It is not clear whether the best analogy for reports about the North-East economy right now is "Jekyll & Hyde" or "Sliding Doors". The divergent narratives that are thrust upon us are puzzling. On the one hand, we have the "Hyde" side of things – the oil & gas sector feels embattled by the Energy Profits Levy (often inaccurately referred to as "a windfall tax"), governments' policy direction towards fossil fuels and the recent High Court decision in the Finch case, which threw uncertainty into existing projects. None of this is helpful for a sector that craves certainty in an international investment environment and dominates our region.
On the other hand, we have the "Jekyll" aspects - over £30 billion of investment is set to flow into Aberdeen and Aberdeenshire in the coming decade, as renewable energy infrastructure projects pick up pace (the Aberdeen & Grampian Chamber of Commerce have called this "an economic renaissance"), as well as projects like the city centre £150 million Queen Street regeneration and the £250 million Aberdeen Rapid Transit network. These major capital projects will provide jobs and opportunities for the region in the years to come.
On the ground in Aberdeen, we can see both sides of the coin in the projects and transactions that we are involved in for our clients. The challenges in the retail sector remain but, notwithstanding that, the acquisition by Lone Star of Union Square buoyed the city's investment market and we are seeing positive initiatives such as Our Union Street and the Belmont Community Cinema.
Aberdeen has also seen reasonable activity levels in the industrials, investment and hotels sectors, with Brodies acting on the sales of Arc at Dyce and Meldrum House Hotel. Occupier clients continue to look for top quality office space with the most flexible terms. While conditions remain challenging in some sectors, market sentiment remains cautiously optimistic and we would hope to see a rise in activity in the next six months, both in Aberdeen and across Scotland.
From a corporate M&A perspective, there is a still a solid stream of deals, including – but not limited to - the energy and technology fields. The Financial Times' Investors Chronicle noted recently that some North Sea oil and gas companies continue to generate serious free cash flow, despite the challenging fiscal and regulatory environment, which would be the envy of other industrial sectors. Our deals work for oilfield services businesses, E&P companies and all kinds of businesses in the diversified supply chain (from catering to software) that make up the life-blood of the region, continues to demonstrate that the people in this region are hard-working and commercially astute in a way that will – with perseverance and resilience – ensure that the area continues to punch above its weight.
If it's a "Sliding Doors" question of which economic future the North-East gets, let's be sure to choose the option that preserves our decades of commercial and technical expertise and enables our people to thrive in the transition from oil and gas to clean energy. This will be a generational shift and one which schemes such as the development of the Energy Transition Zone in Altens and the support of Opportunity North East, are fostering. Let's choose a glass-half-full attitude. We can do this.
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