Scotland's commercial property sector could be shaping up for 'great year' - Knight Frank

The Scottish commercial property sector is set for a strong year ahead after a resilient performance in 2019 despite volumes falling.

The BrewDog Hop Hub was one of the property transactions completed last year. Picture: Contributed

Just over £2 billion was invested in the market in 2019, according to analysis from Knight Frank. The figure was 10.4 per cent below the five-year average after a quiet final quarter when the UK went to the polls for the general election.

Overseas investors continued to be the main drivers of investment in Scotland last year, with a 56 per cent share of spend on commercial property. Meanwhile, UK institutions’ share of investment has dropped to just 14 per cent.

The Edinburgh office market was the stand-out asset class in 2019, increasing by 70.4 per cent on the year before to £484 million with major transactions including the Leonardo Innovation Hub at Crewe Toll and 4-8 St Andrew Square.

The well-publicised challenges faced by the high street were reflected in property investment levels in 2019. Transactions for shop units were almost 80 per cent below the five-year average at just £44m.

Alasdair Steele, head of Scotland commercial at Knight Frank, said that against a difficult backdrop overall investment levels were robust last year and there were some significant bright spots, such as Edinburgh offices.

“The proportion of buyers from overseas is at historic highs, with more than half of investment coming from international sources and the majority of deals being concluded off-market. Korean funds were particularly active last year – concluding three major deals in Edinburgh and Glasgow – while Middle Eastern interest has also been strong,” he said.

Steele said he was already seeing signs that 2020 could be a “great year”.

He added: “Investors are coming back to the market now that there is some much-needed political stability.”