.

GVA and PRSim will join the Property Advisory Panel for the Rental Income Guarantee Scheme, which aims to unlock potential BTR developments with at least 30 units, through the mitigation of risk around the initial rent stabilisation period.

Through the fully integrated scheme, which was launched earlier this year, the Scottish Government will underwrite 50% of any shortfall in rental income that is between 75% and 95% of the agreed annual core rental income forecast (ARIF), the annual cost of which will be 1.22% of the ARIF.

In their advisory role, GVA and PRSim will jointly assess and report on an applicant’s ARIF in order to agree a benchmark for Scottish Government support, creating attractive investment opportunities that will facilitate the growth of BTR in Scotland as well as deliver much needed accommodation against a backdrop of a continued housing shortage.

In a recent research report into Scotland’s housing market undertaken by GVA and PRSim, it was revealed that there has been an increase in the proportion of 16-34 year olds privately renting from 16% in 1999 to 40% in 2016, driven by both difficulties getting on the housing ladder as well as a change in lifestyle and view on rented accommodation. The report discovered that 71% of Scots are content living in a rented home, with 82% of people believe renting a property best suits their lifestyle.

Barry White, chief executive of the Scottish Futures Trust, which manages the scheme, said: “RIGS has sent out a clear message which demonstrates the Scottish Government’s commitment to the Build to Rent sector as an important way to deliver much-needed quality housing.”

Alastair Carmichael at GVA added: “The Rental Income Guarantee Scheme is a breakthrough policy by the Scottish Government and a real milestone in the evolution of BTR in Scotland.  To have been appointed by the SFT in this nascent stage of our strategic partnership with PRSim is a strong endorsement not only of the strength of our combined offer, but also its uniqueness as we are the only true end-to-end experts operating a service in BTR. We look forward to developing this experience further through this innovative new Government policy and helping to deliver thousands of new homes to the Scottish market.”

Blog: Trams can keep Leith revitalisation on track

edintrams_elmrow_18thMay2017_smallerGVA’s Peter Fraser on why proposals to extend the tram service to Leith could see the area’s conversion into one of the premier places in Edinburgh to live, work and visit.

Other than the famous footballing rivalry between Hearts and Hibernian, you may struggle to find a more divisive subject in Edinburgh than the trams.

However, if done properly, plans to extend the tram service to Leith could be good news for the area as well as the city as a whole. The council has approved the outline business case for the extension and if it happens it could unlock Leith’s potential as a business destination.

Leith has undergone something of a revitalisation in the past few years and people have noticed. It’s been compared to London’s Shoreditch and named one of the trendiest places in the UK.

As well as range of stylish bars and restaurants popping up, Leith has also seen a surge in office take-up. It increased by over 35%, from 31,000 sq. ft. in 2015 to 49,185 sq. ft. in 2016 and this trend has continued this year. Businesses know amenities local to an office are important to attracting and retaining the best staff and Leith ticks those boxes.

Compared to the city centre office rents in Leith are much lower. A refurbished open plan space in Leith is around 40% cheaper than in the centre. Residential prices are also generally lower than across the rest of the city so it’s an attractive place to live and work.

So, how does the tram extension fit in to all this? To continue its resurgence and build on momentum to date, improving public transport to Leith (and, given population growth forecasts, Edinburgh) is essential. Creating ease of access from Leith, through the city centre and out to the airport will only increase the area’s appeal.

Those looking for office space will welcome Leith as an option. Edinburgh is like no other city when it comes to planning due to its UNESCO World Heritage Status, and rightly so. But we face a limited supply of office space in central Edinburgh and whilst the business parks in West Edinburgh are well established, they do not suit all occupiers so another urban business district is needed.

Locations like Leith, which has an abundance of brownfield sites and does not face the same planning restrictions, are essential to meet demand and must be used to address the shortfall.

Edinburgh has won plaudits as a hub for exciting tech firms but a shortage of new development stock will harm its ability to retain these and help new ones flourish. Many well-established tech firms started out in Leith and it retains an appeal for the sector. However, once businesses reach a particular size many find themselves driven to the centre to secure larger offices. Infrastructure development could help Leith retain start-ups or even bring back some that have moved.

