Two Aberdeen deals have helped drive a 53% year-on-year jump in commercial property investment across Scotland.
Property giant Knight Frank said a total of £383 million was transacted Scotland-wide during the first three months of this year, up from £251m in the same period in 2023.
Retail property accounted for 56% of investment volumes in the latest quarter.
This is largely because of the sale of Aberdeen’s Union Square shopping centre for £111m.
Hotels accounted for 17% of the Scottish total and offices 15%.
Sale of Aberdeen landmarks drove Granite City Q1 deals total to £140m
The sale of Union Square by Hammerson to an affiliate of US private equity firm Loan Star helped Aberdeen to its best first quarter in five years, with deals totalling £140m.
Meanwhile, the sale of BP’s North Sea headquarters in Stoneywood, Aberdeen, also helped drive up the Scottish total. Manchester-based investor DS Properties is believed to have paid the British Coal Staff Superannuation Scheme about £16m for the building.
The overall Scottish market rebound came as inflation began to come under control and a cut to interest rates looked more likely.
Alasdair Steele, head of Scotland commercial, Knight Frank, said: “Last year was challenging for commercial property across the world, with interest rates rising sharply after a decade of historic lows and the economy adjusting to a new normal post-pandemic.
“While there was some mixed inflation data moving into 2024, a cautious sense of optimism has begun to emerge.
“It is encouraging to see that beginning to be reflected in investment volumes.”
He added: “Although we are not quite back to pre-pandemic levels, there is a noticeable difference between now and this time last year as macro-economic conditions settle, and buyer and seller expectations move closer together.
“The particularly good news is that it looks like there is still plenty more to follow this year.
“International investors weren’t as active in the first quarter but are still very interested in Scotland.
“All things being equal, we are moving in a more positive direction for the year ahead.”
Aberdeen is experiencing improved liquidity, with a significant uptick in office and industrial volumes attracting yield-hungry buyers.”
Chris Thornton, Lismore Real Estate Advisors
Highlighting its own figures showing a big year-on-year jump in the value of Scottish deals, Edinburgh-based Lismore Real Estate Advisors said they reflected “a positive start to the year”.
Lismore associate Chris Thornton added: “Notably, Aberdeen is experiencing improved liquidity, with a significant uptick in office and industrial volumes attracting yield-hungry buyers.”
Scotland-wide, Mr Thornton said key themes were emerging in a variety of sectors.
Logistics and multi-let sheds are leading the way, with strong demand and limited supply “driving genuine rental growth and underwriting investment rationale”, he added.
Conversation