Blog post
February 26, 2024

The Bright Horizon of Property Development in Scotland in 2024

Following his recent visit to Scotland, Relationship Manager John Pointer shares his insights into the development landscape. In this article, he reflects on the challenges the market is currently encountering and sheds light on the abundant opportunities available for developers aiming to build in Scotland.

Having explored Scotland firsthand, it became evident that the market is navigating various challenges. Despite the complexities posed by shifting consumer demands, demographic changes, economic conditions, and legislative shifts, the Scottish property development scene in 2024 is brimming with potential for both growth and innovation.

What are the challenges?

Scotland’s property market is facing a crisis. In 2023, Glasgow, Edinburgh, and Argyll and Bute declared housing emergencies. Regulatory hurdles, land scarcity, and rising construction costs pose challenges to housing supply which in turn is driving up rental prices, raising concerns about affordability. Despite these challenges, the Scottish government has cut its affordable housebuilding programme by £200m for 2024-25, a reduction of 26%. 

What are the opportunities?

Affordable, sustainable housing

The current surge in rental prices, particularly in Edinburgh and Glasgow, serves as a clear indicator of the insatiable demand for affordable housing. Developers have a unique opportunity to capitalise on this demand by addressing the supply gap in affordable homes. 

In pursuit of its 2045 net zero goal, the Scottish Government recognises the need for transformation and modernisation in the structures where we reside and work. Approximately one-fifth of Scotland’s greenhouse gas emissions originate from homes and buildings, with the majority (around 600,000) being tenements, older constructions predating 1919. This presents an opportunity for developers to collaborate with the Scottish government in crafting housing solutions that leverage technological advancements to enhance energy efficiency.

Regeneration of brownfield sites

The revitalisation of brownfield sites holds the promise of unlocking substantial opportunities for residential housing. Cities like Glasgow have experienced a rise in affordable housing supply through regeneration initiatives tapping into available brownfield sites. The Vacant & Derelict Land Fund is a £10m per annum Scottish Government grant fund administered by the Scottish Government’s Regeneration Team. Five local authorities in Scotland are eligible for the fund based on the scale of their holdings of sites on the Vacant & Derelict Land Fund register.

SME developers are in a favourable position to provide strategic solutions that strengthen the residential housing market. They can achieve this by revitalising existing developments and leveraging their local expertise to address specific community needs.

Exploring build-to-rent

Scotland’s rent prices have gone up more than in any other UK region. The number of privately rented homes in Scotland has doubled in the last 15 years. This shows big changes in how people live, influenced by policies that don’t favour one way of living over another and problems in how houses are bought and sold. This trend is expected to keep growing and could reach a 19% increase by 2020.

The Scottish Government has worked with businesses and others to create a better system for investing money that can help more Build to Rent (BTR) projects happen in Scotland. There’s a strong demand for renting homes in Scotland, and the government and local authorities are starting to see the potential for Build to Rent to quickly add more homes. This is a chance for investors and builders to make a difference in how homes are rented in Scotland.

Conclusion

While challenges persist in the Scottish property market, the opportunities for developers in 2024 are vast and promising. By addressing the demand-supply gap, tapping into niche markets and leveraging brownfield sites, developers can play a pivotal role in shaping a resilient and thriving property landscape in Scotland. 

SME developers, in particular, are well-poised to offer strategic solutions that align with the unique demands of local markets. Regenerating existing developments and leveraging local knowledge can create tailored solutions that resonate with the community. 

The coming year is not just an opportunity to overcome challenges; it is a chance for developers to lead the way in creating innovative, sustainable, and inclusive housing solutions for the people of Scotland. 

Information is not presented, nor should be taken, as suitable for the general public, nor is it directed to any person in any jurisdiction where the publication or availability of this information is prohibited.

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