Crown invites offers for high-profile properties as hopes of recovery rise

Published on Saturday 25 April 2009 15:27

THE Queen's property company, Crown Estate, is expecting a queue of buyers for two high-profile buildings in Edinburgh in what is being seen as a sign that the commercial property market is picking up.

Scotland on Sunday has learnt that the Estate is inviting bids for Princes Exchange, the office complex in Tollcross occupied by HBOS Corporate and McGrigors. It is also selling a retail unit in Princes Street currently rented to Waterstone's and Game, the entertainment chain.

The sale of the properties has caused considerable excitement in commercial property circles following a dearth of activity last year when Jones Lang LaSalle calculated that transactions collapsed by 66% on the previous year.

Princes Exchange in particular is expected to attract strong interest and bids are expected in excess of 50m.

Commercial property consultants are hoping the deals will signal the start of a revival in the market, although recovery is expected to be gradual.

The Crown Estate sales will follow a handful of other transactions, including the sale of the Gemini Building in St Andrew Square for 16m, and George House, the New Town property occupied by the Ivory Lounge bar and restaurant, for 9m. A deal is also imminent on Exchange Crescent, the Standard Life office complex on Lothian Road. A fund linked to Henderson Global Investors is understood to have won the bidding for Exchange Crescent for a sum in excess of 50m.

Miller Mathieson, senior director at CB Richard Ellis in Edinburgh, said that optimism is slowly returning to the market after a bleak 18 months.

"From a commercial property point of view, I doubt pricing will get materially worse than where we are now. For good quality product we are actually seeing a bit of competition. The next 24 months will represent the best buying opportunity investors have had in the last 15 years."

According to Jones Lang LaSalle (JLL), all commercial property transactions in Scotland totalled just 1bn last year, down two-thirds on 2007.

Alasdair Humphrey, managing director at JLL in Scotland, said 2009 is likely to provide "once in a generation" buying opportunities. He said: "In the current economic climate, forced selling will be evident and we could see some assets that are rarely traded coming to market, resulting in investment opportunities to acquire prime assets at historically low prices."