Overseas cash continuing to target Scottish property with several assets under offer

Scotland has outperformed the rest of the UK in attracting overseas investors to commercial property with a number of assets currently under offer despite a recent slowdown in activity.

Colliers said it was aware of circa £250m of offices that are currently under offer in Glasgow and Edinburgh, above, to Far Eastern investors.

New research by property advisor Colliers International examines liquidity in the market before the global financial crash, spanning the years 2002 to 2006, compared to the period from 2014 to 2018.

It reveals that overseas-based investors’ share of the Scottish market was up from 19 per cent between 2002 and 2006, to 41 per cent from 2014 to 2018. This compares to a smaller increase, from 18 per cent to 24 per cent, for the UK regional market as a whole.

Overseas investment in Scotland reached £1.25 billion in 2016, from under £250 million in 2002, according to the analysis.

Last year, property investment in Scotland topped the £2bn mark for the sixth year running. After a strong start to 2020, with investment of just under £500m in the first quarter compared to about £250m in the same period a year earlier, there has been a “noticeable slowdown” amid the coronavirus lockdown.

However, Colliers said that overseas investors remained an important source of capital with a number of unspecified assets currently under offer.

Oliver Kolodseike, associate director, research and forecasting with Colliers International, said: “Looking at what attracts overseas investors to Scotland, the country benefits from fairly competitive pricing, while still being a transparent and relatively stable market, compared to other parts of the UK and Europe.

“It also enjoys strong occupational demand in the office sector, has an educated workforce, leading universities and low unemployment.”

He added: “A large part of Scotland’s tax revenues comes from oil and a falling oil price deepens Scotland’s fiscal deficit. The fall in oil prices and the independence referendum had a downward effect on overall investment volumes in Scotland.

“While these factors contributed to a degree of hesitation among domestic buyers, cross-border investors increased their exposure to the market.

“Loose global monetary policy, a weak sterling and competitive pricing, compared to other markets, also contributed to the attraction of foreign buyers.”

Glasgow-based Patrick Ford, director, national capital markets, Colliers International, said: “Overseas capital continues to dominate the Scottish investment market.

“We are aware of circa £250m of offices that are currently under offer in Glasgow and Edinburgh to Far Eastern investors.

“First into the pandemic and first out may see Asia back in the market sooner than, for example, Europe,” he added.

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