Foreign interest remains
Real estate sales rebound, but still lower than last year
Koreans investors bought the Leonardo Innovation hub in Edinburgh in September
Commercial property sales across Scotland rebounded in the third quarter (July to September), with the total £1.2 billion value of transactions almost double the previous three months.
Sales continue to be buoyed by overseas investors, attracted by the low value of sterling. However, the rolling 12-month trend is still below 2018.
Edinburgh was the key driver, seeing sales rise more than threefold during Q3 to £462m. A number of high-value deals meant the capital had a 38% share of the Scottish market by value.
Glasgow also continued the positive momentum with £216m transacted in the city during Q3. Its total value increased by £44m on Q2 2019 and £63m against the same period in 2018.
Commercial property sales in Aberdeen remained steady at £32m. Aberdeen’s total value of sales rose slightly on Q2 2019 (by £2m) but remained £20m below values recorded in the same quarter last year.
It was previously reported that Scotland has attracted £575 million of international capital in the first half of 2019 which put it on track to become the best ever recorded year for inward investment for commercial real estate. Almost half (49%) was made by international investors, representing the largest share of inward investment since 2016.
David Melhuish, director of the Scottish Property Federation, said: “Q3 2019 was a strong quarter for commercial property sales; however, it comes on the back of a subdued first half of 2019, and the current one-year rolling total is still 3% lower than in the same period in 2018.
“We will be watching closely to see if this momentum can continue in the last quarter of the year, against the headwinds of continued political uncertainty and low economic growth.”
Cameron Stott, director at commercial property agency JLL, added: “The large volume by value has been driven by substantial asset sales which have offered investors either long secure income or the asset is in a prime location.
“This volume also reflects how attractive Edinburgh continues to be, notwithstanding the political uncertainty.
“It is also interesting to note the continued interest from foreign investors no doubt seeing the UK as value for money but also benefiting from a more attractive yield compared to many other European cities.”
Scottish commercial property investment volumes rose sharply on both a quarterly and an annual basis, according to property data experts CoStar UK. Investors spent £798m in Q3 2019, the highest quarterly amount since Q1 2018.
CoStar highlighted that Scotland attracted more investment than any other UK region outside of London and the South East, with volumes heavily supported by a continuing flow of capital from overseas.
It was reported that foreign investors were behind over half of all acquisitions by value, with European and American investors involved in sizeable purchases.