Commercial Property industry economic output down by over £2bn as construction orders fall by a third

Property Industry leaders today urged the Scottish Government to work with the industry to do everything it possibly can to help the industry unlock its potential for economic growth, as data reveals new orders for commercial development and repair work have fallen by a third since 2007.

Over two hundred industry delegates gathered in Edinburgh for the Scottish Property Federation’s annual conference to hear how this drop in construction and related sector output alone accounted for an estimated £2bn of economic value (GVA) lost to the wider Scottish economy.

With retail vacancy rates at 26 per cent in some parts of Scotland, and an estimated 28,000 jobs lost in the commercial property sector and research from Warwick University suggesting as many as one in four SMEs believing they will close by 2014, the Scottish Property Federation is calling for:

  • A step change in reforming the planning system;
  • No increase in the cost of empty property rates;
  • Pragmatic climate change regulations to improve the energy efficiency of homes and business premises in the light of continuing economic fragility;
  • Incentives to support economic development, for example exemption from rates for speculative development for new commercial property;
  • New infrastructure investment to boost the economy.

David Peck, chairman of the Scottish Property Federation, said: “Commercial property is an important bellwether for the Scottish economy. The health of the industry is down by every measure - be it new orders, sales or lettings.  Government support for initiatives such as tax increment financing and encouraging flexible developer contributions policies by local authorities is very welcome, but we are asking the government to go further to boost confidence in this key sector.’

“The commercial property industry has been hit harder than most sectors during this recession, losing around a third of its workforce and reducing its contribution to the economy by more than £2bn.  The SPF is urging the Scottish Government to do what it can to help us unlock economic growth and development in order to deliver a strong private sector that will in turn support key public services’.

Alex Neil MSP, Cabinet Secretary for Infrastructure & Capital Investment the Scottish Government and keynote speaker at today’s conference commented:

“The property sector plays a key role in Scotland’s economic fortunes – not just in terms of GDP and employment - but by delivering the homes, offices and places which can attract investment.

“That is why we are taking every action we can to drive the economy and assist the property sector on the ground.

“We have published our priorities for investment in the Infrastructure Investment Plan and the Government Economic Strategy sets out what we want to achieve and how we will do this. 

“We are investing in the economic infrastructure which will ensure Scotland is well connected - which is vital to our country’s economic prospects.

“We are also creating the conditions for businesses to grow and invest.  We have created the cities investment fund and announced the creation of enterprise areas.

“And this is good news for the property sector which is responsible for building the premises needed for new and expanding businesses.”