DEMAND for corporate residential property rentals in Edinburgh and Glasgow is down 50% compared with 18 months ago as the recession has led to job cuts at large companies such as Royal Bank of Scotland.
In his latest quarterly review, David Alexander, head of DJ Alexander, reported that as firms tighten their belts, there is less requirement to take out leases on rented property to accommodate executive staff relocated to Scotland.
Alexander sa
id the reduction in demand had a particularly adverse effect on investors at the upper-middle end of the market, whose properties previously commanded rents of between £1,500 and £2,000 a month from companies willing to pay a premium for above-average accommodation.
He said: "Fortunately for investors, the slack has been taken up by a healthy level of demand for rented property from private individuals."
He added that some landlords are having to negotiate downwards on rent but most are not losing out because, with the exception of those on fixed rates, their own mortgage outlays have fallen sharply in recent months amid the downturn.
Meanwhile, banks and liquidators are appointing estate agents to sell 'distressed' properties when housing developers go bust because they are struggling to shift them in a depressed market.
If a sale is not the best option, agents are offering alternative methods of generating an income from properties rather than leaving them empty, including 'try-before-you-buy' letting schemes. If land has not yet been developed they are recommending alternative uses, such as building hotels or care homes.
Will Scarlett, director of land and development at Rettie & Co, says: "It's often not the case of simply carrying out a distressed sale.
"We also look at letting, changing the use of the land or getting planning permission to build properties that may be more appropriate in the current market where buyers have less spending power."
Scarlett adds that another route for liquidators is to sell blocks of apartments to social landlords to offer affordable housing.
He says social landlords can take advantage of discounts of up to 40% on the original advertised price of properties to increase the supply and quality of their stock.
The full article contains 373 words and appears in Scotland On Sunday newspaper.
