Surge in investment from overseas
Overseas investors undeterred by political climate
Deals worth £662.6 million are expected to exchange or complete by the end of the first quarter, a 33% increase on the same period last year (£498m).
With overseas investors taking a 41% share of total investment in Scottish commercial property last year, Savills says non-domestic appetite continues into the first quarter of 2016 with big players from Germany, the US and the Middle East.
Of the total turnover for Q1, Savills data shows £215m will be invested in Edinburgh, £83 million in Aberdeen and £108 million in Glasgow. A further circa £257m will be invested through transactions in Scotland’s shopping centre market.
Nick Penny, head of Savills Scotland, says: “With Scottish commercial property yields still between 50-150 basis points higher than comparable English cities, Scotland offers investors an attractive income yield and an opportunity for capital growth at a time when elsewhere in the UK the capital value growth story is beginning to tail off.
“The level of activity in the first quarter of 2016 reflects this while non-domestic investors continue to offer the best prices for trophy assets.”
Whether the EU referendum and the Scottish parliament elections are to have an impact on Scotland’s commercial investment market remains to be seen, says Savills.
Regardless, the firm holds a positive outlook for investment in 2016, spurred on by a healthy occupier market where Edinburgh saw demand for prime office space increase by 44% in 2015 and Glasgow broke the £30 per sq ft barrier for the first time.
Mr Penny continues: “Fundamentally, commercial properties with long leases and good covenants continue to look attractive compared to other asset classes, with international investors in particular recognising this.”