Brexit impasse hurting Scottish commercial property market

The commercial property market in Scotland's largest cities, such as Edinburgh, above, has historically followed a cyclical pattern of highs and lows. Picture: Contributed

Professional body Rics – the Royal Institution of Chartered Surveyors – said that half the respondents to its latest survey sense that the overall market is in the “downturn phase”, with anecdotal evidence suggesting that the Brexit impasse is having an “increasingly detrimental impact” on activity.

In the property investment market, the highest proportion of respondents in Scotland since 2016 said that enquiries from potential investors were lower than in the previous quarter.

The net balance for overall investment enquiries during the third quarter of 2019 stood at -34 per cent – meaning that 34 per cent more respondents said that the number of enquiries fell than said they rose.

In the occupier market, tenant demand fell at the headline level in Scotland for the fourth consecutive quarter, with the net balance slipping to -22 per cent, from -3 per cent previously.

Flat

The retail sector continued to drive the overall decline, with the weakest reading since the third quarter of 2008. Demand for office and industrial space was broadly flat.

Richard Smith of Allied Surveyors in Inverness said: “The market over the last three months has been affected by political uncertainty. Clients tell us that they will invest when the uncertainty is removed, regardless of how that is achieved.”

David Castles of Ian Philp Glasgow said: “Retail continues to suffer as the high street adjusts. Office and industrial sector capital values will improve but supply of prime office developments is restricted, and more investment is required which hopefully will improve once market uncertainty is reduced.”

Looking ahead, Scottish surveyors are cautious about rents over the next quarter.