The Courier & Advertiser (Perth and Perthshire Edition)
Jump in property investment
Total value of commercial property market and number of transactions has increased
Investment in UK commercial property rose sharply in the second quarter of this year, according to commercial real estate information company CoStar.
At £14.7 billion, volumes jumped 34% quarter-on-quarter and increased 23% compared to Q2, 2016 – marking the first year-on-year rise for two years.
However, market polarisation was evident, with large trophy buys in London, modern warehouses and alternative investments, such as student accommodation, proving very popular with investors.
But investment in retail, lower-value central London offices and regional offices was less popular.
Large transactions in the UK capital rose sharply on the back of foreign investment, which reached record highs and rose generally as a percentage of overall volumes.
Outside London, the data painted a mixed picture with regional office investment declining to a four-year low of £1.2bn in Q2, and office investments in the big six cities of Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester at around half its five-year quarterly average – the south-east also recorded weak volumes.
An earlier report from CoStar highlighted investors shifting away from London towards the regions, but this was reversed in Q2 2017 with nearly 60% of all commercial property investment concentrated in the capital.
The Scottish Property Federation (SPF), the voice of Scotland’s real estate industry, reports the total value of commercial property sales in Q2 2017 was £785 million – 1.3% down on Q1 and 4.2% lower than Q2 2016.
For the first time since 2012, the total value of commercial property sales in Scotland has fallen in two consecutive quarters – however, the total value of the commercial property market and the number of transactions increased, helped by a larger number of lowervalue sales.
Meanwhile, the value of commercial property sales for the first half of the year was £1.58bn – £142 million or 9.9% above where it was after the same period in 2016. SPF has received reports that Q3 and Q4 of this year have the potential to improve on 2016, with a number of high-value transactions in the final stages of completion – which is encouraging news.