We must fully consider the implications of building the tram extension and ensure the mistakes made last time are not repeated. But the extension could be the investment in Edinburgh’s infrastructure that simultaneously addresses the lack of office space, further modernises the city’s public transport network and completes Leith’s conversion into one of the premier places in Edinburgh to live, work and visit.

Falkirk Council launches Gateway development site

(from left): Ross Martin, chair of the British Waterways Trust; Jennifer Tempany, head of Business Development at Forth Valley College; Falkirk Council leader Councillor Cecil Meiklejohn; Keith Aitken, regional senior director of GVA; Douglas Duff, head of planning and economic development at Falkirk Council

(from left): Ross Martin, chair of the British Waterways Trust; Jennifer Tempany, head of Business Development at Forth Valley College; Falkirk Council leader Councillor Cecil Meiklejohn; Keith Aitken, regional senior director of GVA; Douglas Duff, head of planning and economic development at Falkirk Council

A suite of new marketing materials have been unveiled to help attract investment opportunities at the Falkirk Gateway development site.

Funded using Falkirk Council’s innovative Tax Incremental Funding (TIF) model, the Gateway is a project involving 150 acres of land.  Initial plans involve the formation of a new urban quarter, via £17 million of pump-priming investment.

A number of development sites and infrastructure projects fall under the Falkirk Gateway umbrella, including the state-of-the-art Falkirk Community Stadium and delivery of a new £83m STEM focussed Forth Valley College campus.

View of the Falkirk Gateway looking north over the site

View of the Falkirk Gateway looking north over the site

Falkirk Council appointed commercial property advisor GVA earlier this year to stimulate market interest and help attract investors to the site.

The council has been preparing the Gateway site to make it ready for development; works have included site investigations, topographical surveys, a review of broadband and utility provisions and preparation of an overall drainage strategy for the site.

Details of the opportunities available were unveiled at a launch event held in Falkirk Stadium yesterday.

The speakers included Douglas Duff, head of Planning and Economic Development at Falkirk Council, who provided an overview of the opportunities, Jennifer Tempany, head of business development at Forth Valley College, who shared the vision for the new campus and Ross Martin, chair of the British Waterways Trust, who has a significant track record in the development and diversification of Scotland’s economy over the past 25 years.

36330 GVA Falkirk Gateway South Site Boundary Graphics MedFalkirk Council leader, Councillor Cecil Meiklejohn, said: “We’ve been working on raising the profile of Falkirk on a national and international level and we are keen to build on that success by commencing the marketing of the Gateway site. These new plans signal another step in the transformation of Falkirk’s economic fortunes.

“It is a very exciting project which is being supported financially through the council’s £67m TIF Scheme. The Gateway is a prime, centrally located site and we are keen to work with businesses, developers and investors who are interested in making the site a success. With the significant and growing appeal of the Kelpies, the Community Stadium facility and the forthcoming Forth Valley College campus, there’s huge investment potential for developers across tourism, business and leisure.”

Keith Aitken, regional senior director of GVA, added: “The Gateway site is an exceptional location for investment with an excellent range of opportunities and a supportive planning framework.

“Innovative developments like the Kelpies, Helix Park, the Stadium and the new College Campus make the wider Falkirk area an attractive place to visit and do business.  This, coupled with a council with a can-do approach, means I’m confident we are well placed to attract investment in the Gateway’s exciting new urban quarter.”

36330 GVA Falkirk Gateway North Site Boundary Graphics MedThe Falkirk Gateway site is situated on the east side of Falkirk on the A9 (Falkirk northern distributor road) with access to the M9 network and good connections to the town centre.

The Falkirk TIF initiative, funded in partnership with the Scottish Government, is a key priority of the Council and the proposed works aim to improve infrastructure across the area that will enable further development, support traffic flow and attract private investment.

The Gateway site is one of 28 targeted investment zones identified by Falkirk Council.  The sites all have development potential in varying sectors from residential, commercial and industrial to tourism and leisure.

Blog: How can in-town shopping centres survive and thrive?

Bon Accord graphic illustration

GVA has been involved with the planning of the Edinburgh St. James’ development and the extension to the Bon Accord Centre in Aberdeen (above)

Planning expert Chris Miller on the challenges and opportunities facing town-centre shopping centres.

