Demand for care homes to help fuel commercial property sector in 2020

High levels of demand across sectors including care homes, restaurants and pharmacies are set to drive activity in the Scottish commercial property market in Scotland this year, according to a new report.

The report said the Scottish care market has proved resilient despite ongoing challenges. Picture: contributed.

The business outlook report from property adviser Christie & Co also predicted Edinburgh and Glasgow will continue to be the “focal points of growth in Scotland”.

Christie’s regional director, Brian Sheldon, said activity across many sectors slowed down towards the end of 2019 as political uncertainty led to a tailing-off of transactions. But he said there were now signs of a growing appetite for well-established and profitable businesses across the country.

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The report said the Scottish care market has proved resilient despite ongoing staffing and funding challenges and vendors were taking advantage of the best sale prices seen by Christie in more than 12 years. The report predicts demand will be seen from a wide range of investors looking to grow and consolidate, including private equity buyers and real estate investment trusts.

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Impending policy reform of early years care by the Scottish Government that will increase the number of funded childcare hours offered to all three and four-year-olds from August 2020 will also support demand in the nursery sector.

Premium assets

“In 2020 we may see a select number of premium quality assets coming to the Scottish market on a confidential basis, which will attract significant interest,” the report said.

Although 2019 started in a reasonably positive fashion for the hotels sector, Christie said a heightened sense of caution set in as ongoing Brexit negotiations weighed on confidence.

But the firm said it had multiple deals in the pipeline for 2020 and was already seeing a sense of “renewed positivity” in the market as funders in the sector become more comfortable with the political landscape.

Although 2019 was a difficult year for the pubs & restaurants sector in Scotland, Christie said restaurants with the right trading fundamentals are expected to thrive alongside the booming takeaway market.

“Scottish consumers spent £1 billion pounds on takeaway last year and the market is tipped to continue its growth trajectory via platforms such as Just Eat and Deliveroo,” it pointed out.

The report also said a surge in activity in the pharmacy sector was seen in 2019 and this year is expected to see a steady flow of businesses coming to market on the back of strong prices being achieved.