By Scott Wright
INDUSTRIAL properties, retail warehouses, prime offices and premises for life sciences businesses have been tipped to be in high demand this year.
The forecast comes from commercial property specialist Colliers, which expects UK all-property returns growth to moderate to 9.6 per cent in 2022 and 6.4% in 2023 as rental growth slows and yields stabilise. Its predictions for this year and next come after UK all-property returns growth hit a six-year high of 16.5% in 2021.
Douglas McPhail, head of Scotland at Colliers, said: “We continue to see considerable investor demand for offices in Scotland, especially in Edinburgh where we have witnessed strong prices being paid. Looking across the commercial property spectrum, pricing remains firm with yield compression expected across most market sectors this year. We are also expecting investment volumes to break through the £2 billion mark in 2022 as appetite remains strong and there are still opportunities for strong returns.”
Collliers highlighted the continuing recovery of the office sector from the pandemic. It said £640 million of office deals were concluded in 2021, up from £380m on 2020. While the 2021 tally was still five per cent below the 10-year average of £680m, Colliers underlined strong investor demand for prime assets, as well as improved levels of occupancy in Glasgow and Edinburgh.
Colliers noted, however, that retail will continue to find the going tough, and predicts further rental falls across most UK retail segments over the next two years before a return to growth in 2024. Although it said the return of tourism should help high street footfall this year, the retail sector will come under pressure from falling household incomes and declining consumer confidence.
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