Scottish commercial property sales value sinks to five-year low

Commercial property sales fell sharply in Scotland during the first quarter, bringing the nation’s rolling annual total to its lowest point in almost five years, according to new research.

Edinburgh is seen as remaining a hotspot for investors. Picture: Jon Savage.

The latest analysis by the Scottish Property Federation (SPF) found that the total value of Scotland’s commercial property sales dropped to £763 million in the quarter, 21 per cent lower than the opening three months of 2018.

This was driven largely by a drop in the number of high-value transactions, as the number of sales worth £5m or more was down by almost a third compared with the first quarter of last year.

SPF reported just over £3 billion in commercial property sales across Scotland for the last four quarters combined, representing the nation’s lowest rolling annual total since the second quarter of 2014.

On a regional basis, the Scottish capital led growth in the sector while Glasgow and Aberdeen presented a mixed set of results.

Edinburgh showed a break from the national trend, with a year-on-year increase to £264m, and accounting for around 35 per cent of the total commercial property sales value in Scotland.

Aberdeen reported sales almost tripling from the final three months of 2018 to £41m. But it also saw a drastic year-on-year fall of £125m compared with the start of 2018.

Glasgow suffered a £26m quarterly decrease in total sales, but showed a £49m improvement compared with one year earlier. Scotland’s largest city represented 19 per cent of the nation’s total commercial property sales value at £171m.

Property data experts at CoStar reported a similar nationwide decrease in commercial property investment in Scotland, which fell 54 per cent from the previous 12 months and 41 per cent from the prior quarter respectively as investors targeted alternative assets rather than the industrial or office sectors.

David Melhuish, director at SPF that represents more than 185 organisations operating or investing in Scotland, said: “The sales report for Q1 2019 shows a clear fall in total value of commercial property sales compared to the previous year. This aligns with investment data suggesting a subdued start to 2019 for the Scottish commercial property sector.

“However, the sales data does underline the current strength of Edinburgh’s commercial property market, with the capital accounting for 35 per cent of the Scottish market by value. The data also highlights the rise in investor appetite for alternative property asset classes, such as hotels and build-to-rent.

“For investors, Edinburgh remains a hotspot, while more broadly, low growth and lack of certainty in the economy is weighing down on activity.”