Jonny Seddon: Why adaptability is now Scotland’s real estate advantage

After years of political shifts, rising costs and funding pressures, Scotland’s real estate sector has learned to keep projects moving even when conditions are far from settled. High interest rates and persistent inflation have slowed decision-making, yet demand for quality space remains – a sign of a market adjusting rather than stalling.

In many ways, Scotland is well placed to navigate this period of uncertainty because adaptability has become one of its defining strengths. Put simply, Scotland’s developers and investors have learned to be comfortable with being uncomfortable – but how have they achieved this?

In a market where volatility is the new normal, investors are increasingly drawn to environments that can evolve – legally, commercially and physically. Scotland continues to offer solid fundamentals – a stable legal system, a deep professional base, and a proven ability to deliver complex projects. But the true test of value now lies not in how quickly a project can be delivered, but in how well it can respond to change once built.

Take the £350 million Haymarket Edinburgh development. More than two decades in the making, it finally broke ground in 2020 after changing ownership several times. A major pre-let agreed during lockdown enabled construction to go ahead, turning the project into a symbol of progress amid uncertainty.

That same mindset - timing, pragmatism and flexibility - now defines how many developers and funders operate. Projects are advancing on more adaptable terms, with design, financing and delivery models built to absorb uncertainty rather than resist it. The days of waiting for a stable market cycle to return are gone. Progress now depends on agility – and on recognising that a cautious but active market can still offer opportunity.

That idea framed much of the discussion for the real estate group session at Interlaw’s AGM in Edinburgh recently, where lawyers from across 80 jurisdictions compared how different markets are adapting to change. What stood out was not how challenging Scotland’s conditions are, but how well the market has learned to live with them. Uncertainty has forced innovation – and that is no bad thing.

Over the past five years, the number of variables shaping any new development has multiplied: costs are less predictable, finance is tighter and policy signals shift quickly. Therefore, traditional approaches that depend on long-term stability no longer work. The developers and investors making progress are those who have built flexibility into every stage of their process - design, phasing, finance and delivery.

This flexibility is increasingly what attracts investment. Projects that can adapt to changing conditions – for example, by phasing delivery to match demand, repurposing upper floors for flexible workspace, or incorporating residential or student accommodation alongside commercial units – are now seen as resilient, not risky.

The same principle applies to legal structures. Deals that allow sensible adjustment to cost or timescale are more likely to complete than those that cling to rigidity. Strength now lies in balance: contracts must be firm enough to protect value but flexible enough to let progress continue when circumstances shift.

At MFMac, we’re seeing this shift play out across the projects we advise on. Developers are designing schemes that can evolve with demand – for example, converting redundant office buildings into student or build-to-rent housing. Meanwhile, funders are backing phased delivery models that release capital as occupancy targets are met, while advisers are working together earlier to create legal frameworks that share risk through joint ventures or conditional milestones.

If uncertainty is here to stay, resilience has to be designed in from the outset – through flexible contracts, adaptable schemes and pragmatic decisions. It also demands confidence: the courage to move forward with imperfect information rather than wait for the perfect moment.

Scotland’s market will remain challenging, but opportunity lies with those who adapt. In today’s economy, stability is born from adaptability.