Property-price decline writ large

Published on Monday 7 June 2010 19:05

THE full extent of the decline in commercial property values in Scotland over the past three years has been exposed in a new report by the Scottish Property Federation.

Statistics obtained by the SPF show that total sales across the country of 6.3 billion in the year 1 April, 2006, to 31 March, 2007, had fallen to just 2.3bn by 2009-10. On the same basis, Edinburgh was toppled as the most valuable sales location by Glasgow during that period; the value of sales in the capital dropped from 1.692bn in 2006-7 to 455 million in 2009-10, whereas in Glasgow the rate of decline was much less steep – from 1.221bn to 528m. As a result, Glasgow outperformed Edinburgh in terms of sales value during both 2008-9 and 2009-10.

However, while the value of sales in the two main cities was still in decline at the end of March this year, Aberdeen – Scotland's "third market" – appears to have made a comeback. Sales of 369m in 2006-7 slumped to 212m in 2008-9 but the figure for the last full year was 384m – an improvement, even, on the high-watermark year of 2006-7. Indeed, the combined value of sales for Aberdeen City and Aberdeenshire in the past year significantly exceeded those of Edinburgh.

South Lanarkshire boasted sales values higher than those of Aberdeen in both 2007-8 and 2008-9, when the figure was 489m. However, this slumped to just 90m in the past year, although the total was still sufficient to put South Lanarkshire fifth in the Scottish sales "league table" in terms of value.

As regards volume, sales in 2007-8 were slightly up on those of the previous year – 5,477 compared to 5,469. However, there was steep decline to 3,705 in 2008-9 and this had fallen further to 2,162 in the past year.

According to David Melhuish, director of the SPF, there is some comfort to be taken: "If we consider the deceleration of the decline in the number of transactions we could see perhaps the first signs of the market stabilising and finding the bottom in terms of sales activity," he says.

By securing its statistics from the Registers of Scotland (the sales are based on actual changes of title), the SPF has been able to give a truly national picture with figures produced for each of the 32 local authority areas. This reveals some interesting scenarios, for example the fortunes of Dundee, where in 2006-7 the value of sales was 281m, putting it fifth in the Scottish table. Two years later, however, the city had dropped to 20th place with sales worth just 30m, a figure that had only marginally improved in the past year.

Midlothian, which has benefited from the retreat of light industrial businesses from Edinburgh, is another interesting case. In 2006-7, sales values totalled over 120m but last year the figure was a mere 6m. In West Lothian (which includes Livingston), sales values were down from 126m in 2006-7 to 29m three years later while the varied Fife market went from sales values of 249m in 2008-9 to 65m a year later. Perhaps the area in which decline has been most "balanced" is Highland – where region-wide figures show sales values of: 146m in 2006-7, 209m in 2007-8, 97m in 2008-9 and 81m in 2009-10.

Throughout the three-years covered by the report, Edinburgh and Glasgow properties account for almost 50 per cent of total Scottish sales values.

The SPF report concludes on a slightly confident note, revealing that during the final quarter of 2009-10, sales values had actually increased, albeit marginally – from 575m to 609m. The next quarterly results – available in July – should give a clue as to whether these figures represent a breather on the road to further decline or are a genuine sign of recovery.