The commercial property sector experienced a sharp fall in the value of sales during the first quarter of this year, according to a new report.
Between January and March 2019, commercial sales in Scotland totalled £763 million; an increase of seven per cent (£48 million) on the previous quarter, but a fall of 21 per cent (£203 million) compared with the same quarter in 2018.
The value of commercial property sales in Aberdeen rose from £14 million the previous quarter to £41 million; a 193 per cent increase. Despite that, year-on-year, the total value of Aberdeen's sales was down 75 per cent (or £125 million).
Glasgow recorded a 15 per cent decrease in the total value of sales, going from £197 million the previous quarter to £171 million. Compared with the same quarter of 2018, however, the total value of sales was up 51 per cent (or £49 million). Of the total value of commercial property sales made between January and March 2019, Glasgow had a 19 per cent share.
The value of commercial property sales in the capital was up 47 per cent (or £85 million) compared with the last quarter of 2018, totalling £264 million. This was also a 76 per cent increase (or £115 million more) year-on-year. In the first quarter of 2019, Edinburgh’s total sales accounted for 35 per cent of the national market.
31% less high-value commercial property transactions
The data, which was conducted by the Scottish Property Federation (SPF), discovered the drop of 21 per cent in commercial property sales was primarily due to fewer high-value transactions. There were 28 commercial sale transactions that were at or above £5 million in January-March 2019, with a total value of £394 million. This compares with the £568 million made in the same quarter of the previous year (a 31 per cent drop in value). SPF explained that "low growth and lack of certainty in the economy" was weighing down on the level of activity in Scotland’s commercial property sector.
Of the 28 high-value transactions made in Scotland, Edinburgh was responsible for more than half (14 transactions totalling £207 million). Glasgow, Scotland’s biggest city, had seven £5 million-plus transactions, accounting for £102 million of the £394 million made in the first quarter.
While the data suggests a “subdued start” to the year for the Scottish commercial property sector, David Melhuish, SPF director, pointed to the strength of Edinburgh’s commercial property market:
"The investment 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."
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