Commercial property investment suffers decline

Property experts say market still in healthy shape Edinburgh saw highest levels of activity in first half

Investment in Scotland’s commercial property market remained “resilient” in the first six months of the year, despite figures today showing a double-digit fall compared to a year earlier.

Property consultancy Knight Frank said £804 million was spent in Scotland in the first half, down 11.8 per cent on the same period in 2016 – an outcome it described as healthy given the political uncertainty experienced during the period.

Edinburgh saw the highest levels of activity between January and June, with £326m spent on commercial property, compared to just over £401.1m in the first half of last year. Among the biggest deals of the period was the sale of Exchange Place 1, 2, and 3 for a reported total of £83m.

Glasgow saw a little over £182m spent in the first half of 2017 – broadly in line with the same period in 2016. Major deals included Credit Suisse’s £28m purchase of the Cuprum office building in the city’s international financial services district.

Trading volumes in Aberdeen continued to recover from the challenges of the sustained low oil price with £80m invested in commercial property, compared to some £49.5m in the first half of 2016. A sizeable chunk of the latest total was accounted for by LCN Capital Partners’ purchase of Prime Four Business Park for £43.2m.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Despite the overall figure dropping, the first half of 2017 has seen a steady level of investment.

“Edinburgh, in particular, had a strong first half in 2016, so it is encouraging to see that transactional levels so far this year are broadly keeping pace. There are a number of deals on the verge of going through in the capital which make us confident of a strong second half to the year.”

John Rae, head of the firm’s Glasgow office, added: “Investment volumes in Glasgow have been lower than in Edinburgh – but it’s still been a resilient period, despite political uncertainty pervading.”

The report comes after it emerged yesterday that the total value of commercial property sales in Scotland had fallen in two consecutive quarters for the first time since 2012.

According to figures released from the Registers of Scotland and analysed by the Scottish Property Federation, the total value of commercial sales in Q2 2017 fell to £785m, down from £795m in Q1 2017 and £982m in the final quarter of 2016.

sreid@scotsman.com