By Kristy Dorsey
Figures from Savills have been described as “hugely encouraging” for the commercial property market in Scotland, with the level of investment during the first half of this year up 62 per cent on the same period in 2020.
According to the estate agency, private equity and overseas investors drove more than £770 million worth of purchases in the first six months of the year. With a further £490m of property currently under offer, Savills said the year-end figure is on track to meet or surpass the pre-Covid level of £2.62 billion recorded in 2018.
At £295m, the office sector accounted for nearly 40% of total investment volumes. Edinburgh accounted for 36% of completed office transactions, followed by Glasgow at 27%.
The industrial sub-sector represented just 11% of investment at £82m, though this was attributed to low levels of available stock rather than a lack of investor interest. Investment in high street retail remained at depressed levels, though there has been “renewed interest” in out-of-town retail.
READ MORE: Scottish commercial property investment up a third
“These half-year figures are hugely encouraging and demonstrate how the pent-up demand from last year is beginning to generate activity in the market, which will boost confidence as we enter into the second half of the year,” said Nick Penny, head of Savills Scotland.
“Whilst we haven’t had a huge amount of available stock in the market, investor appetite is increasing and we have seen pricing remain strong for quality assets.”
Stuart Orr, investment director with Savills in Glasgow, added that offices are expected to continue dominating investment volumes for the remainder of the year.
“The near insatiable appetite for industrial and logistics will likely be frustrated by the lack of stock, which will continue to harden pricing in that sector,” he said. “As a result we anticipate some of that capital will shift to retail warehousing, which I expect will have a strong [second half]”.
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