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Scottish £850m scheme moves forward following 'No' vote

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The developer behind Allan Murray Architects and BDP’s £850million St James project in Edinburgh has started looking for contractors following the ‘No’ vote in the Scottish referendum

TIAA Henderson’s (TH Real Estate) has also confirmed it has brought in conservation specialists Purcell to work on the listed Mansion Capital and St Andrews Hall building as part of the huge city centre scheme.

The long-awaited development, which will replace the 1970s St James shopping mall, includes 42,500m² of shops, hotels, office space, a digital theatre, restaurants and 250 homes. Initial plans were first mooted in 2006 and new designs were revealed earlier this year.

Speaking to the AJ’s sister title Construction News yesterday (24 September), the developer’s director of development Martin Perry said it had been ‘easier’ to wait until after the vote for decisions on investment and leasing before pressing ahead.

‘When the polls started to narrow, a lot of uncertainty crept into [the market],’ he said.

‘It just got in the way a little bit in the last three or four months because people’s attitude was that they needed a response on, “What happens if it’s a Yes vote?” and a lot of the time it was an awful lot easier to wait until after the vote rather than answer that question.’

TH Real Estate has since confirmed it will hold a design competition for the five star hotel within the scheme and is hunting for architectural firms ‘with suitable experience’ to pitch their ideas for the ‘centre-piece’ building.

Meanwhile a series of construction contracts worth collectively around £400million, which will include demolition and enabling work, are expected to be signed before the end of the year.

A main contractor contract will be released in June 2015, with plans to be on site later next year and for the centre to open in 2019.

Allan Murray Architects Edinburgh

The developer’s £230million scheme to revamp Glasgow’s Buchanan Galleries shopping centre in partnership with Land Securities - also designed by BDP - will now also move ahead, with a main contractor set to be appointed on the project imminently.

Experts have predicted a flurry of major projects will come forward following the referendum as uncertainty had been holding projects back.

Stuart Agnew, director of national markets and investment at property consultant GVA James Barr, said some overseas high-net-worth investors and UK institutions had been adopting ‘a wait-and-see attitude’ prior to the vote before committing to new deals in Scotland.

He added: ‘In our opinion, there is now likely to be very active trading in the final quarter of the year in Scotland owing to the weight of the money for investment stock and the need to keep a balanced geographical spread/risk.

‘However, it remains to be seen whether pricing in the marketplace will move quickly back in line with the other main regional markets of the UK, or whether there will be a short period of adjustment as more transactions are agreed.’

Development to come

Knight Frank partner and head of global capital markets research Darren Yates expects ‘a surge’ of development in the next 12 to 18 months as the recovery boosts occupier demand, with the recent ‘No’ vote helping this in particular.

He added that investors would also be putting more money into development, since it offered higher returns.

‘You’re getting so much yield compression now on standing investments, people will be forced to go up the risk curve,” he said. “So I think a lot of money will be chasing development.’

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