Recent headlines that the equivalent of one shop per day closes on Scotland’s high streets made for grim reading, but what’s behind this and, more importantly, what can be done to arrest this decline?

For a start, look at what types of businesses have been closing. Unsurprisingly the fashion industry saw the highest number of outlets close in 2016, with banks not far behind. The common theme there is the rise of the internet – people can easily manage money from their pocket or access thousands of items of clothing from their fingertips.

E-commerce has transformed the way UK consumers shop over the last 10 years and now accounts for 14.5% of total retail sales. If growth continues at a similar rate, then online retailing could potentially reach a quarter of all retail sales by around 2025.

It’s impossible to say when this growth will hit saturation point, but it is clear that traditional high streets and shopping centres need to respond to the threat from the internet if they are to survive in the long term. A number have responded by having less of a focus on pure retailing and offering something that online services will never be able to replicate, and that’s an experience.

Developments that people can shop, eat, drink and enjoy something recreational at are becoming increasingly popular solutions to get people away from their tablets and into town and shopping centres.

Recent examples of this can be found up and down Scotland. The redevelopment of Edinburgh St. James is arguably the most high profile of these and that will feature residential units, a hotel, and a cinema amongst a whole host of other attractions.

In Glasgow, the Buchanan Quarter mixes retail with residential flats, and the recently approved St Enoch Centre reconfiguration provides for a cinema and additional food and drink outlets. A planning application to provide a boutique cinema at Princes Square is also currently pending determination. And most recently plans to transform Sauchiehall Street, which has seen a dramatic increase in empty units over the past decade, have been given the go-ahead.

GVA are currently involved in proposals that have received planning permission in principle for the redevelopment of part of the Bon Accord centre in Aberdeen. The proposals could potentially deliver substantial benefits to the city-centre by creating a melting pot of uses and a high-quality public realm. The plans should improve connectivity between the Bon Accord Centre and George Street, and become a catalyst to reinvigorate that area of the city.

Aberdeen’s Union Square is also looking to undergo an expansion to allow for an additional hotel, expanded cinema and additional food outlets.

Mixing uses like this is in line with Scottish Planning Policy and its town-centre-first approach. It stands to reason that the more people you have living, working and visiting an area, the more economically prosperous it will likely be. This has been bolstered by mechanisms such as Tax Incremental Funding (TIF). However, there are still cities in Scotland that don’t make use of such methods – could Aberdeen follow in the footsteps of Edinburgh, Glasgow and Dundee and introduce one?

Planning authorities must continue to prioritise this approach for developments which have the potential to attract significant numbers of people into town centres. There have been examples of local authorities sticking by this approach and defending the viability of city centres. For instance, Aberdeen City Council’s planning department recently recommended a major retail development at Kingswells for refusal before the application was withdrawn.

As well as online shopping, out-of-town retail parks have shouldered much of the blame for the troubles facing town centre shopping. Out-of-town sites tend to benefit from free parking, are easily accessible by car and feature modern layouts that are often more shopper-friendly than older town centre buildings.

Conversely, town centres can require considerable investment to upgrade existing spaces and improve public realms. Such sites are also often within multiple ownership, subject to heritage constraints, or are hindered by servicing and access challenges. These factors can impact on viability, overly complicate and ultimately derail development aspirations, even with the support of local planning authorities.  Such issues make the prioritisation of town-centre-first development even more important.

Whilst older buildings in town centres may make it challenging to develop planning proposals, there is no doubt that the historic and social fabric of the built environment in these areas cannot be matched by most out-of-town sites.

Chris Miller

Chris Miller

Ideally, town centre developments should offer convenient and sustainable access to surrounding high streets, commercial and residential areas and should play to the strengths of being in the middle of a busy area through the generally larger local population, proximity of daytime office workers, employees, schools, tourists and the broader variety of smaller and often independent retailers and restaurants that are not often found in out of town destinations.

Developments that create vibrant spaces in city centres and give adjacent streets a shot in the arm are key to ensuring the longevity of in-town shopping and high streets across the country.

  • Chris Miller is a planning associate with commercial property advisory GVA

GVA appointed to attract investment for Falkirk Gateway development

Falkirk Council Gateway SiteCommercial property advisor GVA has been appointed by Falkirk Council to help attract investment for its Falkirk Gateway development.

