Spending plans by the north’s development quango have dropped by more than £4million in a year amid a slowdown in sales and lettings of its extensive property portfolio.
Highlands and Islands Enterprise (HIE), which owns more than 230 buildings and sites around the region, has blamed UK market conditions rather than specific issues in the area’s economy.
An agency document revealed an income and expenditure forecast of £76.9million for the current financial year, which started in April. The sum is £4.27million down on the £81.17million estimated for the previous year.
Yesterday HIE confirmed “lowered expectations” of income from its property was the main reason for its latest financial predictions.
The figures appear in minutes of the April meeting of the Scottish Government-funded quango’s board, where the head of finance told members property sales had “become a more challenging activity.”
Yesterday, a HIE spokesman said: “In recent years there has been a general slowdown in the commercial property market in the UK as a whole. This is partly a result of difficulties in raising finance and is not specific to the Highlands and Islands.
“HIE has a long-standing policy of selling property that it owns and re-investing the proceeds in a variety of projects to develop the region. The make-up and value of our property portfolio changes over time, which in turn influences the property we seek to market in any given year.”
He added the forecast figures would be reviewed during the year and could be adjusted.
HIE’s portfolio currently comprises 116 industrial and office premises, 80 development plots, eight “strategic development sites,” 21 plots to let to business on long-term leases and nine “miscellaneous properties.” It includes the agency’s new £13million An Lochran headquarters in Inverness.
Scottish quantity surveying company Graham and Sibbald has acted as HIE’s property managing agent, responsible for sales and lets, since 2005. The agency recently put the contract out for tender, with an estimated three-year value of £780,000-£850,000, excluding VAT.
HIE’s income and expenditure forecast for 2017/18 includes “grant-in-aid” funding from the Scottish Government of £66.7million. The figure is down £500,000 from Holyrood’s 2016/17 contribution of £67.2million, which was topped up with a further £750,000 during the year.
The agency’s figures factor in funding it expects from other sources, including the EU. They do not include money it will receive for projects and subsidiary organisations including broadband roll-out, Community Broadband Scotland, Wave Energy Scotland, the Northern Innovation Hub and the Scottish Land Fund.