Aberdeen office jump lifts commercial rent values

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RETURNS from Scottish commercial property increased in the second quarter as a long period of falling rental values came to an end.

Property group CBRE said in its quarterly report that total return investments increased to 1.5 per cent, from 0.3 per cent in the first quarter of this year.

The rise was led by the Aberdeen office sector, which enjoyed a 10.8 per cent annual total return thanks to the city’s booming energy sector.

Derren McRae, managing director of CBRE in Aberdeen, said: “Against a background of an extremely buoyant energy sector, Aberdeen continues to experience high levels of occupational demand across both office and industrial sectors.

“As a consequence of a lack of speculative development, prime rents are expected to continue to rise in the second half of 2013 as occupiers with immediate requirements look to acquire what limited space is available.”

CBRE’s report showed returns had been assisted by a marked deceleration of the pace in which capital values have been falling, to the extent that in there was almost no change in value in the second quarter.

It follows six successive quarters which saw capital values falling by more than 1 per cent in each three month period.

Aileen Knox, senior director at CBRE in Scotland, said: “We are seeing a more-encouraging economic environment developing, with a slight easing of the weaker conditions that have prevailed within the Scottish market over the past two years.

“With the industrials, retail and offices sectors all showing signs of improvement in the quarter, it is fair to say that Scotland’s commercial property market is continuing its slow recovery process, albeit Scottish property continues to underperform against UK-wide returns.”