The council created the Gateway development site in a bid to entice investors and therefore boost the future economic prosperity of the area. GVA’s role in the coming months will be to stimulate market interest and help attract local, national and international investors to the site.

Funded using Falkirk’s innovative Tax Incremental Funding (TIF) model, the Gateway is a project involving 150 acres of land. Initial plans involve the formation of an exciting new urban quarter, via £17 million of pump-priming investment.

A number of development sites and infrastructure projects fall under the Falkirk Gateway umbrella, including the state-of-the-art Falkirk Community Stadium and delivery of a new £83m STEM focussed Forth Valley College campus.

Work is currently underway to prepare the Gateway site and make it ready for development including site investigations, topographical surveys, a review of broadband and utility provisions and preparation of an overall drainage strategy for the site.

Keith Aitken, regional senior director of GVA, said: “With its excellent location at the heart of Scotland’s central belt, Falkirk has plenty to be positive about.  Innovative developments like the Kelpies, Helix Park, the Stadium and the new College Campus make the wider Falkirk area an attractive place to visit and do business. This, coupled with a Council with a can-do approach, means I’m confident we are well placed to attract investment in the Gateway’s exciting new urban quarter.

“With an excellent range of development opportunities and a supportive planning framework, not to mention Falkirk’s growing population and strong commitment to business growth, the Gateway is an exceptional location for investment.”

Douglas Duff, head of economic development and environmental services at Falkirk Council, added: “We are making good progress with the TIF initiative and are excited to witness this latest milestone in our plans for the coming year to support new development in Falkirk.

“Recent developments, including the Falkirk Wheel and The Kelpies at The Helix, have raised the profile of the area on a national and international level and we are keen to build on that success with the marketing of the Gateway site.”

The Falkirk Gateway site is situated on the east side of Falkirk on the A9 (Falkirk northern distributor road) with access to the M9 network and good connections to the town centre.

The Falkirk TIF initiative, funded in partnership with the Scottish Government, is a key priority of the Council and the proposed works aim to improve infrastructure across the area that will enable further development, support traffic flow and attract private investment.

The Gateway site is one of 28 targeted investment zones identified by Falkirk Council. The sites all have development potential in varying sectors from residential, commercial and industrial to tourism and leisure.

Blog: Investment confidence in Scotland remains strong

Stuart Agnew

Stuart Agnew

GVA’s Stuart Agnew says investor confidence in commercial property in Scotland has been impressive so far this year despite ongoing political uncertainty.

Over the past five years we have lived in times of near constant political turmoil and uncertainty.

That’s usually bad news for investment intentions in the commercial property world as with uncertainty comes risk, and it is naturally therefore easier to play a safe hand rather than take a brave decision and be in the minority in such circumstances.

However, Scotland’s investment market has shown signs of strength in the first quarter of 2017 with a deeper depth of investor interest compared to 2016. This has come despite constitutional wrangling being front and centre of the political agenda again this year.

In fact, we’ve seen several investments that did not sell in 2016 going under offer or completing in the last three months. Examples of this include The Tun and Orchard Brae House in Edinburgh, as well as 7 West Nile Street, Glasgow and the recent Redevco purchase of the Nike store on Buchanan Street for c £29 million.

These recent deals indicate to me that the big political debates swirling at Scottish, UK and European levels are unlikely to cause a meaningful change in the property markets in Scotland in the short to medium term. GVA were involved in the sale of the Hovis Distribution unit at Eurocentral earlier this year, which sold for a yield of 7% when it had originally been under offer at a lower price at the end of last year. There is still a degree of confidence about investing in Scotland.

There have also been other major commitments to Scottish real estate which provide a degree of confidence looking forward. These include the investment by the Dutch pension Fund, APG, into the St James Centre in Edinburgh (c £400m), the purchase of the Kingsgate Shopping Centre by Orion for c £90m and the TH Real Estate purchase of the Omni Leisure scheme in Edinburgh for c £75m.

There are a few factors that are undoubtedly helping to sustain prices in the marketplace. These include the scarcity of good quality sensibly priced stock and a positive underlying occupational story in the industrial, retail and office markets. Indeed, whenever new investment opportunities become available they attract strong initial interest.

