◆ Scott Reid looks at the deals and buyers that have fuelled 2024's turnaround, with Aberdeen’s Union Square sale flying the flag
Scotland’s property investment market enjoyed a rebound in the opening months of the year as inflation began to come under control and the outlook for interest rates turned more benign. Total investment volumes jumped by 53 per cent to £383 million in the first quarter of 2024, up from £251m in the same period last year, according to the latest analysis from commercial property consultancy Knight Frank. Retail property accounted for 56 per cent of investment volumes, largely because of the sale of Aberdeen’s Union Square shopping and leisure centre in a bumper £111m deal. Hotels accounted for another 17 per cent and offices represented about 15 per cent.
That sale of Union Square also helped Aberdeen record its best first quarter in the last five years, with £140m of deals. Glasgow saw a strong rebound from last year as well, up from £49m to £109m – an increase of 123 per cent. So far this year, listed property companies have accounted for 43 per cent of investment, with international investors at 30 per cent – well below their five-year average of 57 per cent – and private capital representing 27 per cent, according to Knight Frank.
The firm’s latest statistics coincide with first-quarter figures from industry peer Lismore Real Estate Advisors, which are likely to be based on a different methodology and deal flow but paint a very similar picture. They show that transaction volumes in the first quarter totalled £431m, up 33 per cent year on year, indicating a positive start to 2024.
Lismore said deal pricing was showing “signs of stabilisation”, with some sectors experiencing upward pressure. Logistics and multi-let sheds remain strong, with prime yields expected to slightly harden, it added.
The firm highlighted several transactions in the opening three months of the year, including the acquisition of Union Square in Aberdeen, DS Properties’ purchase of BP’S North Sea headquarters for £16m, ICG’S acquisition of Tesco in Corstorphine, Edinburgh for £43.9m and an overseas private family office’s purchase of the Omni centre in Edinburgh for a reported £64m.
Lismore associate Chris Thornton said “key themes” were emerging in various sectors, with the industrial property areas of logistics and multi-let sheds continuing to lead the way. Strong demand and limited supply are driving “genuine rental growth and underwriting investment rationale”, he noted.
He said: “There are early signs of an increase in fund activity focusing on the prime retail, retail warehousing, hotel and industrial sectors. Corporate
The deal for Aberdeen’s Union Square shopping and leisure centre, above, was a Q1 standout while Edinburgh's Omni leisure complex, right, also changed hands an unconditional contract for the sale of the vast 52,000-square-metre shopping and leisure complex to an affiliate of US investor Lone Star.
Union Square is one of several prominent Scottish shopping centres to change hands in recent months. At the tail end of 2023, The Centre in Livingston was acquired by UK commercial property and investment companies LCP and Evolve Estates, both part of M Core, for an undisclosed sum.
Just last week it emerged that Omni, the leisure and entertainment complex a stone’s throw from Edinburgh’s new St James Quarter, had changed hands in another major property investment deal. The venue, which houses several bars and restaurants, a Vue cinema and a Nuffield health club, was acquired by
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