Investments in Scottish commercial property up 33%

By Staff Writer

Mar 31, 2016 03:57 AM EDT

Scotland commercial property has been receiving encouraging investments of late as office buildings hit the market. Investment inflow into Scottish commercial property segment rose by a one-third during the first quarter of 2016. Overseas investors contribute over 40 percent of investments into THE Scottish property market.

Three prominent buildings in Edinburgh are poised for bringing a major change in local property market. It's estimated that £662.6 million worth of deals would be completed during the first quarter of 2016, according to Savills, a real estate advisor. This is 33 percent growth from the previous quarter. The last quarter of 2015 recorded £498 million property transactions in Scotland. 

The Telegraph reports that new buildings in Edinburgh area are expected to push property deals volumes and value further. Office buildings Quartermile 4, Waverley Gate and Princes Exchange are said to have been sold. Buyers are more bullish on Scotland property market as growth rates are encouraging. The M&G Quartermile 4 building received funding to the tune of £50 million in 2014 and is valued £65 million today. The value was boosted by the signing of two new office tenants. 

Overseas investors account for 41 percent of the total investment in Scotland property market in 2015. Savills further observes that this trend is likely to continue in 2016 as well. Investors from Germany, the US and Middle East are interested in Scottish property market. 

Scotland is witnessing a growing demand for prime property in commuter locations. Its housing market is also gaining momentum. It's estimated that prime markets will grow 18.8 percent over next five years in value terms, surpassing residential markets. Great Britain is recording a whopping growth rate of 22.2 percent. Outside Edinburgh, prime market prices in the range of £400,000 and £1 million are constrained, as reported by PropertyWire.

Nick Penny, head of Savills Scotland, said "With Scottish commercial property yields still between 50-150 basis points higher than comparable English cities, Scotland offers investors an attractive income yield and an opportunity for capital growth at a time when elsewhere in the UK the capital value growth story is beginning to tail off."

Faisal Choudhry, director of Scottish research as Savills, said "While Scotland continues to attract overseas buyers, we are now seeing the return of wealthy home grown buyers and there were some important trophy country house and estate sales during 2015."

The housing prices in Scotland property market are rising beyond previous forecasts. Crossrail sees property prices rising 19 percent. According to a new house price index lunched by Office for National Statistics (ONS) in June 2015, house prices were increasing faster than previous predictions. The Land Registry data for February indicted growth rate of 6.1 percent in property prices. Heavy rush from landlords to avoid tax rise has also pushed volumes upwards, further adds The Week

About £215million out of the total £662.6million has been invested in Edinburgh. Approximately £83million was invested in Aberdeen and £108million was invested in Glasgow. Scotland's shopping centre market may receive a further £257million investment.

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