The Scottish Economy

·        The majority of Scottish business surveys have reported a pickup in activity throughout the first half of 2011 with the latest Bank of Scotland figures showing six consecutive months of expansion of private sector output.

·        Despite weakening more quickly than the rest of the UK as a whole at the start of the recession, Scotland’s unemployment rate is now slightly lower than the rest of the UK.  The Scottish Government reported that unemployment has fallen for seven consecutive months to April 2011.

·        As would be expected during the “recovery” stage of a recession Scottish GDP growth is likely to remain volatile for the foreseeable future.

     Scottish Property Market

·       Parts of the property market are showing positive signs with latest research revealing that the number of sales of properties costing £1m or more during the first six months of 2011 had increased by 30% over the same period in 2010. (source: Savills)

·       Although few of these properties are achieving what they would have at the peak of the market in 2007, most owners have been in their current homes prior to the house market fall and are still realising significant levels of equity.

·       Cash is a key driver in the market in the face of “restricted” bank lending.

·      The beginning of January until the end of August 2011 saw 215 properties (totalling £346m) come onto the open market at an asking price of £1m or more, compared to 151 during the same period last year.  Over £100m of this was attributed to farms or estates.

·       Despite the influx of these higher valued properties coming to the market there remains a shortage of good quality properties in the most desirable areas.

·       Assuming interest rates remain where they are we would expect to see little change in property prices for the remainder of 2011.

     Farms and Estates (source: Smiths Gore)

·       The latest update to the European Common Agricultural Policy (CAP) reforms, released early September 2011, generally looks like more of the same.  Broadly, this is likely to be welcomed by farmers.

·       The key changes to the CAP are that direct payments are likely to continue although very likely to be lower and more “green” work will be required for payments.

·       A progressive capping of payments to “large farmers” is looking much more likely.

·       There still remains uncertainty over payments only to active farmers.

     Edinburgh

·       Edinburgh City Council has signed a new deal with its main Trams contractor, and work re-commenced on 17 September 2011 with a view to completion by summer 2014, at an estimated cost of £776m.

·       A recent proposal to transform part of Edinburgh’s Old Town has been launched.  The proposal which includes creation of both serviced and residential apartments, a restaurant and 585 sq/m of office space would redevelop buildings dating between 1588 and 1882 as well as utilising Warriston Close.

·      Following a review of their funding options, Lloyds Bank-controlled developer Gladedale is seeking a new owner for the Quartermile Development on the former Royal Infirmary site.

·       Edinburgh saw the greatest number of properties (30%) of £1m or more coming to the open market compared with all other areas in Scotland.

·       43% of these were in the New Town or Stockbridge with a total of only 6 properties, of £1m or more in the southside areas of the Grange, Morningside and Merchiston.

·       Demand for good properties in these areas is rising.

·       Although Edinburgh had the biggest proportion of £1m properties come to the market in Scotland, this was unchanged from the number that came on over the same period in 2010.