SCOTLAND’S offices, retail and alternatives property markets all significantly outperformed the UK markets in 2018, according to data released by leading property consultant CBRE yesterday.
Their research revealed that the annual Scottish all commercial property total return for 2018 was 5.6%, only slightly lower than the UK all property return of 6%.
Industrials in Scotland also had a strong end to the year, achieving the highest return of the three main sectors.
Office and industrials returns in Scotland have increased year on year, with offices achieving 8.2% compared to 5.9% in 2017, with industrials increasing from 7.9% to 8.6%.
Offices were 2% ahead of the UK figure of 6.2%, while retail returned 4.7% compared to the overall UK figure of minus 1.1%.
Alternatives continued to be the best performing sector in Scotland, and the only one to achieve double-digit returns in 2018, with 10.6% compared to the UK’s 7.5%.
CBRE said that given the current challenges facing the retail sector, it is unsurprising that at year end the outlook remained subdued.
Compared with performance for the whole of the UK, Scottish returns have been more resilient in the final quarter of 2018. At the all property level, the picture is very similar –with UK returns down by almost 1.5% and Scottish returns unchanged.
During the last quarter of the year, £642 million of stock was transacted in Scotland, demonstrating a strong final quarter, and bringing the annual total to £2.49 billion in 2018. This is broadly in line with the £2.5bn achieved in 2017.
The retail sector total was boosted by the controversial sale of Fort Kinnaird Retail Park, located on the eastern edge of Edinburgh, which was acquired from The Crown Estate by M&G Real Estate for £167.25 million, with none of that sum accruing to the Scottish Government despite the Crown Estate being devolved.
David Reid, associate director of CBRE, said: “It’s great to see the industrial and logistics sector in Scotland performing strongly again during 2018 with sharpening yields and increasing rental and land values within prime locations.
“With this backdrop we are seeing increasing developer appetite for speculative schemes and there are a number of occupier pre-lets on the horizon during 2019.”
By Martin Hannan
Source: The National