INVESTMENT in Scottish property is set to soar past the £2 billion mark by the end of the year if current trends continue.
In what is a sure sign of confidence in the Scottish economy, the third quarter of 2018 is showing a balance of investment across all sectors, with growth in alternatives and leisure property as well as the traditional office market.
According to the latest research from CBRE Scotland, investment in Scottish property in the third quarter of 2018 reached £318.4 million, with office property accounting for the largest share.
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The total figure was achieved across 35 transactions, with offices accounting for 29% of the total at £93.71m.
Some 20% went on industrial property (£63.8m) and 23 per cent on retail deals (£72.16m).
A further £60.4m or 19% was invested in the leisure sector, albeit the majority (£52m) is accounted for in Fattal Properties’ acquisition of 43 Jeffrey Street and an adjacent development site in Edinburgh, with an additional £29.10m or 9.1% invested in the increasingly popular alternatives sector.
The largest investment deal of the quarter was Pontegadea’s off-market acquisition of 78-90 Buchanan Street in Glasgow, which was purchased for £31m.
CBRE acted on behalf of the vendor Lothbury IM.
The major office deals of the quarter were M&G’s acquisition of 40 Torphichen Street in Edinburgh from Triuva for £22.15m and KanAm’s acquisition of Greenside in Edinburgh for £17.52m from the Chris Stewart Group.
CBRE advised KanAm in the transaction.
The year-to-date investment in Scotland totals £1.51bn, which is a rise on the five-year average for this point in the year (£1.26bn).
By the end of the year the total is expected to reach over £2bn which shows an ever increasing appetite for Scotland-based property assets.
Camille Casey, associate director at CBRE Scotland, commented: “The appetite for quality Scottish investment opportunities continued to gather momentum in the third quarter, with an increasing number of UK institutional funds and overseas based investors seeking to invest here.
“Any concerns around Brexit appear to have had little impact on investor demand, although it remains to be seen what the impact will be next year as Brexit looms ever closer.
“In recent months we have witnessed improved investor sentiment across the office, industrial and alternative sectors, primarily due to the yield discount on offer relative to London and our regional counterparts.
“This is evidenced by a more balanced range of deals across all sectors.
“The largest deal of the quarter was Pontegadea’s off-market acquisition of 78-90 Buchanan Street, a mixed retail and office property, in Glasgow for £31m.
“This was the second major deal on Buchanan Street that CBRE was involved in in the last twelve months.
“We expect a strong Q4 finish to what has already been a good year for Scottish investment volumes.
“We are aware of a number of investment opportunities being launched to the market in the coming weeks and predict more deals will be announced before Christmas, in advance of both the year-end and of Brexit.”
CBRE is the world’s largest commercial real estate services and investment firm.
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