Upbeat Caledonian voices poll concern

INVESTMENT GROUP Caledonian Trust has hailed a resurgence in the property market, but warned that the independence referendum would reduce economic activity.

The Edinburgh-based group said it was beginning to see significant improvement in the property market as the wider economic recovery strengthened.

The more upbeat assessment comes just three months after AIM-listed Caledonian said it would not be commissioning any new major developments until there had been material improvement in the property sector.

“We continue to promote our strategic land sites and expect that shortly some of them will be ready for development, by which time the market should be significantly better,” chairman Douglas Lowe said.

“In our existing portfolio, most development properties are valued at cost usually based on existing use — and, when these sites obtain consent and are then developed or sold, the considerable upside value will be realised.

“The group’s strategy, formulated in 2006, has allowed us to enter the upswing in the housing market in a strong position.”

The firm has 12 rural development sites in Tayside and Fife, including a 30-acre small-holding at Comrie in Perthshire with consents for 12 detached homes.

Caledonian also has permissions for a mansion house and four-home development at Strathtay, a further four homes at Carnbo in Kinross-shire, and continues to pursue options for Myreside farm in the Carse of Gowrie.

The company also owns land near St Andrews and has long-term plans for a 12-house development at Frithfield.

However, despite the progress in the property sector, Mr Lowe said the September 18 independence poll was creating new uncertainties and new risk for investment in Scotland.

He said the act of holding the referendum causes the previously unidentified risk of Scotland leaving the UK to be real and relevant, and the business risk becomes assessed and the contingent costs identified.

“For many companies, especially those in the financial sector, the potential costs are very high, including separate regulation, credit rating and credit costs, transaction costs, distribution costs, share valuation and equity capital costs, staff costs and brand value impairment.”

He said it was likely that, of the organisations undertaking contingency planning, some — particularly among large institutions — having started, may continue and then execute such plans irrespective of the referendum outcome.

“A present and recognised danger will initiate remedial action even if the contingent danger does not materialise or is circumvented.

“Most unfortunately, the referendum per se will reduce economic activity.”

Shares in Caledonian closed unchanged at 87.50p yesterday.

Building confidence: Caledonian Trust said it was beginning to see significant improvement in the property market.