The Scottish Property Quarterly report reveals that the all property total return for Scotland was 2.1%, an increase from 1.5% in the previous quarter.
It points out that for the first time since 2010, this positive performance has been driven by capital growth across retail, industrial and offices with the latter the best performing sector, delivering a total return of 2.7%. This was closely followed by industrials at 2.5% and retail at 1.8%.
At a city level, Edinburgh is enjoying its strongest year for almost a decade in terms of office take up, and total returns here have increased sharply over the past three months. The return for quarter three was 4.6%, supported by a 3% increase in capital values over the quarter, the highest growth rate of any city market outside of London and the south east of England.
Although the Glasgow office market has not seen quite the same rebound, a return of 1% over the quarter has reversed the weaker returns posted earlier this year.
Aberdeen offices and industrials continue to outperform any other location, maintaining a long standing trend for stronger overall returns in Scotland’s oil capital, bolstered by low levels of supply, high occupier demand and a high Brent crude oil price.
For retail, despite seeing an improvement in returns in the third quarter, led by Glasgow which saw a 2% return over the quarter and a 3.5% return over 12 months, retail returns remain consistently low across all three cities.
‘Commercial property transactions continued to increase during the last quarter, pushing the year to date sales to £782 million,’ said Aileen Knox, senior director CBRE (Scotland). She pointed out that the figure has been significantly boosted by key deals such as F&C Reit’s £189 million purchase of the Bon Accord Centre in Aberdeen and this will be further increased when the sale of St Enoch Shopping Centre, and other deals currently in legals fall into the final quarter.
‘There are definite signs of recovery although it is a slow process, and whilst Scotland still underperforms when pitted against the UK as a whole outside London and the south eastern area of England, Scotland has actually seen some of the highest returns,’ added Knox.
