Property developers are showing significant interest in new construction sites on Dundee’s fast-changing central waterfront, a seminar hosted by agency firm Ryden heard yesterday.
City-based associate Andy Boal said Dundee’s commercial property market had reached a level not seen for the last six years following a significant improvement in sentiment.
But a gathering of around 100 property professionals at the Malmaison also heard investment funds had begun to show signs of uncertainty over the independence referendum later this year.
Mr Boal said the rejuvenated Tay Hotel building now the 13th outpost of boutique hotel chain Malmaison following a multi-million-pound investment was a “benchmark” for what was possible in the redevelopment of the central waterfront area.
“It is very appropriate that we are here today, because the Malmaison is very symbolic of where Dundee has been and where it might be heading,” he said.
“Most obviously, work on the central waterfront is progressing at some pace, and the first development sites in the central waterfront area are generating interest.”
He said that was without mentioning the V&A and the impact of a world-class building and world-class tourist attraction should not be underestimated.
Long-standing author of the firm’s twice-annual market review Dr Mark Robertson said the property market was benefiting from a period of “sustained economic growth”, which is forecast to continue.
He said the Dundee market which has historically operated below average in terms of many national metrics still had to catch-up with other areas of the country, but the “good gap” will give the city room for growth through continued investment in its £1 billion redevelopment.
Dr Robertson also argued that considerable pent-up demand for new office space would create opportunities in the years to come, with many Dundee firms operating “in low quality space, paying low quality rents and with no market for them to trade up.”
Dundee’s development pipeline which includes several massive waterfront development sites expected to include retail, office and residential space forms a major opportunity, Dr Robertson added.
“You can see the framework beginning to emerge for the waterfront sites, and it is great to see the city coming up,” the former Eastern Primary pupil said.
Leisure developments, like the Wellgate Centre’s plan to open a new cinema, are increasingly common as property managers seek to increase their customers’ dwell time and spend.
But developments of this type are primarily focused on major shopping centres.
Retail rents remain stable, he said, while hopes of a return to real-terms wage inflation should steady a vulnerable sector.
Dr Robertson also revealed investment markets had seen a “slowdown” in recent weeks, with some managers stepping back when faced by the uncertainty caused by Scotland’s independence referendum later this year.
He said anecdotal evidence from a casual survey of six major funds found half were “pretty nervous” about the Scottish market, while the other three continued to invest.
“It’s a matter of opinion really, but some funds are stepping back because they are mandated to invest in the United Kingdom and they are not sure whether it will still be here after September,” Dr Robertson added.
A “completely unscientific” straw poll of those present found 23% in favour of a yes vote, with 65% opposed and 12% undecided. This matched the level of opposition found at a similar seminar in Inverness earlier this spring.
The no vote reached the mid-70s in Aberdeen and Glasgow, and 87% in Edinburgh, Dr Robertson added.