Investment in commercial property hits high in 2018

● Number of big deals fuel activity during the year ● But investors likely to ‘pause for breath’ in 2019

Scotland’s commercial property market has continued to attract both domestic and overseas investors with record amounts being transacted in the first nine months of the year, new figures indicate.

A total of £1.8 billion was invested across all sectors in the first three quarters of 2018 – an increase of 46 per cent compared with the same period a year earlier, according to research from property consultancy JLL.

Some of the most significant deals of the year to date include the sale of Atlantic Quay in Glasgow, an office development which changed hands for £54.75 million to overseas clients of Darin Partners, and Aberdeen Standard Investments purchase of the M8 Industrial Estate in Coatbridge for £24.75m.

Despite “ongoing political and economic uncertainty surrounding Brexit”, investors still see Scotland as a solid investment opportunity with relative value in comparison to other areas of the UK, JLL noted.

Chris Macfarlane, director, capital markets, for JLL in Scotland, said: “The renewed momentum we saw across the summer has carried through to the third quarter, and the prospects for a strong finish to the year look encouraging.

“There has been a better flow of available stock as sellers seek to capture some of the momentum in the market before the year end and the prospect of a more subdued 2019.

“We now have a better balance of overseas investors and UK institutions who are more active than they have been for a number of years – both see Scotland as offering relative value when compared with other UK regions and London in particular.”

JLL said there had been a number of large and significant investment deals so far this year including M&G Real Estate buying a 50 per cent share in the Fort Kinnaird retail park in Edinburgh for some £125m, Hermes Real estate buying Skypark, Glasgow for about £70m and Hines UK acquiring The Mint Building, which is located on Edinburgh’s St Andrew Square.

Macfarlane added: “The strongest part of the market continues to be long income, index-linked opportunities. The demand for pension liability matching product remains insatiable, evidenced by the recent funding of Pentland House in Edinburgh – a student accommodation block let to Edinburgh University for 20 years, at an initial yield of circa 3.75 per cent – a new record low for Scotland.

“Looking forward, 2018 is likely to prove to be a record year for transactional volumes in Scotland,” noted Macfarlane.

“The uncertainty looming in 2019 will undoubtedly have an effect on the market as investors pause for breath to understand how the market will be affected post Brexit.”