Strong demand says report
Record deals as property investors shrug off Brexit
Most areas have reported strong demand, according to latest data from Savills, with the exception of Aberdeen where the oil price slump remains the biggest issue.
A huge over-supply in Aberdeen is seen as an opportunity for companies wanting to trade up, while some landlords may be forced to demolish empty property because of new tax demands.
Nick Penny, director in the investment team at Savills Scotland, said: “In line with the other regional markets, Scotland has seen the greatest volume of overseas investment ever recorded and we believe that this trend could well continue as overseas investors look to take advantage of the weaker pound.
“Overall, appetite remained strong in the lead up to the referendum, which is reflected in the transaction volumes we have seen in the first half of the year.
“Since the end of June, the principal prime office investment buyers have been overseas, with Triuva acquiring Waverleygate (pictured) and non domestic money buying Princes Exchange / New Uberior House in Edinburgh.”
David Cobban, director in the office agency team in the Glasgow office at Savills, said: “Glasgow enjoyed a strong start to the year, with take-up reaching 430,000 sq ft, 57% above the first half five year average for the city centre.
“This was driven by the 155,000 sq ft pre let of the Bothwell Exchange to Morgan Stanley, the largest office deal in the UK regional city centres in the first half of 2016.
“Only 130,000 sq ft of new Grade A offices remain available which will influence take-up activity in the second half of the year however, high-spec refurbished options coming to the market shortly will mean there are still good options for occupiers.
“We expect total annual take-up for 2016 to outperform last year’s figures.”
Keith Dobson, director in the firm’s Edinburgh office, said: “Edinburgh’s office market continues to be a tale of limited supply and healthy demand, driving pre-lets on several new schemes, an uptick of interest in the out-of-town market and a search for refurbishment opportunities in the city centre.”
Simpson Buglass in the Aberdeen office said: “In contrast to Glasgow and Edinburgh, the office market in Aberdeen continues to suffer from low levels of demand and consequential over-supply at c.2m sq ft.
“In terms of the local property market Brexit was a relative non-event as focus remained firmly fixed on the fortunes of Brent Crude price recovery.
“That said, a depreciated pound has undoubtedly made our exporters more competitive and with oil and gas uplift costs proportionately cheaper against a product priced in $US the exchange rate adjustment will have been a benefit to the UK oil and gas sector which has a major influence over the Aberdeen property market.
“Those companies in a position to move office are definitely showing a distinct preference towards higher quality products which in turn must marginalise functionally and economically redundant office stock towards extensive and expensive refurbishment or else demolition and redevelopment.
“The spectre of vacant property rates in a challenging market may propel many building owners down the demolition and redevelopment route.
“The few transactions which have taken place and office requirements which are circulating have been driven by occupier events such as lease terminations and break-options, and with landlord’s competing for tenants it is undoubtedly the best market for years for those office occupiers in a position to consider a move.”