Continued investment decline fails to dampen Scottish commercial property sales

The Atria building in Edinburgh
The Atria building in Edinburgh

The value of sales in the Scottish commercial property market has increased by £200 million in the second quarter of 2016 to £819m despite a 13 per cent fall in investment values to £382m, according to new statistics.

Investment figures from CoStar UK and sales figures from Registers of Scotland, which have been analysed by the Scottish Property Federation, show a continuation of the overall downward trend in investment transactions since the end of 2014.

Edinburgh delivered the highest value of sales across Scotland, worth £223m, an increase of 68 per cent from the seasonally low Q1 figure of £132m.

Glasgow also had a strong quarter with total sales of £197m, including some significant retail deals in the city centre.

The Aberdeen market rallied somewhat, as it continues to readjust in light of the changes in the energy industry since autumn 2014.

The value of sales doubled to £51m in Q2 from £25m in the previous quarter, when the Granite City was outperformed by Renfrewshire, South Lanarkshire and Fife.

Of the £382m of sales classed as investment, the office sector saw the bulk of investment in the quarter with around £205m worth of deals, while retail received £120m.

Industrial investment came in at around £20m and around £40m can be attributed to mixed use deals and other commercial transactions.

Last month analysis from Knight Frank revealed a robust take-up of deals in Edinburgh’s commercial property market despite subdued market sentiment while the Royal Institute of Chartered Surveyors (RICS) also reported a significant drop in confidence and investor demand following the Brexit outcome.

David Melhuish, director of the Scottish Property Federation, called for the Scottish Government and industry to address the downward trend of inward investment.

He said: “We generally expect an increase in activity in the second quarter of the year after the traditionally low post-Christmas period, and it is good to see that sales held up in the run up to the EU referendum. The continued downwards movement of the investment market should not be overlooked though, and is a trend that is likely to continue into the next quarter.

“Scotland’s commercial property market relies considerably on inward investment, and as we face an ongoing period of uncertainty, it is more important than ever that government and industry work together to encourage investment in our sector, which is a significant contributor to the Scottish economy.”

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