Scotland favoured as Middle East cash floods in

INVESTORS from the Middle East ploughed £230 million into commercial property deals in Scotland last year amid improving sentiment towards UK assets outside London, new figures show.

The £67 million acquisition of Abbotsinch Retail Park in Paisley by Ashby Capital was the biggest deal struck by Middle Eastern investors in Scotland in 2019, as more capital from the region was deployed in UK cities outside London for the first time, according to property firm CBRE.

The agent said a total of £880m was placed by Middle Eastern investors across the UK regions last year, compared with £650m in central London.

Other major deals sealed in Scotland last year included the £27m acquisition of Centrica’s headquarters in Edinburgh by BLME/ Darin Partners, the £55m purchase of the Sauchiehall Centre in Glasgow by 90 North and Arbah Capital. Black Sands acquired Technip HQ in Aberdeen for £22m.

CBRE director Alistair Wright said investors are drawn to the “dynamics and discount on offer north of the Border”, noting that there has been diversification of Middle East investment from offices into the retail and industrial sectors.

He said: “Having just returned from a series of meetings with key investors from the Middle Eastern region, it is evident that sentiment towards the UK property market is exceptionally strong.

“While the traditional requirements for defensive stock that offers

stable earnings remains, we are seeing an increasing number of parties willing to move up the risk curve to satisfy return requirements. Compared to two or three years ago, a number of investors now have a UK track record and are looking to build on this.

Accounting for more than 80% of investment activity in Scotland’s office market in 2019, we anticipate that international capital will continue to dominate.”

However, while investment rushed into UK regional in 2019, overall investment in the UK from the Middle East plunged to £1.5bn from £3.7bn in 2018. Chris Brett, head of EMEA Capital Markets CBRE, said this reflected investors offloading assets in London “as they reached the end of their investment cycles, including 25 Canada Square, Citibank’s HQ.”

Mr Brett added: “This group of investors have long been active in cities outside of London having invested £6bn in the UK regions in the last five years. However, this is the first time regional investment activity has exceeded that in London.

“Investors are increasingly attracted by the high levels of investment into regional infrastructure and the opportunity to achieve greater yields.”