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Property deals expected to pick up in second half

Elliot Cassels: ‘genuine optimism’

Property investment is expected to pick up following the Brexit deal and the roll-out of Covid vaccinations, says a new report.

Volumes in Scotland totalled £1.3 billion last year, down from £2.1bn in 2019 – the weakest annual figure since 2012, according to a report by Colliers International which echoes other agency reports.

Colliers said that despite the ongoing pressures caused by the pandemic some sectors are performing well and a rebound is expected this year.

Elliot Cassels, director, national capital markets in Edinburgh, said: “There is genuine optimism in the Scottish investment market, in anticipation of restrictions being lifted. 

“A Brexit trade deal that looked very unlikely has been struck, which will calm nervous investors. And with mass vaccinations being rolled out across the UK there is finally light at the end of the Covid tunnel.” 

He added: “Unsurprisingly most of the capital flowed into ‘beds and sheds’, the sectors that have held up best structurally since the pandemic. There is a significant build-up of equity targeting these sectors and with cheap debt the trend is set to continue.”

Despite the uncertain economic backdrop, headline rents in Edinburgh city centre have risen from £35.50 to £37.50 per sq ft. Glasgow recorded a more substantial drop of 44% in annual take-up, with the 2020 figure of 597,000 sq ft well below the ten-year average of 996,000 sq ft. 

Oliver Kolodseike, deputy UK chief economist, research and forecasting at Colliers International, said: “While demand for office space may be hampered during the first half of this year due to lockdown restrictions and high infection rates, we see a strong rebound on the cards for the second six months.”

Analysis by consultancy Knight Frank, published last week, found that international investors accounted for £654m of investment in Scotland’s commercial property last year – just over half (52%) of the total figure.

It also reported transactions fell by half last year, to £1.2bn compared to £2.074bn in 2019. Office volumes dropped from £759 million in 2019 to £347m.

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