scottish property news
 

Buy-to-let attracts big investors

 © Sunday Herald
Originally published: 23.04.2006

An increasing number of home-grown and expat millionaires are discreetly channelling money into buy-to-let residential properties in Scotland's biggest citiesunderpinning the growth of the investment market, says David Rowand, founding director of Glasgow-headquartered Cairn Properties.

Cairn Properties, set up in 1999 by Rowand, a former estate agent, and his business partner Alan Bruce, a civil engineer, initially started buying and selling individual flats but in 2003 began to target private investors seeking to build bigger portfolios of buy-to-let properties.

Rowand says Cairn's growth has been rapid in the last two years as investors as far afield as the US and Bermuda have been lured by attractive yields.

"Our biggest clients are Irish investors. They're used to 4% yields and they're very impressed by the 7% yields they can get here. We have one Irish lady client who buys flats here and also owns shopping centres in the States, " Rowand says.

Some clients have amassed substantial portfolios and use Cairn to spot future purchases and manage existing ones.

"There is one guy who has £40 million worth of property in the west end and another has £25m worth, " he says.

Cairn is keen to build up its book of expat clients and has targeted Dubai as the next hot market.

Rowand says not all clients are millionaires. Many are middle-aged, people planning for retirement. Some are buying student accommodation when their children are only six years old, eyeing an income stream and capital appreciation until they come of age.

He says Cairn has created a one-stop shop for property investors, with four divisions concentrating on investment, development, interiors and property management. "Nobody else offers the same total service package from identifying suitable properties for investment, to refurbishing them, kitting out the interiors, letting them and managing them, " he says.

Cairn owns 15 properties of its own, Rowand owns a further 20 individually, while his business partner owns 35 flats.

Two years ago Cairn had two staff and between 30 and 40 properties under management at any one time. Now it employs 15 staff and has 300 properties under management and plans to expand into Dundee and Aberdeen.

Cairn, which has 200 properties in Glasgow and 100 in Edinburgh, is also about to open an office in the capital.

The company has particular expertise in student accommodation and is preparing clients for the introduction of the Housing Act 2004 this month which will make it compulsory for landlords to obtain an HMO (House in Multiple Occupancy ) licence if they let to students.

This year Cairn will buy 150 flats or houses, refurbish 90 properties to HMO licence standards and also sell 120 interiors packs to its clients.

"Once you have a licence the property becomes semi-commercial because you can demonstrate an income stream, " he says.

Rowand believes money is still coming into the market despite talk of a collapse in the buy-to-let sector. "The market is fine if you know what you are buying.

We are focused on traditional properties in the west end and southside of Glasgow and in Edinburgh, " Rowand says.

House and flat prices are still rising in the most popular areas of Glasgow, with prices increasing by between 6% and 8%.

However, Rowand "wouldn't advise people to buy modern two-bed two-bath properties in the city centre for buy-to-let because that market is saturated".

While Rowand feels the Chancellor's decision to exclude residential property from SIPPS (Self-Invested Personal Pensions) was disappointing, he insists:

"We had hoped SIPPS would be a stepping stone to expand quickly but it's not a major setback."