Scotland's commercial property market is set to boom in the wake of the referendum, irrespective of the outcome of the vote, according to a report by Colliers International. Pent-up investment demand would be released at the traditionally busy end of year, as current market uncertainty is removed. A 'Yes’ vote could see a surge in occupier demand from professional services groups involved in the subsequent independence negotiations and implementation.

However, the Colliers International referendum report paints a less optimistic picture of the medium-term prospects of the property investment market. Polling 150 occupiers and property investors with UK-wide interests, the survey results suggest that the investment market is likely to suffer, with respondents attaching a considerable risk premium in the case of a ‘Yes’ vote. According to survey, the average response suggests it could take some 4.5 years for inward property investment to return to traditional levels and that property investment yields would need to rise by an average of 160 basis points to compensate
investors for increased risks during the period of normalisation, following an independence vote.

Walter Boettcher, director of research and forecasting, with Colliers International, a global leader in commercial real estate services, said: "Individuals must make up their own minds as to how they should vote on 18 September. However, based on the feedback of some 150 real estate professionals, it is clear that the lack of certainty is creating anxieties in this important part of the economy. While the Scottish Government's Scotland's Future proposal has suggested it will take a decidedly ambitious 18 months to put in place the necessary institutions, treaty revisions and a constitution, the survey suggests that confidence in the property sector is likely to take significantly longer to restore. Only 13 per cent of our respondents expect the current volatility and uncertainty to disappear within two years, given a ‘Yes’ vote.

"The debate so far has been un-illuminating, founded as it is on ‘what-ifs’ and scenarios that are only partially understood. This is reflected in split survey opinions as to whether an independent Scotland would be a higher risk investment than the Eurozone periphery. Some 51 per cent believe that an independent Scotland would be a riskier investment than these ‘peripherals’. While this may reflect the risk-averse nature of property professionals in the survey, who invest on behalf of pension funds and other risk-averse organisations, it may also highlight lingering concerns over the possible lack of a powerful monetary backstop, such as the European Central Bank or the Bank of England. However, some 49 per cent of the sample felt the risks would be either similar (29 per cent) or less risky (20 per cent) than the Eurozone periphery."

Tom Johnston, head of retail for Scotland and head of Glasgow with Colliers International, suggests that the survey highlights the need for a stable environment that enables companies to plan for the future.

"The reality of a ‘Yes’ vote would, undoubtedly, lead to a new period of serious reflection. In that period, we are likely to see a surge in demand for professional services firms, both in Edinburgh and London, as companies seek advisory services.

"This is likely to be reflected in occupier market activity in Scotland, particularly in Edinburgh. Benefiting from a win-win position, the city is likely to see an upturn in professional services organisations, staffing up to supply advisory services to government and companies, and, in the event of a 'No' vote, companies will be taking on new space as uncertainty is removed."