Scottish Commercial Property: Covid Pandemic Drives Market Changes
Investment in industrial property and retail warehousing in Scotland overtook that of offices for the first time in a decade last year, due to changes triggered by the coronavirus pandemic, according to business research acquisition.
However, commercial property consultancy Knight Frank said when publishing its research that prime office space remained “highly sought after” and said it expected to see more activity in this sector in coming months, noting good value in Edinburgh and Glasgow compared to many other European cities. .
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Retail warehousing and industrial property in Scotland saw a combined investment of £541m last year, up almost 45% from the corresponding figure of £374m for 2020 and a 29% increase on 2019. The £541m figure represented nearly a third of retail property investment in 2021. Retail warehousing investment totaled £256m in 2021. The investment in industrial property was £285 million.
In 2020, office investment in Scotland was, at £376m, only slightly higher than the combined total for industrial property and retail warehousing. Office investment fell in 2020, having totaled £739m in 2019. In 2021, office investment totaled £355m, marking a marked slowing in the rate of decline.
Investment in commercial property in Scotland totaled £1.665 billion in 2021, according to Knight Frank. That figure was up from £1.398 billion in 2020, but down sharply from £2.106 billion in the pre-pandemic year of 2019.
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Of Scotland’s three largest cities, Glasgow recorded the highest level of investment, at £475m. Edinburgh was in second place with £429million. Aberdeen accounted for £54m, an increase of almost 50% on 2020. Foreign investors were again the most active buyers in Scotland in 2021, accounting for around 44% of investments.
Alasdair Steele, commercial head of Scotland at Knight Frank, said: “Last year’s investment figures highlight the changes in investor demand since the start of the pandemic, with an almost insatiable appetite for retail warehousing and industrial property driven by changes in people’s shopping habits. This should not continue until 2022.”
He added: “With a return to office work and continued strength in industrial and retail warehouses, there could be a lot of activity in Scottish commercial property over the next 12 months – particularly from the share of overseas buyers, as travel restrictions ease.”
A separate survey published yesterday by property adviser Savills showed that the Scottish hotel market saw investment volumes reach around £185m in 2021, a 166% increase on the £70m traded in 2020 and by 12% on the 2019 total of £165m. Savills noted that the total investment figure for 2021 was negotiated in 18 hotel deals, with international buyers accounting for 46% of deals.
Steven Fyfe, associate director at Savills, said: “Despite the inevitable impact of hotel closures during the pandemic, Scotland was high on the list of staycations when restrictions began to ease after the first lockdown. . Our hotel market has performed relatively well over the past 12 months and we have seen renewed interest from investors… Evidenced by the many transactions that took place during the first half of the year as hotels… had not fully reopened. When the hotels opened in May 2021, it boosted confidence in the market. »