54% hike

Industrial units help H1 deals to four-year high

Pinnacle at Eurocentral
Pinnacle at EuroCentral was among the big industrial deals in the first half

Scottish commercial property enjoyed its best first half of the year for investment volumes since 2018 as the market continued its recovery from the Covid-19 pandemic, according to new analysis from Knight Frank.

It found that £1.2 billion of deals were agreed between January and June this year, 54% higher than the same period last year.

The figure is also 21% ahead of the five-year average – albeit, this was skewed by low investment volumes during 2020 and, to a lesser degree, 2021.

Overseas investors represented more than two-thirds (68%) of the total investment figure, equivalent to £843 million, with UK property companies the second most active buyers, totalling £296m – 23.9% of overall investment volumes.

Investment in retail assets increased by more than 55% on 2021, rising from £148 million to £230m with retail warehousing accounting for £165m of the total figure.

Offices were the most popular asset class with £410m-worth of deals, boosted by the sale of HFD Group’s 177 Bothwell Street in Glasgow, in what is believed to be a record transaction for Scotland.

Edinburgh saw £400 million of investment, while Glasgow accounted for another £329 million. Deal activity in Aberdeen continued to pick up, reaching £189 million, largely from the sale of two retail warehousing assets.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “The first half of the year has underlined a couple of key trends that have emerged over the last two years: retail warehousing and industrials remain in high demand, while prime offices are highly sought after – underlined by the deal for 177 Bothwell Street.

“Similarly, overseas investors accounting for such a high share of investment during the last six months also highlights the strength and depth of the buyer pool for Scottish commercial property.  

“An uncertain macro-economic outlook will likely cool deal activity over the next couple of months.

However, commercial property has typically acted as a hedge against inflation for investors and, with yields in Scotland’s main cities comparatively good value and supported by strong occupier markets, we expect interest to remain strong in the second half of the year.”



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