Retail targeted

US leads investment surge into Scottish real estate

Hermiston Gait

Hermiston Gait: one of the properties acquired

Investment from the US into Scotland’s commercial property market rose by 20% over the last 18 months compared to the the previous year-and-a-half.

This eclipsed the investments by other major overseas buyers, according to commercial real estate research and analytics firm CoStar.

Despite the retail sector’s problems, it garnered the most interest, aided by a major UK acquisitions drive by San Diego-headquartered real estate investment trust Realty Income.

The firm’s recent purchases include Hermiston Gait Retail Park in Edinburgh from Ediston and BauMont Real Estate for around £85m and Garthdee Retail Park in Aberdeen from M&G Real Estate for nearly £33m, with both deals reflecting yields of circa 6.5%.

Grant Lonsdale, senior market analyst at CoStar, commented: “Despite the retail sector’s wider struggles, both domestic and overseas investors remain encouraged by retail parks and food stores, which continue to demonstrate resilience and often offer long-term, inflation-linked rental income secured to strong covenants like B&Q and Tesco.”

Meanwhile, the office and industrial sectors each attracted around £120m of US capital in the 18 months to September.

New York-based LCN’s recent purchase of the life sciences-oriented Alba complex in Livingston for around £47m (a 5.8% yield) helped to lift US spending on offices, which fell 13% from the previous 18 months, reflecting caution among some American buyers around the more traditional office sector as working from home persists. 

US investment into Scottish industrial properties more than doubled in the same period, however, following sizeable acquisitions by Mileway and Blackbrook Capital, which are backed by private equity giants Blackstone and Eldridge, respectively.

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