Property developer James Barrack says the Aberdeen market is currently stymied by inflationary pressures but the longer term prospects are good.
A “perfect storm” of “crazy” construction costs and labour shortages is getting in the way of speculative development at the moment, he said.
But high oil prices and the Granite City’s historic track record for bucking economic trends elsewhere in the UK offer grounds for optimism once current problems are “ironed out”, he added.
Mr Barrack was speaking after his Knight Property Group revealed a jump in profits.
We have been able to understand and respond well to the trends and needs of the market across Scotland.”
James Barrack, Knight Property Group.
Accounts lodged at Companies House show the firm’s holding company made pre-tax profits of £2.6 million in 2021, up from just over £2.4m in the previous 12 months.
Turnover fell to £21.5m in the latest period, from £39.1m previously, as Knight raked in less cash from property sales.
Aberdeen-based Knight warned rising material costs may significantly impact on the profitability of future developments.
The company also said it would continue to focus on opportunities outside its home city, primarily in Edinburgh and the north of England.
But it added: “Having said this and despite the current challenges facing the oil and gas sector in Aberdeen, the directors are confident about the long-term future and looking forward to continued local expansion of operations.”
Volatile oil prices have driven the focus away from Knight’s backyard in recent years.
‘Excellent all-round performance’
Mr Barrack, the company’s founder and chairman, said: “We are proud of the excellent all-round performance achieved by the business during 2021.
“We have been able to understand and respond well to the trends and needs of the market across Scotland by developing speculatively in the office, industrial, logistics and trade counter sectors, where demand has been strong.
“Increasingly, sustainability and ESG (environmental, social, and governance) are key drivers in the property agenda, and we are ideally positioned and fully committed to advise and support occupiers seeking to meet those needs.”
He added: “We have a highly experienced team in place and are involved in a wide range of exciting projects right across Scotland. We look forward to the next year with a huge amount of positively and optimism.”
Knight said it had emerged in good shape from the impacts of the pandemic and continued to invest in new opportunities, with a “significant milestone” being the recently completed £18m redevelopment and refurbishment of 4-5 Lochside Avenue at Edinburgh Park.
Current projects
The company is currently on-site at Belgrave Logistics Park in Bellshill, North Lanarkshire and Langlands Commercial Park in East Kilbride.
Belgrave is a new £50m speculative development which is expected to bring 245,000sq ft of much-needed quality logistics space to the Scottish market across five units.
Langlands is a four-phase speculative development. Construction work on the second phase, adding a new 24,000sq ft warehouse to 10 industrial units built in phase one, reached practical completion last month.
In the north-east, The Crescent, a speculative development of trade counter units in Westhill was completed in March 2021 and is now fully let.
The next phase of Kingshill Commercial Park in Westhill, adding 12 speculative industrial units, is due to get under way in the coming months.
Meanwhile, Knight’s work on a flattened 5.2-acre site in West Tullos, Aberdeen, is due to start later this year. Knight announced its acquisition of the former Tyseal base, which is earmarked for a Ford car showroom, early last year.
Purposeful profits
Knight also highlighted its support for charitable causes, donating around £100,000 of contributions to the likes of the Charlie House Big Build Appeal and Camphill School.
The Barrack Charitable Trust, established in 2008 by Mr Barrack and funded by Knight, also donated £90,000 to more than 30 organisations across Scotland in 2021.
Conversation