Setback for commercial property in Scotland

By ERIKKA ASKELAND
Published on 20/08/2012 00:00

COMMERCIAL property investors in Scotland faced more gloom as returns moved into negative territory for the first time since the depths of the 2009 property bust, a new report has revealed.

The second quarter of 2012 saw total returns for all property in Scotland falling to -0.1 per cent, down from 0.1 per cent on the previous quarter, according to the latest Scottish Property Quarterly from CBRE.

On an annual basis, total
returns in Scotland remained positive at 1.8 per cent, but this was below the total UK figure of 4.4 per cent.

Much of the cause of the disparity between Scotland and UK total returns was due to the slack performance of the Scottish office market, where quarterly total returns were down 0.5 per cent, compared with the UK where quarterly total returns were up 0.9 per cent, CBRE said.

The overall UK figure was skewed by the continued strength of the central London office market. Quarterly total returns for UK offices excluding the south east and London was -0.8 per cent, meaning that Scottish offices are performing well compared to most other UK
regions, CBRE added.

According to the report, total transactions in the Scottish market hit £134 million in the second half of the year, 56 per cent lower than the previous quarter and the lowest total since the start of 2009. This brings the total for first half of 2012 to £439m, which is a 31 per cent fall on the second half of 2011 and 20 per cent down year on year.

The largest deal of the quarter was the £22.4m purchase of a distribution warehouse at Renfrew Road, Glasgow, let to TDG until 2027 by Gatehouse Bank.