Fall in commercial rents unchecked for a full year

Rental income made by owners of commercial property in Scotland as well as asset values have fallen for the fourth consecutive quarter, a new report suggests.

The Scottish Property Quarterly from agency CBRE notes that the pace of the rental value decline has been “relatively stable” over the past few quarters but that the severity of the fall in capital values is increasing.

The first quarter of 2012 saw total returns for all property in Scotland falling to 0.1 per cent from 0.5 per cent in the previous quarter. This was the lowest quarterly figure since Q2 2009 when total returns were negative, CBRE said.

Capital values fell by 1.4 per cent in the first quarter of 2012, compared with -1 per cent in Q4 2011 and -0.1 per cent in Q3 2011.

Retail was the worst-performing sector and has now experienced two consecutive quarters of falling values and 15 consecutive quarters of falling rents, the report found.

The office market in Scotland also “continued to perform badly”, CBRE added, where capital values have now fallen for the last seven quarters although rents saw a marginal increase of 0.1 per cent, reversing a near two-year falling trend.

Industrials were once again the best performing sector in Scotland with quarterly total returns in positive territory at 0.8 per cent.