Investment in Scottish property in the first quarter of 2018 reached £608 million, significantly ahead of the five-year average of £546m. The latest research from CBRE Scotland, a commercial property consultancy, reveals that investment in the first quarter of the year was led by a smaller number of high-value deals with the total of £608m achieved across 28 transactions, compared with the five-year average of 44 deals.
The office and alternative sectors dominated the first three months of the year, representing more than 80% of transaction levels.
Alistair Wright, associate director at CBRE Scotland, said: “This strong quarter performance was dominated by deals which fell over from 2017.“
CBRE Scotland said notable transactions include the acquisition of the Aker Campus in Aberdeen for £112.5m, the Waldorf Astoria in Edinburgh deal worth £85m and Westway Park in Renfrew at £40m.
Wright added: “Interestingly, retail investment volumes are relatively low with £41m across seven deals traded in Q1 – in comparison, the same quarter in the last three years saw an average of over £135m traded.
“Sentiment remains strong for prime products. There is a healthy cocktail of investor appetite from across UK institutions and international capital. Moving into Q2 we don’t expect a deluge of a new product so stock levels will remain challenging, however, appetite is expected to remain strong.”
Separate research published today by CBRE Scotland found that the Edinburgh office market has experienced a challenging start to 2018 with about 139,969 sq ft of take-up.
Following a record year of take-up for the city, the figure represents a 42% decrease from the first quarter of 2017, where a number of large deals slipping out of the last quarter of 2016 bolstered the results.
Allan Matthews, a director in the advisory and transaction Services team at CBRE, said: “While the Q1 take-up figure represents a significant year on year decrease, it should be noted that there was no ‘hangover’ of big deals from Q4 2017, with all major lettings completing prior to year-end, contributing to a record take-up for 2017 as a whole. With a number of substantial active requirements currently progressing, we anticipate taking up increasing significantly in the coming months.”
“In terms of occupier trends, the tech sector continues to rival the traditional financial services industry as being the main source of take-up in the city.”
Significantly, total Edinburgh city centre supply has fallen to 1,100,000 sq ft, half of the total supply figure of the first quarter 2013, which stood at 2,780,000 sq ft.
Matthews: “Despite this seemingly slow start, conditions remain strong into 2018, with total city-wide availability falling by over 60% in the past five years, from 2.78m sq ft to 1.1m sq ft. Options for immediately available brand new Grade space are still extremely limited, and with only 38,648 sq ft scheduled to complete at 2 Semple Street this year, supply levels will remain critical.”