Commercial property sales in Scotland have fallen sharply

Commercial property sales in Scotland during the first quarter of 2019 fell by 21% compared to the same period in 2018, according to an analysis of the latest data to be published.

The drop was largely driven by fewer high value transactions for this period, with the number of £5 million plus sales down by nearly a third compared to the first quarter 2018, the analysis from the Scottish Property Federation shows.

According to David Melhuish, director of the SPF, the trend aligns with investment data suggesting a subdued start to 2019 for the Scottish commercial property sector but he pointed out that Edinburgh’s commercial property market is strong, accounting for 35% of the Scottish market by value.

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,’ said Melhuish.

The SPF analysis shows a 21% or £203 million year on year decrease in sales by value in the first quarter of 2019, with the value of commercial property sales in the quarter totaling £763 million.

Overall, there has been £3.03 billion in commercial property sales across Scotland for the last four quarters, the lowest rolling annual total since the second quarter of 2014.

Property data experts at CoStar reported a similar decrease in commercial property investment in Scotland in the first three months of 2019 with investment volumes down by 41% compared to the final quarter of 2018 and down 54% compared with the first quarter of 2018.

CoStar points to investment into alternative assets as the key driver of activity in the first quarter of 2019, with below average investment into Scotland’s industrial and office sectors.

Edinburgh showed a break from the national trend with higher values than the same quarter in 2018 and a total value of £264 million in commercial property sales, accounting for 35% of the total value of commercial property sales in Scotland.

Aberdeen also saw commercial property sales recover against the previous quarter, with an increase from £14 million to £41 million. However, year on year, the total value of Aberdeen’s sales fell sharply by £125 million.

Glasgow experienced a decrease in the total value of sales by £26 million or 15% from the previous quarter but rose by £49 million compared to the first quarter of 2018. Some 19% of the total value of Scotland’s commercial property sales in the first quarter of 2019 were in Glasgow at £171 million.