The BTR Sector In Scotland, Could This Be The Answer To The Housing Crisis?

Many large international investment firms have been increasing their level of activity and commitment to the UK’s BTR sector over the last 12 months.

Home ownership has become increasingly unaffordable in recent years and with a lack of high quality private rental housing available on the market, there has been a gap for The BTR sector which offers investors strong returns compared with other, more volatile sectors.

The BTR sector is also likely to deliver tangible benefits for consumers and make renting a more attractive long-term option as in many parts of Europe and the United States.

Scotland’s house prices have risen by more than 20% between March 2020 and December 2021, so home ownership may not be an option for many now. This means that renting remains a very real and likely option for many. The growth in BTR investment is set to increase in Scotland and across the UK and this is due to the location and quality of accommodation, the proximity to local amenities and in many cases the on site services which can include gyms, laundry services, car parking and concierge.

The focus on location and quality accommodation, helps to ensure high occupancy levels, making it an attractive investment proposition whilst offering strong financial returns for institutional investors.

Whilst this does not necessarily help people onto the property ladder and to fulfil their dream of home ownership, it does have real potential to improve both the quality and quantity of housing stock available in the private sector.

The BTR sector will create higher quality accommodation, a much more professional approach to property management, more certainty for both tenants and landlords, and the regeneration of many communities whilst driving more people back into town and city locations.

Logistics and Industrial Boom In Scotland

The Logistics and Industrial sectors remains the highest performing within Scotland’s commercial property sector with record levels of activity and demand outstripping supply in most areas.

Scotland will see the development of large industrial and logistics parks over the next couple of years but this already looks to be insufficient in tackling the growing demand for this type of accommodation.

The property market in Scotland accelerated during the second half of 2021 as many investors re-entered the market, particularly for industrial, key city centre office locations and retail warehousing including e-commerce. This trend is expected to continue to grow throughout 2022 and beyond.

The UK has seen many organisations make bold business decisions around re-shoring their operations following Brexit and more recently the COVID-19 Pandemic. This has driven land and rental values whilst having a significant impact on the supply of high quality assets within this sector.

Whilst this is great news for institutional investors, it does remain an issue for developers seeking sites and occupiers in trying to secure accommodation, a trend which is not set to change anytime soon.

We believe that land could therefore be more effectively used with organisations making better use of brownfield sites, existing assets and seeing more partnership and joint venture working between local authorities.