An interesting trend has emerged recently in the commercial property market in Dunfermline which could potentially have ramifications not only on the north shore of the Forth but also in other areas in close proximity to Scotland’s capital.
There has long been a tendency for large Victorian, Georgian and Edwardian properties across the country to be converted to business and office use at a time when they had outlived their attraction as a residential home.
However, that traffic has been reversed in recent months in the desirable area of Dunfermline between the Abbey and the town train station, with the sale of period properties which are in commercial use being converted back to private residential dwellings.
And what has been remarkable about these properties is the interest they have attracted from both individual buyers for owner occupation and from developers.
The first property, in Comely Park, was until recently used as a business centre. It is a substantial building, but a major part of its attraction is the retained ornate period features together with the extensive gated established garden grounds which surround it. The property has now been sold to a private family who have subsequently successfully obtained the required statutory consents to reinstate it to what will be a substantial family home in the ancient capital’s town centre.
The property was sold before it reached the market with the offer received being in excess of the vendors asking price or aspirations, reflecting its underlying residential redevelopment potential. It also compares very favourably with other properties in the immediate vicinity which tend to market at between £650,000 and £700,000 as existing homes. Had it sold on the basis of continued commercial use the price achieved would have been considerably less.
The other property was a significant former Fife Council building located on Abbey Park Place, again with extensive garden grounds. Unsurprisingly, the property attracted a great deal of attention from developers who were keen to build on the large lot, but access issues dampened that interest.
Instead, a sale was achieved to a private individual who intends to convert the building back into a family home and reinstate the external areas as a private garden.
The sale price achieved reflects the extensive work and capital expenditure required to return it to its original residential glory, but once the work is complete, the value will have increased substantially with the end-value comfortably exceeding the purchase price and the cost of conversion.
Another semi-detached property nearby, with the potential for conversion into a four-bedroom home is under offer and again the price recognises the underlying residential use which is in excess of what could be achieved for continued commercial use.
Large, period properties of this nature do not come up frequently and when they do, there can be a remarkably deep pool of potential buyers, despite punitive LBTT charges.
The reasons are varied. Cash rich buyers are still experiencing disappointing returns from traditional investment/saving vehicles and property can seem attractive, especially if they have the capability – such as in the case of small building firm owners – to do the conversion work themselves.
There is also a continuing lack of stock in the neighbouring capital city of Edinburgh with many period properties which do hit the market trading for well in excess of market value. As a consequence developers are looking further afield for a reasonable return on capital employed with slightly less competition.
With the opening of the new Queensferry Crossing and the dedication of the old Forth road Bridge to public transport, Dunfermline has never been closer or more accessible as an affordable commuting destination.
The Edinburgh market is becoming less attractive to establilshed local developers as they are being priced out of the market by owner occupiers. This is creating a positive ripple effect outwards to areas where there are opportunities to acquire similar properties at more competitive and affordable pricing.
Will this trend continue? Time will tell, but the immediate signs can be viewed as encouraging for the upper end of the residential market which has been languishing since the introduction of LBTT.
And if residential buyers are looking beyond the confines of Edinburgh for appropriate properties, could the same happen in the commercial market?
Big national enterprises have shown lesser inclination, historically, to come over the water, but ther are emerging signs of company relocation taking advantage of the improved transport links and the more competitive and attractive pricing on offer in Fife.
The M90 corridor is becoming a more attractive location, with properties situated only a short distance off the motorway – for instance Rosyth’s Europark as well as, Dunfermline’s Pitreavie and Masterton Business Parks – generating interest. All we need now is for that to be reflected in the level of take up and pricing.
Margaret Mitchell is a surveyor in the Commercial Agency department at the Dunfermline offices of DM Hall, one of Scotland’s leading firms of Chartered Surveyors.