Scotland goes to the polls today, with market participants focused less on the vote itself and more on what it may represent.
A strong showing for the Scottish National Party, or an SNP and Scottish Greens majority, is likely to be presented by some as a mandate for a second independence referendum. But while the SNP is widely expected to remain the largest party, projections vary on whether it can secure an outright majority, with some models suggesting it will fall short and others pointing to a narrower path to victory.
In the near term, the impact on occupier markets is likely to be limited. Office leasing has picked up in recent quarters, though this has yet to translate into positive absorption as occupiers weigh up moves, with hybrid working, cost discipline and the potential impact of AI being factored into decision-making.
Caution could deepen if the election is seen as a step towards a future referendum, particularly if it begins to weigh on business confidence, hiring intentions and longer-term expansion plans.
More broadly, supply constraints are becoming a defining feature across sectors. Development activity has slowed sharply as elevated build costs have weighed on viability. Some market participants are looking to the next government for greater policy clarity or support, particularly initiatives that will reduce the cost and complexity of delivery and help unlock development activity.
Industrial and logistics is widely viewed as one of the more resilient parts of the market, supported by demand linked to e-commerce, supply chains, the energy transition and defence. While investment volumes may respond to shifts in risk appetite, occupier demand is expected to remain relatively robust.
Hotels meanwhile continue to attract investor interest, supported by Scotland’s tourism appeal and the international positioning of Edinburgh. Any renewed focus on independence following the election could raise Scotland’s global profile and support visitor demand, although this would need to be balanced against any impact on business travel and corporate spending.
Purpose-built student accommodation has historically been underpinned by demand from international students, although recent trends indicate some softening. The sector is also exposed to policy risk. Any pressure on Scotland’s higher education funding model, including the sustainability of free tuition, could affect its attractiveness as a study destination and, over time, influence international student flows.
Looking further ahead, any independence debate is likely to matter more for the trajectory of the recovery than for its initial direction. If the election is seen as a step towards a future referendum later in the decade, investors are likely to factor that into decision-making over time, as they did before the 2014 poll when "independence clauses" were a common feature of investment deal negotiations.
In that scenario, the risk is less about an immediate slowdown and more about a gradual capping of momentum. As any referendum approaches, uncertainty around taxation, currency and fiscal policy could begin to weigh more heavily on business confidence, hiring and capital allocation, slowing the pace of both occupational and investment activity.
Some investors point to Scotland’s strengths, including its universities, the renewable energy sector and established clusters in life sciences, technology and advanced manufacturing, while emphasising that fiscal clarity remains key to investment decisions.
For now, the picture is finely balanced. The direction of travel is improving, but the pace and durability of the recovery will depend on how confidence evolves and how much clarity investors have around Scotland’s long-term direction.