Aberdeen property investment plunges by 80%

Aberdeen's commercial property market has suffered amid the oil downturn. Picture: Ian Rutherford
Aberdeen's commercial property market has suffered amid the oil downturn. Picture: Ian Rutherford
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Investment in Aberdeen’s commercial property market slumped by 80 per cent last year, according to new research.

The dramatic downturn across the oil industry, sparked by plunging crude prices, saw total investment volumes in the Granite City tumble from more than £800 million in 2014 to just £162m, commercial property data provider CoStar Group said.

CoStar Group real estate analyst Grant Lonsdale

CoStar Group real estate analyst Grant Lonsdale

While both Edinburgh and Glasgow enjoyed a “record year” for office deals with a combined total of £736m, CoStar said investment in Aberdeen’s office market dropped 78 per cent to £118m.

READ MORE: Insight: Aberdeen’s oil industry running on empty

Real estate analyst Grant Lonsdale said: “There is no longer any brand new office space coming to the market in Glasgow and Edinburgh as the three buildings set to deliver in 2016 are entirely pre-let, although there are a number of refurbishments underway which could fill the supply gap.

“For these reasons growth in both prime and average rents can be expected. However, investment activity across all sectors in Aberdeen has dropped dramatically which can be largely attributed to the collapse of the oil market.”

READ MORE: Scottish commercial property investment market runs out of steam

CoStar said a total of £2.2 billion was invested in Scotland’s commercial property sector in 2015 – a slide of 41 per cent on the record £3.5bn invested the previous year.

Lonsdale added: “Though investment into Scottish commercial property fell 41 per cent year-on-year, 2015 was still the second strongest ever year for investment as assets in both Glasgow and Edinburgh are attractively priced compared to English cities.

“The occupational markets in both cities are strengthening and there continues to be demand for prime stock and value-add opportunities in the office sector, particularly as the next supply wave is still a few years away.”

READ MORE: Glasgow leading the way in property investment

In Edinburgh, office investment rose “marginally” to £374m, making 2015 the strongest year since 2008, while foreign investment accounted for 21 per cent of deals in Glasgow.