By Scott Wright
THE Scottish commercial property market fought back from the pandemic as the “wall of overseas capital chasing stock” continued, a new report has declared.
Investment in commercial property climbed by 24 per cent to £1.345 billion despite the “ups and downs faced during 2021”, according to Lismore Real Estate Advisors. The agent flagged the £32.2 million sale of Sainsbury’s at Inglis Green Road, Edinburgh, by Inglis Property to Urbium Capital Partners among “key” deals that went through in Scotland last year, as well as the £10.725m off-market purchase of Scania at Eurocentral by West Ranga Property Group to DVS Property.
While Lismore warned that the emergence of the Omicron variant and reintroduction of restrictions posed challenges to the market, it noted that trading remained strong in the fourth quarter of the year; transactions were 27% up on the fourth quarter of 2020 to £520m.
Lismore director Chris Macfarlane said: “The wall of overseas capital chasing stock continues and pricing reached pre-pandemic levels in the food stores, logistics and retail warehousing sectors. However, challenges remain for significant parts of in-town retail/leisure and investors continue to grapple with offices, other than those of the very best quality or which can be adapted to meet more challenging ESG (environmental, social and governance) credentials.”
Mr Macfarlane said 2021 saw UK institutional investors continue to target “defensive stock” such as retail warehousing and distribution, interest in which has been boosted by the online retailing boom during the pandemic. But he added that “we have seen a welcome return by an institution to the Edinburgh office market for the first time in a number of years”, referring to the £58m sale of Exchange Place One in Edinburgh by Macquarie Asset Management to CBRE Investment Management.
Mr Macfarlane said Scotland and Edinburgh in particular continue to be targeted by overseas investors, chiefly from North America, but also from the Middle East and Europe. Offices, retail warehouses and supermarkets are among the most sought after property types.
Mr Macfarlane said: “The level of distressed selling continues to be very limited with the more opportunistic buyers looking further up the risk curve, either direct development, vacant buildings or shopping centres.”
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