The Scotsman

Scots property sector enjoys ‘encouragin­g’ result in 2017

● Total return of 6.8% recorded for all property in 2017 ● Industrial units in two main cities best performers

- By SCOTT REID

A strong final quarter boosted returns across Scotland’s commercial property market last year, new figures have revealed, though the performanc­e lagged other parts of the UK.

Property consultanc­y CBRE published data yesterday showing that the annual total return for 2017 in Scotland was 6.8 per cent, while the UK as a whole notched up a total return of 10.2 per cent, as measured by the IPD Quarterly Index.

Over the fourth quarter, the all-property total return was 2.1 per cent, up from 1.7 per cent in the previous threemonth period.

The increase was attributed to improved capital growth, with average capital values up by 0.6 per cent. This represente­d the bulk of capital appreciati­on during the year.

Industrial­s were singled out as the key differenti­ating factor in the UK’S relative outperform­ance against Scotland, with the pace of rental growth in the London and south-east of England industrial markets leading the charge. However, for some other sectors, the performanc­e gap between the UK and Scotland has narrowed, notably high-street shops and offices.

Office sector total returns for the final quarter rose to 2.2 per cent, from 1.6 per cent in Q3, representi­ng the largest quarterly uplift in returns for any of the three principal property sectors in Scotland. It was also the highest total return for the Scottish office sector since the final quarter of 2015.

At a city level, the industrial markets in Glasgow (14.2 per cent) and Edinburgh (11.6 per cent) were the only two city/ sector groupings to achieve double-digit returns in 2017. The market in Aberdeen continues to lag significan­tly behind the Central Belt cities, but at 2.8 per cent the industrial sector is now generating positive returns.

A total of £2.5 billion of commercial property stock was transacted in Scotland during 2017, up from £2.12bn in 2016. While investment volumes were relatively low in the first half of the year, the second half, and in particular the final quarter, had a significan­t impact on the strength of the year-end total, CBRE noted.

Steven Newlands, an executive director at CBRE, said: “These results are encouragin­g for the investment market in Scotland, where sentiment improved following the general election result last year, which reduced, in investors’ eyes, the likelihood of a second independen­ce referendum. It should be noted that Scottish property continues to offer good value to investors.” The entreprene­ur behind a social enterprise tackling period poverty in the UK has been crowned Virgin Startups Scottish Business of the Year 2018 after only launching in January. Celia Hodson of Dunbar-based Hey Girls beat more than 100 entrants and impressed judges including Scottish Enterprise chairman Bob Keiller and Leah Hutcheon of Appointedd. Every time a customer buys a packet of towels from the firm, one is donated to someone in need.

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