In terms of macroeconomic mood music, it is tempting at the moment to put your hands over your ears. Scotland faces political instability at home, in the wider UK and in Europe and the economic outlook still fails to inspire confidence.
However, to lighten the gloom, it is worth taking into account a remarkable surge in the performance of the leisure and hospitality sector. It is heartening across the country, but north of the Highland Fault Line, it has been something of a gold rush.
The last time there was as much excitement in the Highlands, the Redcoats were chasing Prince Charlie round the glens. The roads and ferries have never been busier, the hotels fuller or the pubs and restaurants more crowded.
A typical client with say a 12-bedroom hotel on the West Coast reports 100% occupancy, a rate which is sustained over an enormously extended season and tails off only slightly in the shoulders.
Room rates, also, have gone through the roof. A very unremarkable B&B which might have charged £70 a night two years ago is now typically holding its hand out for £120. A decent bed in Skye can fetch £250 – more than central Edinburgh.
The same applies to most of the other Western Isles, notably Mull and Islay, and the businesses along the remote single tracks of what has become one of the world’s iconic drives, the North Coast 500.
VisitScotland, often much maligned, has to be congratulated for the success of many of its campaigns. Scotland the Set brings film fans flocking to the locations of Outlander and Harry Potter, and castles and lochs are an enduring draw.
Road Equivalent Tariff has also made access to the Islands much more accessible and there is no doubt that, in a continent troubled by various geopolitical issues, Scotland is seen as a safe haven, as well as one of the last great wildernesses.
How does this affect commercial property? Well, the market values are intrinsically linked to businesses’ ability to generate profit and virtually all enterprises in the sector are having to put fans beside the cash registers to cool them down.
It’s not just the high end hospitality outlets which are benefiting from the convoys of coaches, cars and campervans heading north, but also businesses in out-of-the-way places many of which, frankly, should have dusted down their offering a long time ago.
As revenues climb, hospitality and leisure businesses should be perceived as a much better risk and lenders should be looking at this bonanza and wagging their tails. But at the moment on the whole they seem to remain pretty much behind the curve. Nor have valuations yet been greatly affected.
What we are seeing is a cautious element of self-funding. There is no great appetite for the heavy investment required for new building, which is often, anyway, bedevilled by planning issues.
Instead, owners are adopting more bespoke ways of getting heads onto beds – such as building annexes and extensions, or establishing chalets in often extensive grounds. Others are exploring eco and camping pods, or huts and lodges.
Owners of a West Highland hotel doubled their turnover with the simple expedient of an extension which allowed them to repurpose the restaurant capacity and also increase bed space. The investment was small compared to the immediate return.
Another aspect which might ring alarm bells with lenders is that many business owners are funding new investment out of cash flow rather than taking on potentially expensive new debt.
It is to be expected that lenders will eventually wake up to what is an unusually positive time for the Scottish property sector in leisure and hospitality, and as transaction activity grows an improvement in valuations will inevitably follow.
Meantime, the P&L graph across large parts of the sector remains on a satisfyingly upward curve regardless.