PROTRACTED Brexit uncertainty has led to a “considerable slowdown” in the Scottish commercial property market, despite the weakness of the pound making deals more affordable for overseas investors, a senior industry figure has declared.

David Davidson, Scottish chairman and partner of Cushman & Wakefield, said foreign investors are currently reluctant to invest in the UK while the country’s future relationship with the European Union (EU) remains far from settled.

And the uncertainty has been amplified in the Scottish market as the prospect of a second referendum on independence has moved back up the political agenda.

Mr Davidson said: “There has been a considerable slowdown across the UK, not just in Scotland. There is a reluctance to invest and put commercial property on the market for fear that they won’t achieve reasonable pricing.

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“The main sellers are those who will either have made a profit on other assets, or those who are in the need of raising cash.”

Mr Davidson said the sale of the building home to Standard Life Aberdeen on Edinburgh’s St Andrew Square to KanAm, representing German pension fund investors, was the “exception to the rule” because it was a “truly unique asset”.

The £124 million deal was concluded recently.

Mr Davidson said: “That is the exception to the rule because most of that capital is very wary of investing in the UK, let alone in Scotland.”

He observed that there has been some influx of South Korean capital in commercial property into Scotland. He cited the recent acquisition of 110 St Vincent Street, Glasgow, occupied by Bank of Scotland, as well as two major deals in Edinburgh, the sale of the BAE building at Crewe Toll for £95m and a Government-let office for £50m in the west of the city. Such deals were made attractive to investors because of the weakness of the pound and the competitive price of property in Scotland.

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However, Mr Davidson said: “There is not a great depth of capital, because so many people are concerned about what could happen with Brexit, and what could happen with independence on top of that, which is certainly back on the list of questions that we are being asked and haven’t been for the last 12 months.”

Asked what impact the increased likelihood of a no-deal Brexit, sparked by Boris Johnson becoming Prime Minister, has had an property investor sentiment, Mr Davidson replied: “It has clearly increased investors’ concern about what Scotland will do, because there is a strong view that the Scots don’t like Boris Johnson, particularly, and don’t trust what the UK Government will do.”

Mr Davidson, meanwhile, offered a counter view to widely-held perceptions of CVAs, company voluntary arrangements, which have been used by a number of major retailers in recent years to reduce their rent burdens amid increasingly difficult trading conditions on the high street.

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While noting that there is an “understandable” focus on job losses when CVAs take place, Mr Davidson said insufficient attention is paid to investors who lose out.

He stated: “The perception is that all landlords are bad or wealthy [and] can afford to take the loss. What the public don’t appreciate is that they often are the losers, because most big assets are owned by pension funds or life assurance or retail funds, like the REITs (real estate investment trusts) or direct funds. And the bulk of the owners of these retail funds are investors, pensions funds who are buying it for a bit of exposure to shopping centres. It’s people on the street.”

He added: “The sympathy currently seems to be with the retailers and the unfairness of retailers’ positions, which is correct, but there is another loser in the CVA and distress of retail just now, which is individuals.”