The possibility of Scottish independence is not the biggest issue for UK property investment in Scotland, as long as yield outperforms other regions of the UK, according to new research by legal firm Morton Fraser.

A study amongst British property investors, based on YouGov plc figures, revealed that the independence issue ranks only fourth equal in importance among investors' criteria for choosing the Scottish market. The top factor was rental yield, listed by 46%, followed by capital growth (30%) and a stable tax and regulatory environment (26%), while political stability ranks along with earnings growth at 23%. 

Asked specifically about Scottish independence, 79% said it would have no impact on investment decisions, while 15% said they would be less likely to invest in Scotland if it gained independence.

If the UK were to leave the EU, there would be little overall impact, as the same proportion – 7% – said they would be more likely to invest in Scotland in that event as would be less likely to do so. The remaining 85% said there would be no impact.

On present market conditions, one in four property investors is open to investing in Scotland, with 11% actively monitoring or currently pursuing opportunities. Scotland's share of the UK commercial real estate market has been calculated at 8.9%.

Morton Fraser believes the "tipping point" at which a yield premium would encourage investment would be 3% or higher for 70% of those property investors for whom yield premium is important. "That figure should be viewed in the broader context of many respondents being initially 'cold' on investing in Scotland, so the true figure for active investors is likely to be sharper", the firm commented.

Commercial real estate partner David Stewart observed: “Viewed in context, one in four investors leaving the door open to entering the Scottish market and over one in 10 actively pursuing investment opportunities is much more positive than it can appear at first blush.

“It is easy to overestimate the potential impact of Scottish independence on the property market. Investors are ready to enter the market if the right opportunity arises, regardless of the political status of the country. That gives us optimism for the future of the Scottish real estate industry. If the price is right and the market conditions are at least on a par with other regional areas across the UK, investors will follow the returns. The prospect of a neverendum in Scotland may drag investment, but it’s not the deciding factor for many.”

He added: “Many investors are prepared to overlook ideological or political issues to run the rule over Scottish property investments. The ‘yield gap’ between Scotland and other regional cities in the rest of the UK can always be met with a quality opportunity – whether you are looking to invest in Edinburgh or Manchester, Glasgow or Bristol, a high quality asset will always stand on its own merits.”