Wed, 12 Jan 2022 | BUSINESS NEWS
Investment in the Scottish commercial property market rose 24 per cent last year, with investment in the fourth quarter of 2021 up 27 per cent on the same period in 2020. Overall, £1.3 billion was invested in the market last year, and fourth quarter trading remained strong despite the challenges of COVID-19 and the new Omicron variant, with £520 million invested.
Chris Macfarlane, director of Lismore Real Estate Advisors, said: “The wall of overseas capital chasing stock continues and pricing reached pre-pandemic levels in the food stores, logistics and retail warehousing sectors. The only sector really offering ‘value-add’ pricing is the shopping centre market where risk remains but the best assets are starting to find their level, at between 50 to 90 per cent discount to purchase levels.”
2021 saw a number of high-profile sales. These included the sale of Sainsbury's at Inglis Green Road in Edinburgh by Inglis Property to Urbium Capital Partners for £32.2m, a £10.7m deal for Scania at Eurocentral by West Ranga Property Group to DVS Property and CBRE Investment Management's £58 million acquisition of Exchange Place One in Edinburgh.
Respondents polled in Lismore's analysis forecast that 2022’s top three performing sectors will be retail warehousing (cited by 36 per cent), distribution (28 per cent) and multi-let industrials (17 per cent). Retail warehousing, in particular, is thought to offer strong value due to rapid change in the retail sector, according to Lismore.
James Dunne, head of UK transactions at abrdn, said that alternative sectors were "an increasingly significant part of the real estate investment market". Dunne cited hotels and the extended stays market as examples of durable and growing sectors.
However, Dunne characterised the recovery trend as "narrow" and added that it was being driven by "the best assets and the best locations significantly outperforming the market.”
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