Edinburgh’s Quartermile 2 building sold to UBS offshoot in £28.5m deal

● Development on site of former Royal Infirmary currently home to five tenants

One of Edinburgh’s major prime office developments has changed hands in a £28.5 million investment deal.

UBS Asset Management said yesterday it had completed the acquisition of Quartermile 2 – situated on the site of the former Edinburgh Royal Infirmary – with the deal representing a yield of 5.4 per cent.

The real estate and private markets arm of the Swiss banking giant’s asset management business has bought the office complex from the Swissbased fund AFIAA.

Constructed in 2009, the Grade A building is spread over six floors and currently houses five tenants, including legal firm Morton Fraser and industry body the Scotch Whisky Association.

The mixed-use Quartermile scheme comprises more than 1,000 new-build apartments and some 350,000 square feet of office space, together with retail and leisure facilities. Designed by architectural firm Foster & Partners and extending to 19 acres, the development is home to more than 20 businesses currently employing about 2,200 workers.

The deal for the Quartermile 2 building comes amid a dearth of new Grade A stock which property experts believe will continue for some time given the limited development pipeline in the city.

Howard Meaney, head of real estate UK at UBS Asset Management, said: “Having long been impressed by Edinburgh’s transformational Quartermile area, we’re very pleased to now gain access to it through our acquisition of this prime office asset.

“Edinburgh continues to see robust occupier demand for high quality and well-located office assets that offer tenants a bespoke working environment alongside access to a range of amenities, open spaces and excellent transport links. The Quartermile development goes from strength to strength as one of the city’s most desirable mixed-use schemes, having achieved a number of major pre-lets with ambitious plans in the pipeline to capture further growth.”

Stuart Agnew, senior director at selling agent GVA, added: “We are delighted to have secured this result for our client following some competitive bidding for the asset. It is an example of improving market sentiment in Scotland where both domestic and international investors are seeking good quality stock providing a comfortable yield discount to London, but with strong occupational dynamics.”

UBS was advised by CMS Cameron Mckenna Nabarro Olswang while AFIAA was advised by Brodies and GVA.