Also, given that no-one has a clear idea what the outcome will be of the major constitutional debates currently being played out a case could be made that investing in Scotland is viewed as a risk diversifier. As questions remain about passport rights and regulations around the UK’s terms when exiting the EU, investors may view Scotland as an opportunity to spread the risk of any poor Brexit deal, regardless of the spectre of independence and its possible consequences. If businesses still require a base within the EU post-Brexit, then why not Scotland as opposed to mainland Europe?

At present, concerns remain about the economic effect and currency implications of continued political uncertainty. However, the nervousness about the independence issue is, we believe, starting to lessen and indeed part of the reason that some UK Funds are not investing is down to quite significant buying activity in 2014 and 2015. UK funds and both international and high-net worth investors who know the marketplace have confirmed that they wish to be active in Scotland in 2017 and beyond.

The bottom line is that investing in commercial property in Scotland is and will remain attractive for both UK and international investors, and I don’t anticipate this will change in the medium term.

  • Stuart Agnew is senior director of investment at GVA

Blog: Planning regulations in Scotland need to be stirred, not shaken

Richard Slipper

Richard Slipper

Richard Slipper of GVA on why Scotland’s new planning system should blend the best of the old with the new.

Few who have experiences of the process would argue that there has been a chronic underinvestment in the planning system in Scotland in recent years.

And that’s why plans to increase planning fees in Scotland by the equivalent of over 500% should be welcomed with a note of caution.

Following an independent review, the Scottish Government has unveiled comprehensive plans to radically overhaul the planning system in a bid to modernise it. The planning fees increase is the most eye-catching of those changes.

Currently, maximum fees are set at £20,050 for detailed applications and £10,028 for ‘in principle’ applications. These could rise to £125,000 and £62,500 respectively under the new system.

The only way that kind of fee rise would be acceptable is if a direct benefit was seen, with the money being ploughed into properly resourcing the planning system at local authority level to vastly improve efficiency and speed up the process. Measures to ring-fence the cash for that purpose should be guaranteed within any new legislation.

All proposed changes in the Places, People and Planning Whitepaper are designed to modernise the system, making it more efficient and transparent to all involved.

The proposed new planning system is also intended to strengthen national leadership through a National Planning Framework (NPF), which identifies national and regional ‘aspirations’ for housing delivery and established priorities for planning at a regional level. More specific national guidance on planning would be ideal, but it remains to be seen whether ‘aspirations’ alone would be enough to deliver the housing supply Scotland desperately needs in the face of the vastly different approaches taken by differing local authorities in their regions.

The NPF would be underpinned by Local Development Plans (LDP) and Local Place Plans (LPP). The place plans, if implemented properly, should drive community engagement and encourage more interaction with the process at a local level.

LDPs work in five year cycles at present, but this would be increased to ten under the new system. With such a long cycle the main issue is what would be the triggers for a review, and would the power to call for such a review rest locally or nationally? Tensions between national and local planners have been identified as a major issue within the current system, and this represents a potential flashpoint between the distinct groups.

Anything that gets communities involved in planning in their own area should be welcomed, but the system must ensure LPPs are a tool to support change and not a roadblock which frustrates development that is being encouraged at national level.

Another change could see more appeal decisions taken by councillors sitting on a local review body. The issue this raises is whether such an initiative would be properly resourced or supported by cash-strapped councils. Some also wonder whether elected members will have the technical skill or professional understanding to make such decisions. Similarly, we need to know what steps will be taken to ensure those involved at an LPP level have enough knowledge and expertise to make well- informed choices.

At present, viability assessments are not required for planning proposals. However, the new system would require these for ‘major’ scale housing proposals to demonstrate deliverability. Such assessments should allow for better planning decisions to be taken at an earlier stage, and are to be welcomed. Specialist viability studies on challenged sites represent a key opportunity where planners and surveyors can and should collaborate.

Whilst these new proposals are debated it is imperative that the system is allowed to run as smoothly as possible in its current form.

Scotland has too many examples of strategic and economic projects on hold or withdrawn due to planning drift. It can only be hoped that any resulting legislation blends the best of the old with the new – and creates the perfect recipe for growth that unlocks the seemingly perpetual housing crisis in Scotland.

  • Richard Slipper is senior director of planning development and regeneration at GVA