SCOTLAND’s property industry contributes almost £5 billion to the Scottish economy and supports more than 92,000 jobs according to a new study.
The Economic Contribution of the Commercial Property Sector, compiled by the University of Strathclyde’s Fraser of Allander Institute for the Scottish Property Federation (SPF) showed the commercial property element of Scotland’s construction industry has a direct impact of around £2.4bn to Scotland’s economy.
However, when the additional spill-over effects of the industry were considered, commercial property was estimated to have a total impact approaching £4.8bn.
The report, unveiled at the SPF’s annual conference in Edinburgh, estimated that combining full-time equivalent (FTE) employment in construction and real estate activities, that around 49,000 jobs were directly supported by commercial property, with indirect posts helping to support total FTE of around 92,000 jobs.
SPF director, David Melhuish, said: “Commercial property plays an important role in the Scottish economy and we welcome this excellent piece of research by the Fraser of Allander Institute.
“The industry has experienced challenging times in recent years due to the economic downturn and fragile levels of business and consumer confidence which has led to a dampening of growth.
“However, this report highlights that the industry remains an important growth generator for the Scottish economy and that there are huge opportunities for the industry to grow as a valuable financial asset for investors which in turn will drive economic activity and important infrastructure in our cities and towns.”
Property is an important source of tax revenue for the Scottish and UK governments and is an acknowledged barometer of economic activity.
The report’s authors said that without high quality and effective commercial property there would be no business activity.
But despite this, the report also identifies a “worrying” lack of investable space with the amount of new commercial property being built in terms of square feet smaller than a decade ago. In 2009, new commercial property construction equated to 7.1 million sq ft, but in 2017 the equivalent of only 1.6m sq ft was built. Similarly, while the value of commercial property sales has been rising in recent years to £3.2bn in 2016/17, it is still significantly lower than a decade ago.
The report also showed the potential for growth and concluded that for a £100m increase in new commercial property output, the economy would benefit by a further £73m.
“We continue to work with the Scottish Government to look at the barriers which exist to attracting investment into the sector,” said Melhuish.
“One such area where more work is required is to ensure that Scotland increases its overall supply of Grade A office stock - a vital component in attracting businesses to locate or indeed remain in Scotland and continue to be important tax generators for the economy.”
Professor Graeme Roy, director of the Fraser of Allander Institute added: “The latest data shows that the sector has been growing in recent years, but levels of activity remain down on where they were a decade ago. That being said, our analysis demonstrates that the sector continues to make an important contribution to the Scottish economy.”
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